The day ahead

Weather – Depending on which weather model is your favourite, things look a little less wet in the south, but slightly wetter for NNSW and SQLD. Still no relief for Russia but western Ukraine is wet as is France.

Markets – Firm across the board. Vegoil keeps on trucking. Storms keep ripping through South East Asia, slowing harvest and restricting supply.

Australian day ahead – Should be firm. AUD facilitating the conversation around export parity, we just have to work out what quality and destination. Canola remains bid.

Offshore

Overnight StatsCan came out with slightly lower production print on wheat and much lower than expected for canola. Farm survey data showed a near record crop for wheat at 34.958 million tonnes (Mt), and canola showed 17.845Mt compared to market expectations of a 18.25-18.5 number.  

US weekly export sales were 378kt on wheat, compared to market expectation 250-550kt. Major destinations were 152kt for Mexico & 136kt for South Korea. 

Palm oil reached its highest closing level in over three weeks, driven by concerns that adverse weather in major producing regions could tighten supplies just as demand is expected to rebound. Indonesia’s meteorological agency reported that rainfall intensity might increase by 20pc above normal levels due to weak La Niña conditions, with the rainy season peaking at the end of December in much of Sumatra and Java. Meanwhile, Malaysia anticipates five to seven heavy rain episodes during the monsoon season, which will last until March. Severe weather could reduce palm oil yields and disrupt fruit transportation in Indonesia and Malaysia, which together account for about 80pc of global palm oil production.

Whet forwards are paying carries. Canola and rapeseed are mixed. Prices expressed in $A per tonne. Click expand.

 The Buenos Aires Grain Exchange reported in its weekly update that wheat yields in Argentina’s southern region are outperforming initial expectations. If this improved yield data is confirmed when farmers begin harvesting, the exchange is likely to revise its production estimate upward from the current 18.6Mt. The optimism in the southern region coincides with similarly stronger-than-anticipated yields in the “zona núcleo”, another key wheat-producing region. 

State-owned Sinograin and its subsidiaries have announced plans to ramp up purchases of domestically produced corn for China’s reserves, responding to a sharp decline in local grain prices. Beijing has a history of stockpiling corn and limiting imports to stabilise the domestic market. However, prices have continued to fall due to abundant supplies and weak demand. Corn futures on the Dalian Commodity Exchange recently hit their lowest level in over four years, as farmers rushed to sell weather-damaged, lower-quality grain.