International

Tick tick boom. We came for wheat but stayed for… wheat. The great saviour to the wheat markets export woes has a few issues of their own. An extremely hard finish to the Indian wheat growing season has forced many back to the drawing board, as the world puts an increasingly thick line through Ukraine supply. The double whammy is the same weather pattern has probably added to Pakistan’s import requirements.

US futures markets had one eye on their own production prospects with general disappointment around yesterdays rainfall. Most of the in-need areas, i.e. western Kansas/Oklahoma, were missed and the wetter areas of North Dakota/Minnesota are in for another two weeks of above-average precipitation.

Problems are now defined by the balancing item of Russian exports. Bulls will suggest shipping constrictions will limit the Russian program, while the bears point out that Russian production looks amazing and Russian wheat buyers are more about supply than sanctions. Both arguments have merit, and the scary part is the top and tail of these scenarios probably account for 20Mt of export supply.

Slightly dampening the excitement was export sales wet blanket. The US managed to punch out 118,800t of old crop and 42.400t of new crop – a far cry from the 418,000t need to hit the USDA projection.

Wheat balance sheet conjecture is playing out on the futures market. Corn is not… well, not really. Yes, we are trading almost $8/bu corn but, with wheat/corn at USD$3.67/bu, we are nowhere near reflecting the risk in front of us. Imagine if the US prevent plant kicks in and safrinha up and fails. Hard to say these words, but maybe we will look back at $8/bu corn as the buy we let get away.

Australia

Local wheat markets were slightly firmer by $5-10/t for current crop with the delivered port value continuing to lead the way. New crop canola was up $20/t in WA to $1155/t Kwinana

Investments are being made to overcome some of the current supply chain woes as we stare down the prospect of third bumper winter crop. South Australia’s Peninsula Ports has announced they have secured funding for a $250-million Port Spencer development on the Eyre Peninsula, 20 km north-east of Tumby Bay. The grain export facility will have the capacity to store 800,000t of grain and have a ship loading capacity of 2,400t per hour. Construction is set to commence in June, and it is planned to be operational in time for the 2023 harvest. In WA, key grain supply chain networks will receive a funding boost through a combined state and commonwealth funding commitment of $200 million as part of the Agricultural Supply Chain Improvement (ASCI) program. The $200 million is split between four key rail upgrade projects which have been determined in consultation with CBH, rail network manager Arc Infrastructure, grower groups and local government

Forecast rainfall for next week is looking pretty wet for most of QLD with 50-100mm predicted (up to 150mm for CQ), 25-50mm for the northern half of NSW and southern WA, and lighter falls for southern NSW and VIC. It looks like SA will miss out again with less than 10mm on the 8-day forecast.