Grains futures were higher and oilseeds lower;

• • Chicago wheat July contract up 19.25c/bu to 510;
  • Kansas wheat July contract was up 9.5c/bu to 455.25;
  • Minneapolis wheat July contract up 18c/bu to 565;
  • MATIF wheat September contract up EUR0.50/t to 179.50
  • MATIF rapeseed August contract unchanged at EUR367.50
  • Winnipeg canola July contract up $C4.50/t to $C454.70
  • Corn July contract up 5.5c/bu to 420.5;
  • Soybeans July contract down 1c/bu to 868.75
  • Crude oil July contract up US$0.91/barrel to $52.59
  • Dow Jones up 181.09 points to 25,720.66
  • AUD up to 0.6977
  • CAD up to 1.3355
  • EUR up to 1.1275

Basis rally, then futures rally; eventually, maybe!

Offshore futures markets are becoming like Melbourne weather – if you don’t like it one day, just wait. The ripsaw nature of these moves are seemingly justified in the cold hard light of the closing bell. Every down day can be explained by high global wheat stocks or the fact the HRW delivery system is full of good quality carry grain that can cover the sins of a lower quality harvest. Up moves focus on the explosive situation unfolding in the corn markets and dryness in Russia. Today was all about Soft Red Winter and the impact the extreme weather could have on deliveries. The contract allows for lower quality SRW to find its way to the board but, at some point either the discounts are too painful or the quality is simply too bad to be delivered. Sometimes the futures markets do what they should – build on the concerns above, basis has been firming hard as the trade tries to ensure it can get the quality it needs – basis rallies, then futures rally.

Just when you thought it was safe to go back in the water. A good part of the corn/bean belt has had a reprieve over the last few days and a few more dry days ahead of us. However, the back end of the forecast, ie Friday the 14^th on, has over 6 inches forecast for parts of Nebraska, Iowa, Wisconsin and Minnesota. Monday nights planting pace report will certainly be extremely important as it will capture the end of the official corn planting window in many states. Additionally, the Trump administration is rumoured to announce the details around their Market Facilitation Program (MFP) and more specifically if Prevent Plant Acres are included in the payment calculation. This is significant for farmers in the US and will dictate if a bunch of acres get planted to corn/beans or are left. It’s worth pointing out however – the assumption is the growers can physically plant should they want to – more rainfall is not helping this situation.

Australia rainfall activity encouraging

Rains have materialised in WA this morning with the southern part of the belt finally getting a drink – radar showing good activity and the BOM observations showing 3-12mm through the Great Southern so far. This event will fill in the gaps in parts of WA which, given many in the north of NSW and southern Qld got more in the ground post last week’s event helps add to the planted area footprint. A long way to go with many areas still running on fumes and, believe it or not, parts of Vic that could actually do with a break. The only real certainty is we are heading into a relocation market again – moving from the haves to the have nots will once again keep the market engaged.