How the 2013/2014 season will unfold has been given more flesh over the last few days with the release of several highly anticipated reports from the USDA. The Quarterly Grain Stocks report and the June Acreage report have gone a long way to reinforce the view that the tight old season supplies stemming from production issues that plagued last season’s US crop will be replenished this season. The reports also highlighted old crop stocks remain extremely tight, however the outlook for the coming crop took centre stage and will have a much larger bearing on the market going forward. The figures released from the USDA were in fact stronger than what the market was anticipating, with corn acreage nearly 2 million acres over trade estimates being the largest crop since the 1930s. Wheat acreage was also increased from the March estimate by 100,000 acres. The International Grains Council has also come out with global grain stocks increasing this season by 1 million tonnes for both wheat and corn. In addition to this the USDA’s weekly crop progress report has corn growing conditions improving, while the harvest of the US winter wheat crop, which experienced some troubles through its season, is coming off with yields better than expected. All this combined has resulted in a sharply negative tilt to the grains markets.

Cotton, on the other hand, has now had three consecutive positive sessions, with a move of 153 points on the December contract closing at 85.54 USc/lb. Futures values continue to move within a well-defined trading range with its ceiling around 89.00 USc/lb and its support around 82.00 USc/lb, the value it approached toward the end of last week. Cotton markets are more aligned with global macro performance, and the perceived resurgence in the US economy is supportive cotton prices. Production concerns for the US crop are also beginning to play a larger role, however the USDA’s crop progress report has the crop in a much better place than it has been. Of particular note is Texas, the largest growing region which has been struggling with drought conditions. Last week’s report had 37% of Texas cotton rated poor to very poor, this week has reduced to 27%, while the good to excellent rating has increased from 25% to 31%.

Domestically, dry SOR1 remains in very high demand however more rains last week has pushed back the harvest of crop still in the ground even further and moisture continues to be a big issue. There are several options available if you are holding stocks of borderline moisture for movement North or in to Narrabri. Old crop wheat stocks also continue to have strong values, however have softened slightly over the last week. Please call the office with any new crop pricing enquiries, we have several options available with differing spreads and certain sites can attract a premium over our straight bid sheet value.