The grains markets found some strength from the next Artic Blast forecast to hit the Midwest of the US over the next couple of days, the “winterkill” talk is expected again, but it is ultimately much harder to determine, given the snow cover which is now covering a good deal of the wheat growing area. Prices have also found some support from the difficulties in getting product to port, with both Wheat and Corn shipments under pressure from a logistic system hamstrung by the delays associated with this late cold snap. Soybeans are holding ground against the cheap South American crop for now, as domestic livestock prices in the US, drive meal prices in a tight stocks situation, which may see South American beans move not only into China, but also the US in the next couple of months. We should expect a bit of side taking over the next couple of sessions, traders and the funds alike try to get on the right side of the next USDA report, which is out next Monday (US Time).
The cotton market will probably hold its ground over the course of this week with the Chinese Lunar New Year Celebrations being much more important to the world biggest user of cotton. With only a few to no business actively doing business this week, buyers will limited, as they will be much more focused on the year of the Horse, than the moves the cotton market may make.
The currency has found some strength today from the RBA’s decision to leave interest rates unchanged. It was concluded that economic growth in Australia will remain low for the near future, and business investment will remain subdued, particularly as mining investment reduces and unemployment will most likely increase before the outlook changes. The RBA believes that continuing with its accommodative interest rate policy for the foreseeable future as the key to fostering sustainable growth.
The start to the week/new month has seen most traders take a wait and see approach following the rain event in Central Queensland which should see upwards of 100,000ha of late sorghum being planted. This doesn’t fix the supply situation right now, but makes the outlook a little better for now. From central and northern NSW, through to Southern Queensland, some significant rainfall is going to be need to improve the outlook for the next winter crop.