The grains markets took a run higher overnight, technically nothing is different in the grain production space. But fundamentally, the actions of Russia invading the Crimean peninsular puts a whole new spin on the supply equation. The Crimean peninsular is home to one of the largest Ukrainian export ports, the Ukraine is the 4th largest exporter of corn in the world and the Black Sea region is the major supplier of Wheat to the Middle East and Northern Africa. Continued turmoil in the region will see buyers switching purchases to more safer origins for both wheat and feed grains alike, including Australia, the US and Canada. The soybean markets are jumpy on the back of decreasing production expectations from South America, and the delays in Brazilian ports which are seeing some cargoes switching back to an already tight US supply.
The cotton market followed the rest of the ag markets, but did trade its own tune with a few revelations about the decrease in Chinese strategic reserve purchase pricing, and the expected direct subsidy program assisting growers in the Xinjiang province, and the likely change of quota to a 4:1 basis (1 Bale import for 4 Bales of domestic purchased). The futures markets are still testing the recent highs, whilst the invert from July ’14 to December ’14 is in the back of the merchants mind, with 9 cents equalling -$50+ Aussie today.
The drama with Russia has brought a flight to safety, which has seen gold jump up, and equities markets drop from the highs of last week. Our dollar has held its ground in the 89-90 cent range, for the last week, so the status quo remains. The RBA is meeting today, but nothing out of the ordinary seems likely to eventuate from that.
The local grains market has only small increases, compared to the moves in Chicago, which continues to reaffirm the domestic nature of the Brisbane and Newcastle port zones. Delivered Darling Downs markets continue to rally, relative to the Brisbane market zone, for both wheat and barley. The sorghum market has lost some ground on the back of sorghum being too expensive relative to wheat, & continued progress of the Central Queensland crop, which is now all but finished with planting. The pulse market continues to be bid reasonable numbers onto the Downs for March/April delivery, but there has been no new news from the subcontinent to generate a rally in prices here.
Please contact us if you would like assistance in purchasing feed grains such as grape marc, faba beans, corn, sorghum, wheat & barley.