Grains futures overnight were down across the board with December wheat closing down 5.5 cents at 713.75 cents/bushel. Strong export inspections, good crop prospects in EU and the Black Sea region and positioning ahead of this week’s USDA Report all added to the sell-off in wheat. December corn closed down 12.5 cents on the back of good growing conditions in the US despite the slow planting pace which is at the slowest pace since 1995/96 season. Soybeans also lost 11.25 cents on the November contract due to favourable weather over the next week with warmer weather and a few scattered showers which are seen to be beneficial.

Cotton led the charge overnight with the December contract up 70 points to close at 0.8588 US cents/pound. Technically, a close above 0.8650 would set-up the December contract to test the 89 cent highs that were hit back in March. The USDA weekly crop conditions were posted this week for the first time and 42% of the US cotton crop is rated good to excellent, down 9 percentage points from last year, and 21% of the crop is poor to very poor, up from 13% last year. Today, ECOM are paying $480/bale for both 2013 and 2014 crop. We are also taking market orders as overnight markets combined with AUD movements can trigger these levels while we are sleeping soundly!

Domestically, basis remains firm on old crop wheat with minimal change in values. We have strong buying demand for all grades of wheat, from lower-grades through to high protein and even screenings wheat. New crop wheat the past week has traded up to $286/mt Newcastle with some selling activity in both Newcastle and Brisbane port-zones. We believe growers should be considering selling some new crop multi grade wheat at levels above $280 port. This would equate to APW at Narrabri to $240, Moree $232, Burren $232, Walgett $224, Goondiwindi $245, Coonamble $234 & Trangie $236. You could then look to add conservatively $10 to H2 & $20 to APH2. We have a range of new crop contracts available from floating spreads, fixed spreads, a milling grade only contract and we are also able to lock in site prices. The global wheat balance sheet is pretty loose at the moment and with EU and the Black Sea regions staring at a very large 2013/2014 crop, there isn’t too much concern regarding the struggling US crop at the moment. Ukraine production for 2013/2014 is expected to be in excess of 20 million tonnes compared to 15.8 million tonnes last year and there is no export limits for the first half of the marketing year as a result of this comfortable production forecast.

New crop chickpea values have been around $445-450/mt delivered Narrabri which historically are pretty reasonable numbers. Faba beans for Oct/Nov pick-up are $340/mt XF Narrabri/Wee Waa/Cryon for No. 2’s or better and $330XF Garah/Weemelah again for No. 2’s or better.

Sorghum harvest is progressing ever so slowly due to high moisture. What this crop needs is 2-3 good frosts and a few sunny harvesting days. We just can’t seem to get them and growers are struggling to get started without having to resort to drying grain. We are seeing sorghum as high as 18% moisture being harvested and getting dried down to fulfil existing contracts. We have strong demand for sorghum delivered Brisbane, Narrabri and system. XF parcels on the LPP are more limited due to a weak domestic demand and a preference for wheat in feed rations. We do have homes for higher moisture sorghum but this is probably limited to a maximum of 14.5%-15% at the moment. With more rain forecast this week, it is becoming increasingly frustrating for those trying to harvest.