The USDA released their first WASDE report outlining production projections for the 13/14 crop over the weekend. They are predicting a sharp rebound in global stocks of corn and soybeans in particular, reaching close to record levels, along with large values for wheat and cotton. This resulted in the market significantly softer on opening on Monday, however managed to regain much of those losses overnight as uncertainties surrounding weather became the primary focus. Corn planting progress remains sluggish with 28% of the crop in the ground versus 65% 5 year average, and forecasts for more rain over the weekend across the corn belt raising concerns the current yield estimates for the crop will be markedly lower. Wheat and soybeans fed off this uncertainty while bulls also found encouragement from continued strong demand for limited remaining stocks. What is clear is that while the USDA report was overall bearish for most commodities heading in to the new year, weather is having a large impact on the fortunes of the market and will continue to play a major role until new crop production is secured. USDA’s WASDE report will undoubtedly be revised several times over the coming months.
Cotton was also softer by 55 points after losing more than 100 points on Monday to close at 86.09 USc/lb for July. This is after a week of firmer prices pushing close to the 88 USc resistance level. Support is currently being found in the tightness of US stocks and continuing strong demand coming out of China, while gains are being limited by sluggish mill demand at prices above 85 USc outside of China. While picking is getting close to wrapping up across the valleys pricing for 2014 crop has started to take place. Given the current volatility we are seeing in overnight trading we see as an opportunity for growers who are interested in pricing 2014 cotton at $450+ to place market orders. Quite often futures can trade significantly higher overnight and trigger a market order but settle or close below these highs and the price the following day is below your target price. ECOM have been competitive for 2014 cotton and if you would like to discuss, we suggest contacting your local AgVantage office.
Locally, much needed rain has fallen across much of Northern NSW and in to Southern QLD however we would have liked to see a great deal more fall. The max appears to be around an inch around Narrabri, while 10 to 15 ml was more common from Moree to the Liverpool Plains and out to Dubbo, and 5 to 10 ml for growers at the Border, North West and in the Macquarie. We don’t anticipate that this rainfall will have an immediate effect on the strong demand currently being seen in domestic feed markets. We still have strong demand for sorghum currently at $260 delivered in to Narrabri, or $250 XF in surrounding areas, or for movement North around $260 XF in the border region. We also have strong numbers for any stocks currently held in the system both Brisbane and Newcastle lines. Similarly we are buyers of all grades of wheat XF and in the system. Also please enquire with the office for any mung beans pricing at the moment.