The USDA report out Friday night was full of fall-out for grains and oilseeds, as world production increased, and use was decreased, giving the world a few more tonnes to play around with. Wheat ending stocks grew to 189.5 million metric tonnes, giving the world almost 100 days supply without any further grain being produced. Australian production was increased by 500,000 tonnes, and overall our national balance sheet looks very comfortable, with the exception of Northern NSW and Queensland port zones. Corn ending stocks increased, not on production but on decreased usage, most expect that the August report will increase stocks once the USDA have reassessed yield, which most had expected would be increased in this report. Soybeans only did the obvious, bumping-up production on the back of the 30 June acreage report, but more downside is being built into prices as yields remained unchanged for soybeans also.

Cotton futures continue to move lower, the market is still trying to digest the ever increasing US crop, and where it is going to be sold. China continues to sit on millions of bales in warehouses, and the rest of the world seems to have sufficient supply to keep spinners busy. A chance that the Indian monsoon is going to come in short is a talking point, but they still have plenty of time on their side for now. Look for the market to test the 66 USc/lb level shortly, how the market reacts could dictate the markets’ direction, and if the funds get on board, they could continue to push this market into the low 60’s.

Our dollar remains highly resilient, keeping time in the 93-94 cent range. Governor Stevens has come out and voiced the option of using a rate cut to drag our currency lower, but that seems to be his last resort, preferring to threaten the cut, rather than actually make it happen.

Domestically, prices are continuing to come under pressure from production prospects in the South. Wheat basis continues to hold firm, but as futures markets retreat, basis cannot continue to firm as production in the south continues to appear more assured, pulling prices lower. Barley has followed wheat, and sorghum continues to lag well behind the white grain markets. We have seen some small interest in chickpeas, but the demand is not for lots of tonnes, and is coming and going for the market on a daily basis. For anyone growing Durum, prices have remained firm, and are approaching the $390’s Newcastle, and are worthy of some consideration.