Grain markets continue to react to any change in weather outlooks for the northern hemisphere crops. Over the last fortnight corn in particular was developing a weather premium as the potentially record size US crop faced an extended heatwave heading in to the important heat sensitive pollination period. However, these fears have subsided with forecasts for a return to more normal weather patterns by the end of the week, with the majority of the crop reaching pollination after this time. Futures have weakened as a result. Wheat is also facing volatility due to weather, with the market now pointing to chances of rain for the struggling Western Australians adding to a rebound in global stocks. The wheat market is struggling to find direction with bullish and bearish factors competing for dominance. The US winter wheat harvest pushes ahead with some states reporting better than expected yields and others are reporting disappointing results. More recently, potential larger global stocks is being countered by news that Russia and India have overestimated their production, while strong demand from China, which has been providing support to the current market, may be limited longer term as the Chinese crop is apparently reaching record levels. As weather continues to take such an important role in market direction our outlook over the coming weeks remains uncertain.
Cotton markets continue to fluctuate within the well-defined range between 82 – 89 USc/lb, with the stronger run of last week being replaced with a more negative tilt following a generally bearish USDA report last week. The December contract, which current crop is being priced against, is currently holding around 85 USc/lb, while the May 14 contract, which is used to price new crop, is lower around 83 USc/lb. Despite a softening in futures values demand from mills remains limited, the result being that basis is actually weakening in tandem with the falling futures. The performance of the Aussie dollar continues to lend support to domestic prices, however recent forecasts are suggesting current lows of 0.90c are now the support levels for Q3, with a sustained push in to the 0.80’s more likely to be later in the year.
Domestically, strong values for old crop grain are still available, with support continuing to stem from domestic feed markets, however prices have retreated from the highs seen over the course of the rally. Homes for on farm parcels that can be moved in to Northern markets are now being pushed out to August/September delivery, while parcels in the system are steading around $310 track for most grades, with a premium for site Moree north still available. Sorghum stocks are now becoming more readily available after a difficult run with harvest over the last few months, however high moisture remains a persistent problem. While at the start of the month buyers were able to handle borderline moisture simply out of necessity due to very limited stocks available to them, as more stocks begin to come on line their ability to take more moisture is drying up. Genuine SOR1 is still highly sought after.
New crop values remain strong and should be considered for those growers who have been lucky enough to have a good run with recent rains. Wheat values have managed to remain above $290 track at the moment for both Brisbane and Newcastle. Canola is currently $542 NTL Track, off the highs of a few weeks ago of around $570. New crop faba bean prices are also of interest, in a range of $340 – $350 XF for no. 2 grade or better, depending on location. Please call the office with any pricing enquiries you might have.