The grains markets have put a couple of days of gains on, with profit taking, short covering and bull spreading the big words to have come out of todays market wires. The gains in the wheat market have been linked to continuing quality issues with the French and German harvests, which whilst yielding well, are not producing the vast amounts of 11% protein required to fill current export milling contracts, continued demand from China for soft wheat, and Brazilian demand for hard wheats. Profit taking in the corn market pushed both the new and old crop contracts higher following the flurry of old crop sales at the start of the week. A well followed crop analyst increased US total production to 14 Billion bushels (355mmt), assuming an average of 158.5b/acre (9.95t/ha), but we will have to wait until the USDA on the 12th of August to see how that stacks up. The soybean market ran high with the old crop contract jumping up on tight domestic supplies, and a stronger palm oil market in SE Asia, new crop beans put on a couple but the crop development remains supported by good growing conditions.
The cotton market had a very quiet night, whilst 13k in contracts traded overnight, the December contract put on 1pt, whilst May 14 contract lost 5pts. Decertification of board delivered cotton continues, with a small 6k taken out overnight, but totalling almost 520k in the month of July. Yesterday also saw the last day of the current Chinese reserve auctions, a total of approx 11m bales moved to domestic mills in China during this period, reducing bales in China to approx 29.5m. Ecom’s bids today are $493 for 2013, $482 for 2014.
Our currency has continued its downward slide, losing 130+ pts overnight to mark the lowest point for our currency since the 6th of September 2010. The US federal reserve postponed the consideration of the tapering/withdrawal of their stimulus until they met again in mid September as was widely expected. Our currency has come under fire since RBA Governor Stevens spoke on Tuesday, suggesting he saw that pushing our currency lower (under 90 cents) as the best way to help pick up our economy, and that cutting interest rates would the best way to achieve this outcome. The market has almost fully priced in a 25pt rate cute, but some are now forecasting 50pts would be needed to have the desired effect.
Domestically, generic track Multigrade APW has reached the $290’s Newcastle and Brisbane track. Most of our buyers are now pricing on a site specific basis, with premiums or discounts depending on the delivery location, whilst new crop Multigrade Durum contracts are also ranging for $330 – $337 depending on the site. Barley prices are following wheat up, with track prices now around the $250’s track for both port zones, we also have buyers looking for ex-farm parcels for those preferring to store their barley on farm. Faba Beans remain firmly priced at the $395 -$ 400 levels delivered local packer in Narrabri and Goondiwindi, whilst chickpeas still remain out of favour, with new crop bids dropping into the $350’s packer.