The announcement by the US Environmental Protection Agency on Friday to cut the ethanol mandate by 1.4 billion bushels continues to have a negative effect on futures markets. Soybeans were the worst effected yesterday, losing 30 USc in value, while today it was corn that took the lead with a 10 USc fall to close at its lowest level for the harvest period. Basically what has been a massive corn harvest in the US has now seen an important source of demand removed, with few options to replace that demand. Add to this ideal conditions for planting in South America and an expectation of elevated corn sowings for next season in the US, and the bears have taken hold of this market. Wheat has also been softening after the announcement, albeit in minor moves, with the view that the excess corn will now be competing more aggressively with wheat in to feed destinations. A tender overnight from Iraq saw US wheat overpriced by $20, with Canada and Australia being the most competitive. The December Cotton contract also had a rough night, with its close lower of 75 points to 76.37 USc/lb pushing it back to its 9 month lows. Of course, China has been a factor, with purchases in to the reserve tumbling ahead of expected sales out of their massive inventories.
Harvest is continuing on the Liverpool Plains after sporadic showers over the weekend and yesterday held up some, while growers in the Central West have been pushing ahead uninterrupted. In these areas we have strong demand for APW1 and H2 going in to the system, and strong prices for AUH2, HPS1 and APH2 also. For stocks on farm on the Liverpool Plains, we are buyers of 70/10 wheat ex farm with movement commencing next week, or for APH2/H2/APW delivered to Newcastle for December. In the Macquarie, we are buyers of all grades delivered in to Dubbo, in particular H2 and APW, and can handle grain with high screenings (can handle up to 50%). Also have strong values for Lupins and chickpeas either ex farm or delivered Dubbo. Around Narrabri we still have strong values delivered in to the packers in Narrabri for APH, H2 and AUH2, which we can write up on a multigrade contract with flexibility on screenings and protein. H2 would be at $285-$290, with APH2 at $295+. Further north, we can still bid for 70/10 wheat ex farm for movement in to Queensland with prompt movement, prices starting above $260 on farm around Moree. If you have straight H2 or APW we can offer a premium of $5-$10 over these values. We have strong bids for DR1 in the system or on farm for movement in to Brisbane.