After a major review of its bond-buying program, the Federal Reserve decided to stick with its $85 billion a month of asset purchases, the Fed also kept its federal funds rate target unchanged at a record low range of 0 to 0.25%, where it has been for over four years. The US Dollar edged down against most major rivals Wednesday, holding to losses after the U.S. Federal Reserve said it will continue its bond-buying policy. All things being equal is should be seen bullish for commodities as a weaker US Dollar is seen to strengthen global commodity prices.
Wheat reached a three week high in Chicago on expectations that its discount to corn will boost the amount used to feed livestock in the US, the May contact rose almost 2% to finish at 736c/bu.
Corn prices may be supported in the next 3-6 months as wet conditions erodes prospects for Brazils second harvest while Soybeans are expected to drop as shipping bottlenecks ease. May corn rose 0.5% to 732c/bu while May soybeans fell almost 1.25% to 1457US cents/bushel.
Brazil is set to become the largest exporter of soybeans where production could reach a record 81 million tons. Ports will be busiest from June to August as the corn harvest accelerates, and logistics in Brazil will be a key determinant in prices for corn and soybeans over the coming season.
On the cotton front, US futures took a dive overnight with the May contract closing sub 90c/lb to settle at 89.10, a fall of over 2.25% on the news that India will follow China and sell cotton to local mills from its state reserves lessening the need to fill their orders from overseas exporters.
Overnight Canadian canola futures were down by around $0.6 to $623.30CAD.
Domestically, this week we have seen stronger selling interest in grain from the northern border-region and sorghum values for prompt movement have dropped $10/mt. In terms of consumer demand for sorghum, it is declining and they are stepping aside and looking to purchase wheat or barley to use in rations instead of sorghum, which they consider to be too expensive at current levels.
On the wheat front, NNSW and SQ are relatively quiet on the demand front although we do have snippets of demand still feeding through. Please refer to the commodities of interest section for more details on parcels we are currently looking for.
Faba beans although there are limited stocks still available are in demand. We have two buyers currently looking for small tonnages to finish of this year’s program. Ideally, they would be looking to source these in Northern NSW or west of the Newell but beggars can’t be choosers so if you have some smaller parcels you are looking to offload, we do have homes available.
We are seeing more new crop values posted from buyers each week. Currently Multigrade wheat contracts are available and there are a number of pricing/contracting styles available. As we look toward new crop plantings, there are still regions that require significant moisture or we will face the potential to lose some big acres this year.