With another short week, we thought it best to give a midweek recap on what we are seeing in the markets, and hearing around the traps.
Since last Thursday, the grains markets have all lost ground. Wheat down 30c/bushel, and Soybeans down 50c/bushel from the Thursday highs, corn while corn was a bit more resilient, dropping just 5c/bushel from last week. The US wheat market is still under pressure from the supply side of the equation, with the good to excellent rating unchanged from last week at 34%, remaining historically low, the outlook for rain appears to be improving across the US Midwest, and with only 9% of the crop having produced a head so far, moisture now should only benefit their crop. Soybeans came under pressure from further South American cargoes being diverted to US ports after being cancelled by the Chinese. With these tonnes entering the US, the squeeze on stocks there has loosened for now, whilst record planting forecasts have the new crop soybean prices at a significant discount to the prompt market. Corn growers in the US continue to chip away at the early planting, but have remained well behind the 5 year average for planting pace of 14%, with just 6% of the crop in the ground, the slow start is helping to keep the price around the $5/bushel mark with some impressive sales released last week putting a floor in the market for now.
The cotton market saw both May and July jump up on what will mostly be last minute mill fixations on the eve of May’s First Notice Day. The July contract is continuing around recent highs, holding above 93USc/lb, with open interest in the contract sitting at approximately 105,000 contracts. Some interest in the December contract saw it make a contract high of 82.62 USc/lb during the session, but the contract dropped 150points late in the session but still marked a 10 month high on the close. With cotton plantings in the US at just 9%, they have a lot of crop to finish planting, and this could continue to be supportive of the December contract.
Locally, cotton harvest is continuing reasonably uninterrupted, with most growers moving into fields that required a second defoliation over the course of this week. Later crops in the Upper Namoi are still a week to 10 days away from making a start on picking, whilst ginning pace appears to be picking up following the delayed start. Canola and Faba’s are continuing to be planted, but with the planting window closing over the next 10-14 days, in the north, a few more hectares might be swapping back to wheat, barley and chickpeas as the available soil moisture starts to be drawn a bit deeper into the profile. We continue to have interest in hectare contracts for both faba’s and canola for any growers looking to lock in historically good prices and production. Early barley sowing is also well underway, with the dual purpose of providing a crop to graze, or take through to harvest providing options for those with less of a profile.
Current grain prices are reflective of the continued demand for feed grains onto the Downs and northern NSW feedlots. Barley interest remains limited as the spread to wheat remains more favourable to the use of wheat in feedlot rations. Sorghum prices are remaining firm as the first shipments of sorghum out of Newcastle move closer to execution.