International grain markets were strong overnight as August weather and September forecasts get the bulls raging. Dec wheat finished up 20.75 cents and closed at 666.75US cents/bushel. It was mostly due to strength in corn but also from a technical perspective, wheat crossed and traded above the downtrend line it’s been trading since April. This prompted spec buying and short covering. Dec corn closed up 29.75 cents after last week’s crop tour shaved 300 million bushels of the production estimate after a hot, dry August and forecast. The weekly crop progress report wiped 2 percentage points from the good to excellent category this week taking it down to 59%. Soybeans was the big mover overnight with the November contract closing up 61.5 cents at 1389.5US cents/bushel. Four percentage points were wiped from the good to excellent category and this week sits at 58%. Again, hot and dry weather is taking a toll on the crop and the driving force behind recent futures moves.

Domestically, we are hearing of extensive frost damage across the region after last week’s event which is widespread from the Liverpool Plains region through to north of the border. This has affected wheat, barley and canola crops. Crops west of the Newell are struggling without rain and another week or two without rain will see heavy yield declines and more stock being put onto crops. Basis for new crop wheat remains strong and values today are above $300/mt Newcastle track and well above in the Brisbane zone. For growers in the north looking to price new crop we recommend looking at pricing on-farm and utilising on-farm storage as the 70/10 market is well above track Multigrade pricing.

New crop chickpea demand remains quiet and prices haven’t moved. Faba demand is still strongest into the packers for export as the domestic market can source imported soymeal cheaper for the Nov-Dec period than fabas locally. Prices are $385-400 delivered packer and we are happy to look at offers.

Cotton futures were up overnight although fundamentally not a lot of news to provide much direction to the markets. Futures in the low 0.80USD range is creating demand from China with merchants making sales in the past week. We expect this demand to continue while futures trade within this range and drop off should they hit the high 0.80’s. $500/bale for 2014 crop is gone and today prices are around the $481/bale mark. We believe given the sharp decline, another go at $500 will see a wave of selling activity.