Futures markets have remained closed for the start of the week with the Memorial Day public holiday taking place in the U.S.. Wheat and corn finished higher at the end of last week with further rain slowing the progress of corn sowings while the winter wheat crop continues to deteriorate. The USDA’s weekly Crop Progress report, which has been delayed a day, will shed further light on how these crops are managing. Demand for limited old crop supplies is also providing support, with particularly strong export demand coming from China. Cotton has been trading in a down trend for the last week and is currently testing support levels at 82 USc/lb on the December contract. If the market opens below this level further losses could be likely, with the next technical level of support being around 78 USc/lb. The fall in the Aussie dollar has limited the damage to domestic prices, with a loss in value of 6.14% on the July futures contract being matched by currency falling 6.76% over the course of the month.
For the past 2-3 weeks we have seen basis levels for new crop wheat at levels that equate to $12-20AUD/mt above the futures prices. For growers that have reasonable moisture levels and are planting at the moment, prices between $280-287/mt Newcastle track are rather encouraging and at this price, it is trading.
Old crop wheat is still very strong from both price and demand. Currently ASW or better is priced at $333/mt delivered Brisbane, working back to a $283-type number at Garah, and stronger for locations closer to destination. We are able to look at ex-farm or delivered parcels as well as grain in the system.
Sorghum demand for old crop remains present but only into certain market zones. Delivered, Brisbane, delivered packer seem to be the strongest which is predominately export-based. Domestic use of sorghum remains minimal as spreads between wheat and sorghum are still quite narrow.