Corn futures had another negative night with both the September and December contracts reaching new contract lows. Corn appears to have gotten through the important growing month of July relatively unscathed and forecasts are now anticipating beneficial conditions for pollination, with the trade effectively booking it in as a monster crop a few months out from harvest. Hedge funds, a proxy for speculators, have reacted to this outlook by now collectively holding a record net short position in Chicago corn, i.e. more investors are predicting a fall in prices by holding short contracts, which profit when values fall. This in of itself may limit further losses as the market can be seen as being oversold and other investors being wary of a correction in the market. Wheat, which often takes its lead from movements in the corn market, has managed to weather the price collapse of corn, with the spread between wheat and corn contracts at its highest level of several months. Wheat, which also currently holds a large net short position, is being supported by consistent demand from export markets, with Jordan being the latest to tender for the grain and expectations Japan will enter the market soon. In addition to this there are concerns for the availability of quality protein wheat in the market. New crop soybeans continued its recent decline, however the lateness of the crop and cooler temperatures potentially limiting the advance of the crop points to the market heading in to a period of volatility.

Cotton looks to be on course for another quiet week in the market, with the main focus now looking at the large invert between the December and March contracts and how this will impact the market going forward. Longer term there has been some discussion about a change in Chinese domestic cotton policy. This will see the government move from the Chinese Reserve absorbing huge quantities of domestic production at a guaranteed minimum price, which in recent times has been substantially above international prices, to a direct subsidy system similar to that in operation in the US. The talk is a trial will be rolled out in the large cotton producing Xinjiang province, however nothing at this stage has been approved. The view is that this will be bearish for NY futures as it will continue to maintain the huge amount of global stocks which is weighing down on the market.

Domestically, faba beans is the strongest performer of new crop pricing with delivered Narrabri prices at $400/mt for No. 1 grade and a $20/mt discount to No. 2 grade. Goondiwindi delivery is a $5 discount to Narrabri. If you think your production is looking secure at this stage and these prices are of interest please give us a call. New crop wheat prices have steadied after falling over the last fortnight to now be holding in the low $280s Newcastle and Brisbane track. Premiums are being offered for certain sites in the North up to $5 over our generic track bid on the bidsheet. Similarly new crop barley is strongest for delivery to sites in the north, with prices better than $250. Sorghum looks like it is levelling out also after falling sharply over the course of the month. Moisture remains an issue for most growers, and homes for this quality of grain are limited.