Well the US government has shut down. The most direct way this has affected commodity prices is in an immediate softening in the US dollar, which has the effect of boosting the price of US dollar denominated crops by making them cheaper to buyers in other currencies, which is supportive of futures markets. However the move was largely matched by strengthening in the AUD so any gains on this front will be negligible. On a more practical front the partial government shutdown has seen the USDA close, so depending on how long the impasse continues could result in no global supply and demand report, while Phyto certificates issued by the USDA, which are needed to export cotton to most destinations, are unavailable.
Wheat futures didn’t need a softer US dollar to continue its strong rally which has seen Chicago values increase in 8 of the last 9 sessions. A combination of tighter than expected stocks following the USDA stocks report, and strong demand coming out of China and Brazil, with the latter looking to source grain from the northern hemisphere after a disappointing harvest from its neighbour Argentina. This is compared with the strong bearish tilt for corn, with much better than expected yields from the ongoing US harvest being the main factor. Ongoing trade spreads of buying wheat and selling corn are solidifying this position. The massive canola harvest in Canada is continuing to have a negative impact on prices with soybean futures struggling to hold on to any gains made.
Aussie harvest is well under way for our northern growers, with faba beans being the first one off, and barley and canola beginning to get under way also. Faba Bean prices had a surprising drop yesterday after holding around $400 for delivery to Narrabri or Goondiwindi. Yesterday saw prices fall off to hold at $385 delivered to Moree or Goondiwindi, while Narrabri is at $390. Canola prices are a long way from the highs seen this season, with the best pricing opportunities still coming from ex farm pricing which today is holding at $467 around Narrabri for a hectare contract, prompt pick up. This is compared with track prices which are holding below $500 Newcastle Track. Barley in the north is still attracting decent prices for movement in to the north, with the major obstacle at the moment finding homes for October movement. Ex farm in northern NSW is around $240 XF, while Moree north sites being priced at the same as Brisbane line sites, today at $268 track. Wheat in the north of NSW is also attracting a premium, with site prices around $295-$300 for APW multigrades. SFW1 ex farm contracts are also still attractive, around $255+ Northern NSW.