Summary
• Australian sowing season complete. Excellent soil moisture producing best start in a long-time.
• El Nino? Still uncertain.
• Weather good to great.
• Bearish Wheat Market:
- Europe/Russia good wheat crops
- US harvest underway but demand slow
• CBOT WHT FUT dropped 0.70 over late June/Early July
• Current crop market indicators for Melb/Geelong:
- Wheat, Old Crop @ $277
- Wheat, New Crop @ $280
- Barley, Old Crop @ $250
- Barley, New Crop @ $248
• Highest rainfall since 2011/12.
• GV market is seeing a price par to WD & Riverina – demand is consistent – trade flows have changed. Growers in West Vic holding grain.
Domestic
• Q3/Q4 consumers have stepped in. Trade counterparties in the market trading old and new crop grain. Domestic consumers are getting covered or are covered.
• Australian price has large spread (basis) to world pricing.
• Buy cash grain if required:
- Some growers selling but want higher value
- Barley wheat spread (currently at $23/mt)
International
• World wheat bearish stock.
• Europe/Russian crops looking very good (Russia 20% harvested):
- EU looks to be top wheat exporter this year
- Argentina sowing more wheat this year (more supply)
• US corn 75% sown (good July pollination)
• Australia looking at a 24-25 million tonne wheat crop.
Watch Out For
• Conditions look great but dry in north:
- Local suppliers still have high price expectations
- Inverse in the market, Vic $30 too expensive vs WA & SA
- Export business still there on West Coast/SA. Vessels on East being cancelled.
• Domestic (Eastern Seaboard) users paying under export parity from the trade and some growers.
• Supply Q3/Q4 2014 – wheat looks to be ok.
• Old crop grain prices retracted, but are firm today.
• Low price market. Will they remain low? Exercise caution?
• 4-5 months till harvest
- If supply from Qld/Nth NSW falls supply will come from large crops in southern NSW
- Soy Meal 2015 values competitive (Aus Dollar helping)
