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Weekly Strategy Update 13/02/17

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Wheat –  With CBOT wheat futures up 18 cents for the week, (or A$7 per tonne) we would have expected to see cash prices up week on week. However, the buyers pulled basis back 15 cents with grower selling targets being triggered. This was most evident on Friday with futures up 11 cents yet the cash price only pushing up about $1 across the board. Good news for those with Grain95! We would now be less aggressive in cash sales for wheat (with the exception of ANW1) with Thursday nights USDA report quite bullish and plenty of carry in the wheat futures market meaning traders will want to keep remaining long. If needing to sell for cash flow or feeling undersold, we believe Grain95 is the better move than selling cash at this stage.

Feed barley –  Is starting to look a lot tighter now with a heatwave hitting the eastern states severely impacting sorghum. Also a very heavy shipping program of barley out of Australia into Saudi Arabia and China is quite bullish. Similar to wheat, traders will want to remain long barley and to do that will need to ramp up buying of feed barley for this to happen. Currency will have a big influence on markets in the short term. We can’t see massive downside in barley so perhaps holding is a strategy to consider now.

Malt Barley –  The marketing window for malt barley is closing by the week. Have price targets in place as this is the best way to achieve your targets. Chinese buying interest should return following Chinese New Year’s celebrations but at what level is hard to gauge. Premiums should be $20 above feed for most malt 1 varieties.

17/18 Canola –  With rain forecasted across much of the wheat-belt this week, growers will look to getting some cover. Canola is the only grain to consider at the moment as it is at a decile 5-6 compared to other commodities still at about a decile 1-2. Planting expected to be up considerably due to pricing and early moisture so we suggest to get some cash sales cover at current levels.

Markets Focus on Supply Fundamentals

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Last week we had the latest USDA report into US planted acres and grain stocks. While we expected some increases to US hectares for wheat and soybeans (we got them but not as big as expectations) it was corn that surprised the market. Corn has been well supported on the perception that it had lost out to bean hectares and not had the timing at the back end of the sowing window for the market to ‘buy hectares’.

US wheat was expecting a total area somewhere between 48 and 53million acres, USDA has reported 50.8m acres down on the 54.64m acre figure from last year but still above average area of 49.8m acres. US winter wheat harvest is adding to market pressure with growers in a selling mode despite a 7 year low in the wheat market.

Beans were expected to come in somewhere between 82 and 85.7million acres, the estimate came in at 83.7. Higher than predictions in March but lower than expected overall. With strong US sales continuing to be made US soy futures have been the light in the darkness for grains and oilseeds over recent sessions.

Corn was acres were expected to fall in a range between 92 and 94milliion acres instead the USDA gave the market an additional 500,000 hectares over the March estimate, coming in at 94.1m acres. Coupled with stocks that were again above the upside expectation, at 4.7billion bushels vs 4.6billion and corn was hit hard on Chicago futures markets last week.

With wheat and corn competing for a share of feed markets the big interruption to corn markets has sucked wheat into the downdraught somewhat. We are now looking globally at a two speed wheat market, with very cheap general purpose wheat eroding values. However we are seeing demand pick up for the lower, cheaper grades and this will eventually be the solution to oversupply though it will take some time. Holding onto physical old season wheat does not look to be a rewarding exercise from here on in. Grain Brokers can discuss a number of alternatives on this front so please contact one of our brokers at any time.

Countryman 17/5/16

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It is great to see such a positive start to the season for most across WA with solid early rains seeing the first fully wet plant in some time. Let’s hope this continues throughout the season and those in the north can pick up some solid rains to get them up and running with the rest of the state.

Old season pricing has been unusual to say the least over recent weeks with basis remaining strong in all port zones (and strengthening in Kwinana) despite futures strengthening and our dollar weakening against most other major currencies. This is contrary to the general belief that basis will weaken when international prices rise in Aussie dollars.

With shipping slots being pushed back towards the back half of the year and many being cancelled, it is hard to see how basis can continue at these levels with such a large wheat carryout expected. Further to this, we are seeing a strong inverse between old and new crop pricing in WA despite there still being considerable carry to the forward contracts in the Chicago, Kansas, Minneapolis and even Matif wheat exchanges. This should signal alarm bells that old season local wheat prices are overvalued or new season prices are undervalued. If you are holding a large proportion of your old season wheat, this is the type of scenario you will want to avoid.

Pricing out old season crop over the short term is the simplest strategy but for more information on the above or to see how Grain Brokers can add value to your business, please don’t hesitate to call one of our team.

Weekly Report 24/3/16

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Corn prices have traded above the crucial support of US$3.60. March 16 CBOT corn futures settled the week at US$3.684 per bushel.

Chart 160324 WR1

Argentine maize production is forecast to hit record highs this season, according to the latest estimates from the Argentine government on Wednesday. At 37 million mt, the latest estimate is well above the current USDA forecast of 27million mt and much more than the Buenos Aires Grain Exchange’s estimate of 25 million mt. The government have put the step change in maize production expectations down to a surge in late maize planting

China, which has been a key market for barley over the past two years, continues to display a trend of ever decreasing grain imports. China imported 261,000 mt of barley in February, the lowest monthly barley imports in 15 months.

Chart 160324 WR2


Chicago May-16 soybean rallied and settled at 905.2 US¢/bu on Thursday, the sharp rise owing to stronger trade data.

Chart 160324 WR3

Canola followed the oilseed market and ICE Canola March 16 finishing at CA$470 up CA$4.52/t for the week.

Chart 160324 WR4

Argentine soyabean output was pegged at 60.9 million mt by its government in the first official estimates of the season. This is above both the latest estimates from the Buenos Aries Grain Exchange at 58 million mt and USDA at 58.5 million mt. Harvesting has just begun in the country, with 1% cut by 23 March.

Chinese imports of soyabeans are running ahead of current forecasts this season, with further growth predicted for 2016/17. So far this season (Oct-Feb), China has imported 32.2 million mt, up 8% on the same period last season and ahead of the 5% growth rate the USDA expects in 2015/16 as a whole. Imports are predicted to grow by a further 3Mt in 2016/17 by US attachés – read more here. Higher Chinese demand could help soak up some of the global record crops expected this season.

Chart 160324 WR5

to read the full report click the below link.

Weekly Report 16_03_24

Weekly Report 30/10/15

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Wheat CBOT Dec 15 futures made positive gains for the week, and finished at

515USc/bu. up 24.4USc/bu week on week.

US wheat prices traded higher this week as better than expected export sales came amid forecasts for more rain in the winter wheat areas, and as fund participants sparked a round of buying.

The USDA has lowered Australia wheat crop estimate to 24 million tons

We continue to monitor the northern hemisphere crop progress, as the market is very sensitive to any developing production concerns.

The US winter wheat is currently at 83% planted up 7% from last week. The first condition rating was also released, the good/excellent score was 47%. This is the lowest rating in 3 years and well below analysts’ expectation for 55%.

Weather 151110

The extreme weather map shows that large areas of Italy and eastern Europe experienced abundant rains. In Eastern Europe, the excessive rainfall hampered the sowing of winter crops.

In Poland, dry conditions have persisted since summer. The winter crops sown in September therefore germinated under unfavourable conditions which further worsened due to the low temperatures that occurred in October. Similar problems occurred in the Baltic countries, especially Lithuania. In Ukraine and Russia. Reports out of the Black Sea are suggesting 50% of the winter wheat is rated in poor condition. This story is unlikely to play out until the northern hemisphere spring.

The Russian wheat plantings pace is at the 5yr average, however in Ukraine continues to lag and is about 12 to 17 days behind where it should be and is at 82% complete.

Local pricing has followed the offshore market higher this week making gains of $ 6-9 across all zones. However the full extent of the gain has not been passed along, as basis continue to slide.


To read the full report follow the below link.

Weekly Report 15_10_30

BoM – Weekly Tropical Climate Note

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Issued 14 July 2015

Unprecedented cyclone activity in central Pacific Ocean

The central Pacific Ocean has seen unprecedented tropical cyclone activity this July. Based on data compiled by the National Hurricane Centre, in the USA, records for earliest storm formation during the northern cyclone season have been broken. During the first half of this month, three central Pacific Ocean cyclones formed in the space of three days. This is the first time this many cyclones have formed in any calendar month since systematic cyclone tracking commenced in 1949. The first of these cyclones, Ela, formed in the central Pacific basin on July 9 beating the previous earliest formation date of July 17 (TC Waliin 2014). There has also been tropical cyclone activity in the eastern and western regions of the Pacific Ocean. Peak activity occurred on July 12 when there were six tropical cyclones across the Pacific Basin.

Typhoon Chan-hom (Falcon) made landfall on the east coast of mainland China on July 11, generating hurricane–force winds and high seas. In its wake, is typhoon Nangka. This typhoon has been moving in a westerly direction, but is expected to make a turn to the north and potentially impact southern Japan as a strong typhoon in the next few days. Other systems over the Pacific Ocean are not expected to have a significant impact on land areas in the short-term.

Madden–Julian Oscillation weakens

The Madden–Julian Oscillation (MJO), which was at near–record strength last week, weakened towards more moderate values during its eastwards progression over the western Pacific Ocean. As the MJO moved out of the western Pacific Ocean, convection and associated rainfall reduced significantly over the Maritime Continent and near the Date Line, and increased over the eastern Pacific Ocean.

Most international models accurately predicted the rapid weakening of the MJO signal over the last week. The general forecast trend is for the signal to reduce further and possibly become indiscernible in about a week. Even if the MJO signal reduces to that extent, it usually has no significant impact on rainfall over northern Australia when it approaches the central Pacific Ocean at this time of year. The Maritime Continent, South-East Asia and India often experience suppressed convection and rainfall in this weakened MJO scenario while the tropical northeastern Pacific Ocean often sees enhanced activity.

See the Bureau’s MJO Monitoring for current MJO information.

Tropical Pacific Ocean warms as El Niño strengthens

The Tropical Pacific Ocean has continued to warm in recent weeks, as El Niño steadily strengthens. Recent tropical cyclone activity and a near–record strength Madden–Julian Oscillation has likely contributed to the most recent warming.

All international climate models surveyed by the Bureau indicate El Niño is likely to persist at least through to the end of the year. The latest weekly NINO3.4 sea surface temperature anomaly is +1.5°C and the 30–day SOI value to 12 July is −16.2

See the Bureau of Meteorology’s ENSO Wrap-Up for official El Niño information.

Next update expected by 21 July 2015 | Product Code IDCKGEW000

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