Misc Archives | Grain Brokers Australia

A new year starts with the same old stories …  

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A new year starts with the same old stories …

The New Year celebrations are now behind us and 2018 has been happily farewelled by many growers across the globe, particularly by a vast majority of eastern Australia’s winter crop farmers. Nonetheless, many of the same old issues continue to generate volatility on both global futures and domestic grain markets right across the globe.

World wheat values remain supported as rumours of supply tightness, and possible export restrictions, in Russia linger. Fresh news is limited as most of the Black Sea region only return to work from holidays this week. Russia has been dominating global wheat trade so far this marketing year but US hard red winter wheat is now priced to buy demand, trading last week at a US$10 discount to Russian export values. That said, the trade is waiting on a sustained improvement in US export sales before slipping into their buying shoes.

The market did rally late last week on the news that Algeria had rejected a cargo of Argentine wheat on the grounds that it was below contractual quality standards. Argentina exported around 900,000 metric tonnes of wheat to Algeria last year.  The north African country is Argentina’s second-biggest wheat client. Argentine authorities are confident that the quality issue is an isolated case.

The trade stand-off between China and the United States (US) appears no closer to a resolution despite mutterings from the White House, and tweets from The Don himself, suggesting all is on track. There are also unconfirmed rumours of more purchases of US soybeans by the Chinese government owned Sinograin. One day the soybean market is up on speculation of a resolution and sales. The next day the market falls as profit takers jump in to take risk off the table.

A US trade delegation is due in Beijing this week. Some reports say it is to continue the discussions (meaning progress has been slow) and others say it is to finalise an agreement (maybe the Don’s “going well” tweets are accurate). Nevertheless, one fly in the ointment could well be President Xi Jinping’s recently enunciated position on the reunification of Taiwan. Me thinks this stalemate may well continue for some time yet.

And now we have another game in play in the US. In simple terms, Trump wants to build a wall between the US and Mexico, but the Democrats don’t agree with his border control policy. The impasse has led to the shutdown of non-essential government services across the country. More than 800,000 federal government workers have been without pay since the 22nd December.

One such non-essential agency is the United States Department of Agriculture (USDA). The lapse in funding means that key USDA reports, due for release this week, will not be published. Reports such as the World Agricultural Supply and Demand Estimates (WASDE) along with US production and US stock reports will be delayed until at least one week after funding has been restored. With the Democrats now in control of the House of Representatives it could be a long wait!

The WASDE report is a monthly publication that includes production and trade forecasts for the US and world wheat, rice, coarse grains (corn, barley, sorghum, and oats), oilseeds (soybeans, rapeseed, palm), and cotton. For many traders and consumers across the globe, this report is an essential component of their market analysis and strategy development.

The January WASDE report is particularly important as it will likely contain the final production numbers for the US corn and soybeans crops as well as updating the South American summer crop production estimates. There are growing trade expectations of a lower final US corn yield compared to the December WASDE estimate.

The December weather concerns across many regions of Brazil (extremely dry) and Argentina (exceptionally wet) have continued into the new year putting downward pressure on both soybean and corn production forecasts in both countries. The dry is also having a detrimental impact on summer crop production in neighbouring Mercosur trade pact member countries, Uruguay and Paraguay.

Another victim of the partial US government shutdown has been the trade aid payments to US farmers. The payments are designed to help (and appease) farmers affected by the US trade war with China. A second round of payments was authorised just prior to Christmas but they have not been paid. This comes at a time when US farmers are securing finance for their next summer crop program and it may reduce the amount of money banks are prepared to lend farmers.

Harvest here in Australia is now winding down with pockets in the Western Districts of Victoria, small areas of the lower south-east and lower Eyre Peninsula regions in South Australia and some late Albany and Kwinana crops still to be harvested. Favourable weather will see most of this knocked over in the next week or so.

Receivals in Western Australia have now exceeded 16 million metric tonnes (MMT). Wheat makes up around 9.3MMT of this total, barley around 4.7MMT and canola just over 1.4MMT. In South Australia total bulk handler receivals are approaching 4MMT and are expected to surpass that number by the time final harvest deliveries have been received.

Major bulk handler receivals in the eastern states total around 2MMT and probably constitute around 35% of the total crop. The balance is either sitting in private stores, on-farm or has already been received directly into consumer storage facilities across Queensland, New South Wales and Victoria.

Experience says that no two years are ever the same in agriculture. New global supply and demand challenges will emerge in 2019 as old ones are resolved. But for now, political interference in the jurisdictions of Presidents XI, Trump and Putin continue to dominate grain market news wires.

As legendary American folk rock duo Simon and Garfunkel wrote and sang many years ago: It’s the same old story!

Peter McMeekin is a consultant to Grain Brokers Australia. Call 1300 946 544 to discuss your grain mark

Grain Brokers grain in hand

Grower Events

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Grower Events – March 2018

Senior Grain Brokers from our team along with and expert guest speakers will be touring WA from 19 – 23 March and providing Growers with information regarding:

  • Season Overview 2017/18
  • Marketing
  • International Grain Markets
  • Weather Risk Management
  • Lime
  • Safe Farming

These events are a great opportunity for Growers to ask questions and network with our team and other growers.
Refreshments and food will be provided and entry is free.

 REGISTER

If you would like to attend any of the events below please email or phone our friendly team:
bids@grainbrokers.com.au  or call PH (08) 9367 2866

TOWNEVENT LOCATIONDATEDAYTIME
YerecoinYerecoin Hall19 MarchMonday 2:30pm - 5:30pm
YealeringYealering Bowling Club20 MarchTuesday 9:45am - 12:15pm
DumbleyungGraham Shearing Shed20 MarchTuesday4:45pm - 7:30pm
BroomehillBroomehill Golf Club21 MarchWednesday9:45am - 12:15pm
South StirlingSouth Stirling Hall21 MarchWednesday4:45pm - 7:30pm
RavensthorpeLandmark (Shed)22 MarchThursday9:45am - 12:15pm
ScaddanScaddan Golf Course22 MarchThursday5pm - 7:30pm
Moorine RockMoorine Rock Tennis Club23 MarchFriday11am - 1:30pm

Download the Grower Events WA

Win 2 nights at Tribe Hotel, Perth

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Grain Brokers Australia are giving away two nights’ accommodation for two people at the new brand of hotel, TRIBE in West Perth.

Tribe Perth is characterised by contemporary, innovative and boutique design, along with its prominent position next to Kings Park just minutes from the city’s restaurants, bars and tourist attractions.

The hotel comes with free broadband, smart TVs, a digital reading collection, and free streaming movies on demand. The hotel will also include large common areas that reflect homely living rooms and a café and bar, TRIBE Foods. All rooms come with complimentary unlimited WiFi, Nespresso pod coffee machines, T2 Tea and bottled water.

TO ENTER

For those not receiving our Daily Pricing Summary, to enter simply visit us at either Mingenew, Dowerin or Newdegate Field Days and sign up for your free month trial.

If you’re a current customer or on a free trial of our Daily Pricing Summary you will automatically go in the draw to win – no need to do anything.

Click here for the Terms and Conditions.

Tim Byass, Grain Brokers Australia

Trump remains popular among US farmers

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Last week at the Australian Grains Industry Conference (AGIC) WA Grains Business Development Manager, Tim Byass met with Sara Wyant, veteran US agricultural journalist and editor of Agri-Pulse.

Ms Wyant said Trump remains popular among US farmers and that agriculture was enjoying near-unprecedented access to the president with strong influence in terms of key issues such as trade policy.

“The map of where his voters sit has been critical, his position on trade policy has made agricultural people nervous, but you see with the North American Free Trade Agreement (NAFTA), he nearly threw it out but the opinions of the farmers, those that elected him, were considered.”

Listen to the ABC radio interviews below by Clint Jasper on Trump talking the type of talk farmers want to hear and US trade restrictions.

Tim Byass, Grain Brokers Australia

Tim Byass, WA Grains Business Development Manager comments on Trump policies

Image of hand using phone in grain field | Grain Brokers

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.

USDA WASDE Summary 12/12/16

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The latest USDA Report for December was released on Friday, and globally the USDA Report was overwhelmingly bearish across all commodities. However, the US ending stocks of the key commodities were kept unchanged despite expectations that they might have increased, which combined with fund buying led to a jump in most futures. Globally, wheat jumped a solid 6.5 million mt of which 4.7 million mt was in Australia at 33 million mt. Corn production was up in several countries but lower than expected US stocks supported prices overnight. Beans were also up solidly on the production side but it was almost matched by a similar increase in demand.  Overall, the report was more of the same with big crops so the market will likely digest it pretty quickly.

WHEAT           BEARISH

  • World production UP 5 million mt – key changes:
    • Australia UP 7 million mt to 33 million mt.
    • China UP 85 million mt.
    • EU UP 4 million mt.
    • Brazil UP 36 million mt.
  • Consumption UP 2 million mt (mainly in Australia, Russia and China).
  • Stock levels UP 9 million mt and stocks to use ratio UP 24 points to 34.08%.

BARLEY           SLIGHTLY BEARISH

  • World production UP 7 million mt – most in Australia and Canada.
  • World demand UP 3 million mt.
  • World stocks UP 28 million mt with stocks to use ratio UP 16 points to 15.85%.

CORN              BEARISH

  • World production UP 2 million mt – with key changes:
    • China UP 55 million mt.
    • Brazil UP 3 million mt.
    • Russia UP 1 million mt.
    • Canada UP 7 million mt.
    • Indonesia UP 6 million mt.
    • EU UP42 million mt.
  • World demand UP 7 million mt – mainly in the China and Indonesia.
  • World stocks UP 4 million mt – mainly in China and Brazil.
  • World stocks-to-use ratio UP by a 30 points to 21.65%.

SOYBEANS      BEARISH

  • World production UP 9 million mt – most of it in India and Canada.
  • World demand UP 9 million mt.
  • World stocks UP by a massive 1.3 million mt (in Argentina and India).
  • World stocks-to-use ratio UP 27 points to 28.85%.
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