Currency Archives | Grain Brokers Australia

Weekly Strategy Update 09/11/16

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Wheat – Recommend growers establish minimum tonnes they need to sell as required for
cash flow accompanying sales of other grains. Understanding quality is a concern, where
possible make sales or fill contracts using APW. ASW and AGP1 under-priced at current
discounts and suggest holding these over better grades. Hard wheat is extremely rare, if you
have hard wheat you have the upper hand in negotiations.
Barley – We feel feed barley can still be priced sharper than current values, at $190/t we are
the cheapest option for feed barley out there, be prepared to hold for up to six months and
target $200/t, protect downside at $185/190. Current malt premiums are strong considering
the size of the crop and quality of receivals to date. Suggest a sell at current premiums.
Canola – Supply and demand continues to be tight but current values present exceptional
value at harvest for cash. High oil values could possibly erode grower values at some point
as end user markets are generally capped at 45% max oil. Suggest make sale off the header.
Oats – Values have rallied $15-20 in the last 6 weeks and look to have flattened out. There is
a couple of buyers chasing right now so suggest selling off the header once quality is known
and contracts are filled accordingly.

Grain being harvested | Grain Brokers

Brexit explained

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Last Friday we saw one of the biggest days in financial markets of all time with the surprise announcement that the UK have voted to exit the European Union. Although this won’t take effect for at least 2 years, the impact of the referendum was instant with foreign exchange markets reacting strongly and global stock markets seeing daily falls greater than during the Global Financial Crisis.

If we were to show how major global currencies faired in comparison to one another in the hours immediately following the announcement, then this basically sums it up; GBP < Euro < RUB < AUD < CAD < USD < JPY. So unexpected was this decision by the Brits to the market that the pound Stirling hit 1 year highs and 10 year lows against the USD within a couple of hours either side of the announcement. The stronger USD against most other currencies did see US export derived currencies including corn, wheat and soybeans weaken immediately following the announcement.

The weaker GBP and Euro could have a negative impact on our competiveness into export markets, however Aussie wheat hasn’t been competitive into these markets anyway due to the large sales of German and French wheat into Egypt and Middle East of late. On the positive, Aussie wheat is being priced more favourably into Indonesian markets last week than previously before that so hopefully not all is lost.

Nic Sewell

Woman in grain field on a call | Grain Brokers

Looking for signals

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Wheat pricing this season has been frustrating for growers holding onto grain well after harvest in anticipation of better pricing opportunities. This approach was justifiable if you are to look at the trend of the previous few seasons with prices at times during post-harvest periods in 13/14 and 14/15 above $300/t in most zones and rewarding growers for that approach.

Notwithstanding the dominating issue, that markets have been impacted heavily by an overburden in global supply and a lack of demand to drive buyer accumulation. We have seen the influence of a number of other factors shaping our local price over this season Understanding what is happening and how pricing is being impacted is a big part of identifying opportunities to make sales in the environment we now find ourselves in.

With a lot of grain held over after harvest buyers are making sure not to bid the market up unless necessary, remembering a lot of accumulation and trading companies have struggled to maintain profitability over previous seasons. Volatility and large variations in price have been uncommon so selling into small rallies has been key. Don’t sit out in hope of large scale movements in price.  The lower cost of shipping slots is also a contributing factor and it has become much cheaper for buyers to walk away from a commitment to ship grain. Which they will do if purchasing those tonnes will be a greater loss making exercise than simply exiting their commitment to ship. This makes it harder to identify short term demand and gives rise to the need for greater information about the rolling and exiting of shipping slots by buyers. This adds further weight to the previous point, don’t expect buyers to get caught out with shipping shorts and push the market up to buy tonnes.  Quality is another big factor and has been a big driver of a shift in pricing between port zones. For much of the 14/15 season Geraldton traded at a premium to Kwinana, Albany and Esperance. Last week Albany traded at a $5 premium to Geraldton, so identifying these types of changes is key to extracting market value and executing sales. We are working hard to identify opportunities across all commodities if you wish to discuss further please get in touch with one of our team.

Weekly Report 9/5/16

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BEANS/CANOLA

July-16 Chicago soybean futures made strong gains as the market was boosted by further confirmation of crop damage in Argentina. Settling at 1034.6 US¢/bu.

Chart 160509

Canola futures followed soybeans closing CA$510.5/t for the week.

Chart 160509 WR1

The fallout from flooding in Argentina continues to buoy soybean markets. Soybean prices gained following further confirmation of crop losses in Argentina and the US reported strong soybean export sales for the time of year.

An estimated 0.79Mha of Argentine soybeans have been lost due to the heavy rain in April according to the Buenos Aries Grain Exchange (BAGE). On top of earlier losses of 0.75Mha caused by previous weather issues, over 7% of the planted area has now been lost. Though BAGE maintained its output forecast at 56Mt, the latest report did not rule out further adjustments, with quality and harvest concerns affecting a further 0.7Mha.

Drier weather last week allowed the Argentine soybean harvest to progress, with 42% of the area now harvested, up from 24% a week ago. However this is still behind the 69% complete a year ago (BAGE)

Canadian canola stocks were reported last week at 7.49 million mt, down 10% year on year, reflecting a smaller crop and positive exports. Planting of the 2016 crop is ahead of average in key provinces.

Chart 160509 WR2

Australian canola production could reach 3.3Mt in 2016/17. This would be 10% higher than the 2015/16 crop.

Chart 160509 WR3

To read the full report click the below link

Weekly Report 16_05_09

Weekly Report 26/4/16

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WHEAT

Wheat futures rallied last week, as funds extended technical short-covering and reports of firmer export demand helped futures to climb.

CBOT March 16 futures finished the week at 457 US¢/bu down 16.2 US¢/bu from the previous week.

After a period of dryness which provided support to US wheat futures, rains over the weekend and with more on the near horizon, has put pressure on prices.

The USDA released the first weekly crop progress report for 2016 – the report was bearish for wheat with 59% of US winter wheat crops were rated as in a good or excellent condition, well above last year’s 44% rating. The rating is the highest for this stage in the season since 2010, when 65% of crops were classed as being in a good/excellent condition. US spring wheat is now at 13% planted.

Early forecasts for the 2016 Russian and Ukrainian wheat crops have been released restating concerns for Black Sea production next season. However, these concerns alone do not appear to be large enough to be to have any real effect on pricing.

The Ukrainian state weather centre has reduced the crop forecast by 35% from 2015/16 at 17 million mt. This forecast is based on losing approx. 1 million ha of the winter wheat planted area due to insufficient snow cover over. UkrAgroConsult however are forecasting slightly higher production at 18.5 million mt due to favourable spring weather, this is still far below this season’s crop of 26.5 million mt

Russia has forecast their crop at 57 million mt from 62 million mt this season, a cold weather forecast is expected for April/May, and as a result some growers are expected to reduce the spring wheat area they sow.

US wheat was the cheapest in the latest Iraq tender at US$238/mt CNF (Aussie wheat offered at US$249.75/mt CNF and Canadian at higher levels still!).

To read the full report click the below link

Weekly Report 16_04_26

Weekly Report 24/3/16

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CORN/BARLEY

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

BEANS/CANOLA

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 19/3/16

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WHEAT

Wheat futures closed lower this week as the market shifted concerns from crop production weather concerns in the short term to burdensome stock levels and high prices relative to other competing nations.

CBOT March 16 futures finished the week at 462US¢/bu down 14.6 US¢/bu from the previous week. Prices fell below the 45 day moving average of US$4.69.

The market was pushed back late last week, as the weather forecasts show much less risk of freeze damage in the HRW area and showers forecasted in the back end of the 10 day forecast.

Recent winter wheat crop conditions released by the USDA show 56% of the crop is in good-to-excellent (G/E) shape in Kansas wheat and is jointing earlier than usual, with 6% of the crop in that phase, versus the 5-year average of 2%. Texas wheat conditions gained 4 points on the week, now sitting at 46% G/E. The Texan improvement was a surprise as the moisture remains a concern there and with the early move out of dormancy, farmers and traders are closely watching temperature levels for the next 2 weeks or so in the Southern Plains.

Drought has resumed in the main winter grain growing regions of Morocco. Field reports have seemingly confirmed the negative impact of severe drought on wheat crops, which could mean further export opportunities for the UK.

Although German crops have come through the winter in good condition according to the German association of farm cooperatives, wheat production will fall 1.7% to 26.10 million mt. the reduced levels is seen yields ease back from the very high levels last year.

Canadian wheat stocks will fall to their lowest levels since the 1950’s.The AAFC, Canadian Farm Ministry cut their wheat July 2017 domestic stock levels by 400,000t to 3.70 million mt. The downgrade reflected weaker wheat sowing expectations in the key Prairies region, as farmers switch area to alternative crops with greater returns.

EU soft wheat export forecasts for 2015/16 were revised up by Strategie Grains, the increase driven mainly by higher exports from Poland. Exports of soft wheat are now

To read the full report click the below link

Weekly Report 16_03_19

Weekly Report 12/3/16

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BEANS/CANOLA

Chicago May-16 soybean rallied and settled at 889.2 US¢/bu on Friday, the sharp rise owing to strong soybean oil exports.

Chart 160316 WR1

Canola followed soybean over the week with ICE Canola March 16 finishing at CA$465.3 up CA$13/t for the week.

Chart 160316 WR2

Last week’s WASDE report saw US ending stocks at 12.5 million mt a 272,000t increase, on account of lower domestic demand. However on a global scale ending stocks were reduced to 79 million mt (still a record.)

The strength of the Brazilian real, as well as strong demand for US soybeans helped to support US soybean prices last week. On Friday, the Brazilian real rose to an over six month high against the dollar, reducing the relative competitiveness of Brazilian exports. A planned trucking strike in Brazil failed to materialize into anything meaningful. There were no reports of any disruptions. Another supporting factor has been delays faced by soybean shipments in Brazil, with ship line-ups of up to 57 days reported at southern Ports.

With Brazilian harvest now at 41% complete the Brazilian government crop supply agency Conab lifted its forecast for soybean production last week to a record 101.2Mt. The latest forecast is 250Kt higher than January’s forecast, on account of gains in area planted and yields.

Chart 160316 WR3

To read the full report please click the below link.

Weekly Report 16_03_12

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