International

Wheat took a back seat to the row crops overnight with beans leading Ags higher. Interestingly, export sales of soybeans for new crop are as low as they have been in recent times, so talk that China is sniffing around suggests values are encouraging a demand response. Some additional wheat market talk about low test weight in SRW is fuelling volatility in relative value spreads such as HRW vs SRW and SRW calendar spreads. 

USDA said wheat global ending stocks excluding China are estimated to be the tightest level since 2007/08. While still almost 30Mt above the 2007/08 ending stocks number, the northern hemisphere balance sheets are still being determined. USDA pegged Russian production at 83Mt but there remains potential for further cuts. On the flip side, USDA estimated US production at just over 51Mt which is 2.8Mt above the 5-year average. Big crops often get bigger. It’s a similar story in Canada where spring crops are off to a good start. Sask Ag rated their spring wheat crop condition at 87pc good to excellent, slightly lower than the previous week but the highest rated crop since 2016. 

USDA predicted wheat imports by South Korea, Philippines, Indonesia and Vietnam combined falling to 37.3Mt from 41.3Mt. Except for Vietnam, the other Asian countries will be lowering their wheat ending stocks because of the lower imports. Corn imports for the same countries are only expected to fall by 650kmt. 

India has indicated it has no plans to reduce the 40pc import tax on imported wheat purchases. 

Ukraine’s wheat exports in the marketing year 2024-25 will fall to 13Mt, the lowest figure in the last 10 years according to USDA. The conjecture around this number centres around Crimea and the occupied territories and how much Ukraine production will exit via Romania or through the Russian supply chain. 

Russia’s southern Rostov region has declared an emergency due to the ongoing drought. Rostov is the number 1 oblast for wheat production. The significance of declaring an emergency centres around the ability for people to claim insurance. The GFS model has temps exceeding 38°C over the next 10 days. 

The US western corn belt is expected to receive 3-6 inches over the next 10 days according to the GFS model. The USDA currently rates the US corn crop as 74pc good to excellent. Corn futures have been supported by the prediction of a ridge in the central corn belt with temps expected to be 4-8°F above normal. 

Australia

Much of the rain in South Australia overnight unfortunately fell outside of the grain growing areas. Coonalpyn received 13mm and the Eyre Peninsula from 3-10mm. Similar falls in the Vic Mallee were short of the soaking needed to add confidence to production. Another 15-25mm is forecast for the Wimmera/Mallee and southern SA over the next several days. 

Clear Grain Exchange in recent days has traded mainly in WA and mainly barley. 

FIS Kwinana traded at A$362/t for MAX1 while feed barley has been trading at $348/t. 

New crop wheat values have been easing back in line with Chicago, but volumes have been thin at best. Given the fundamental outlook for both the Black Sea region, our main competitor, and the US and it is interesting that the domestic trade has mirrored the Chicago move.