23/04/2018

The AUD/USD 0.7696

Futures

Futures/International market highlights

Bizarrely enough for all the bluster about trade wars and weather influencing futures in the last month, futures are pretty much back to where they started. The charts attached show a different picture to the benign future price table above. The next monthly USDA report is due out tonight.

Wheat                US wheat futures have been oscillating between large world stocks and US weather worries, exacerbated by spec’s switching positions.

Wheat

Coarse Grains   US corn futures have had a pretty subdued run compared with wheat, soys and cotton in the last month. Interestingly barley values in Europe have been trading at a premium to wheat values lately and expecting a swing back into greater barley planting this year, much like we are seeing in certain parts of Australia.

Soybeans           Have been pushed around with the tariff talk.

Soybean

Canola

Cotton                What a wild ride in the last week with China announcing cotton was on it’s list for a 25% tariff on US cotton only for the market to decide it wouldn’t happen for a while (if it does in fact come to reality) and in any case it won’t affect old crop, which is pretty much sold out anyway. It is good and bad for Australia if it comes to fruition – good as China will come knocking on our door for supplies which should lift basis, but bad as the US will take all our other market destinations and we’ll be beholden to Chinese buyers. Indeed, Chinese merchants have been actively trying to source Australian cotton in the last week or so, particularly for long dated cotton.

Cotton

Chickpeas           Pakistan harvest is underway and the crop appears to be coming up short pushing buying enquiry up for Australian product.

Domestic

A jump in feed grain values as end user demand kicks in. Durum and sorghum vessels due to start loading in the next week out of Newcastle.

 Durum               The last of the currently booked export vessels due to commence loading next week. A slight pickup in track numbers today but purchasing has been pretty lacklustre as majority of the shipment was covered some time ago. A pickup in feed values has seen a flow of old crop stock filling those markets in the last couple of weeks as growers who have held stock back in the hope of better values filter into better local market values.

 Wheat               After dropping off due to good rain on the Downs a month or so ago, prices have come roaring back as feed grain values pickup everywhere. Delivered Downs prices are now bid today $345 with little being offered, $10 higher than a month ago. As the dry weather kicks in demand in southern NSW, the stock coming from there now has competition. There is demand for supplies coming from the Riverina/nth Vic into the NSW southern tablelands, Liverpool Plains and the Downs. LPP values have jumped to $322 from $312 in the last two weeks.

Barley                 Has jumped $20 into the LPP and northern tablelands, to around $330 delivered LPP. At an $8 premium over wheat end users are talking to nutritionists and looking to change the ration mix to take wheat instead of barley. Delivered Downs barley is about $10 under wheat at the moment but expect that gap to narrow as stock is hard to come by.

Sorghum            Bulk vessel out of Newcastle due to commence loading next week. Prices circa $340 Newcastle and trading $305-310 ex-farm LPP and CW. Once the rug is pulled from demand there it will be interesting to see what happens but track prices will be more affected than delivered as expecting on going containerised bus. to take up the balance of the crop and some local demand still around. Estimate 80% of the current crop is now harvested and sold. Delivered Downs prices have picked up as well with the pull from wheat and barley values going up as well as export interest. There is longer dated buying in that zone so expect possibly more export activity is scheduled there as well as sorghum keeping pace with barley and wheat values.

 Canola               Although futures have had a good run lately, we are so far not seeing much reflection in old crop stock values. New crop now ind. $530 track. The Canadians talking another big plant there, which could challenge prices but we don’t have rain in the forecast here to get a crop in the ground yet either.

Chickpeas          Prices have jumped back up to where they were a month ago into the $580’2 upcountry packer on the back of demand from Pakistan.

Faba Beans       Supported by a generally lively feed market, values indicatively $305xf LPP, $295-300 Narrabri west areas.

Cottonseed        Ginners and traders swamped with feed market enquires, and why not, can’t go past the cattle feed value of $260 x-gin for cottonseed when barley and wheat are a good $40 over this.

Cotton               What a wild ride for cotton values in the last week but still well supported with basis circa 700 on May and cash prices $580+ for 2018 and $560 for 2019. Chinese buyers are particularly strong in ’19 and 20, which is interesting with all the tariff trade talk in the last week.