Sailing through the market

After solid rainfalls across northern NSW over the past 3 weeks, one would not be blamed for becoming over-excited and pulling the ark out of the shed. Moisture has arrived at a good time and seen widespread planting of summer crops with cotton and sorghum emerging in near record time on the back of the rain and warm temperatures. With prices at good levels for both, and a green tinge prevalent, an uptick in mood is in the air.

Also in the air is winter crop harvest, with paddocks south of the QLD border starting to see headers. Some downward pressure did hit the global markets towards the end of last week, with CBOT declines spurred by the International Grains Council estimates lifting notably for China and smaller increases for the EU, Russia and Algeria. Also lurking in the background were funds and the trade looking to skirt the uncertainty by selling and locking-in their profits. However, Monday morning heralded numbers returning to the green, with futures recovering following news that US wheat has triumphed in the most recent GASC tender. This could add fuel to the fire of trade expectations that the US will step in as Russian exports start to taper-off. While currently still being pumped-out, somewhat surprisingly at this stage of the game, Russian exports may be nearing the end of the line on the back of a smaller crop.

Locally, track and delivered pricing also saw a pull-back following the rainfall and spreading news of sorghum going into the ground. We should see planting ramp-up on the Downs over the next week, which was too wet to get onto in some places following big falls and storm rain. Despite this, those who will harvest cereals surplus to seed and feed needs are still able to take advantage of local spot pricing which, when compared to averages, is still very strong.  With the staggered maturity of crops due to the variable season and late rain, there could be support for prices throughout harvest with the potential of avoiding large volumes flooding the market at once. Buyers will also start to look for coverage into the new year, which could pave the way for a portion of the crop seeing the inside of on-farm storages silos in search of further pricing opportunities. Following the opening theme however, one cannot ignore the number of vessels on the horizon coming from the West to service the East Coast demand.

Forecast indications seem to be leaning towards a drier November ahead, so keep an eye on the reverse camera as the ark may end up right back in the shed. Hopefully the recent rains have built enough moisture to tide-over summer crops for a while, yet with two harshly hot and dry summers still fresh in the memory, it is a wait and see as to what this one has in store.

 
Originally published 30 October, 2018