Outside influences drive the Australian market

Well hasn’t it been an interesting month. I was sure that if the sorghum crop started to fail, this alone would put a floor in the East Coast market. Well how wrong have I been, with crop reports saying total sorghum tonnage could be as low as 1-1.1 million tonnes, yet all we have been seeing is the cereal price soften to add further insult. We also have reports from ABARE informing us that the national crop was the smallest for more than 20 years. USDA reports that the current wheat crop sown by the American farmer is the smallest since 1909 at 31.24 million acres and the Argentinean crop is becoming water logged. You would think  just these items alone would cause some concern.

But as I have learnt this month, it’s more about outside influences, namely the Chinese anti-dumping dispute and the lack of a Saudi tender, that have really affected the market more than the consistent dry conditions on the Eastern Australia seaboard. China and Saudi Arabia are large buyers of WA grain and as they have not currently purchased any new crop, huge pressure has been placed on the Western Australian barley market coming off near record production. It is currently trading at $280 Kwinana Port Zone, down from $298 a month ago. This in turn has placed pressure on the domestic East Coast feed market which has followed through  into the domestic wheat market. Other factors include the 45c/bu fall of futures in Chicago over the last month, the good condition of the French wheat crop, good corn and soybean stocks and a feeling that the trader could be looking further down the line instead of the here and now.

But hold the phone people if the futures price continues to fall and our dollar remains soft. The West Coast exporters will start to come into their own, interest could arise from the Philippines, Indonesia or other south east Asian countries that will fill demand.  This could tighten up availability and access of grain for the East Coast consumers and then the grain game is back on.