A quieter week at the Chiropractors Clinic

By Tyson Hosie

1st June, 2022 

 

Of late, it would seem, a market-moving event was a daily occurrence, with both domestic and international commodity values reacting accordingly. Anyone trying to keep abreast of the recent volatility would be well advised to have their local chiropractor on speed-dial, with the whipsawing settlements testing even the most seasoned of spines.

Two of the greatest influences in any agricultural market are government influence and the weather, both of which have been dominating headlines here and abroad for much of this past year and are set to continue well into season 2022/23.

This past week has been a somewhat slower news week though, with an almost pleasing lack of “big moments” to move the market affording participants the chance to focus on some themes closer to home, such as our own ongoing weather concerns or the continuing struggle being faced in the logistics department.

Eastern Europe remains as the dominant influencer of international market movements and will continue to be until a resolution can be arrived at. The recent promise of Black Sea grain and oilseed exports resuming in the coming weeks was met with heavy scepticism from the trade, as the crisis in that region sadly rolls into its fourth month.

This well-documented situation has seen other origins forced to react, with India recently banning wheat exports in a bid to manage domestic food inflation on the back of reduced Black Sea supply, as well as Indonesia, albeit briefly, halting cooking oil exports on the back of the skyrocketing oilseed complex.

These few examples of government influence over trade flows have exacerbated the other primary driver of markets – the weather – and its obvious impact on current and future availability of product.

The market remains on high alert in terms of production, as without the usual voluminous involvement of the Black Sea region, the balance of the globe’s suppliers can ill-afford a misstep. The mere whisper of a downward adjustment in figures amongst the exporters is a red rag for the bulls, whilst the suggestion of an improvement is enough to trigger a retracement.

The market has digested much of the latest global production figures and seems to have found a fine balance. Roughly a third of the US wheat crop is considered in good-to-excellent shape, whilst around three-quarters of the French crop is reportedly in the same condition, although recent dry weather has trimmed forecasts somewhat.

Australia and Canada are grappling with wet planting conditions, which underpins the canola and wheat markets on the threat of underperformance; however, it is tempered by the promise of a strong result, should the crop get a late start into favourable soil moisture. And it’s best not to linger on the progress of Australian summer crop harvest…

So, all things considered, having a quieter week for the market to catch up on after a truly volatile first half of 2022 was welcomed by most. Well, maybe not the chiro…