Too many lions, not enough shares

As we approach the mid-point of the winter months, the Australian crop conditions are for the most part, well setup right across the country. 

The saying goes that markets take the stairs up and the elevator down, which suggests that markets tend to fall faster than they rise. 

Never in recent history has it felt like the ag commodities market has exhibited such volatility in such a short space of time. 

In what we used to call a ‘normal’ year,  the end of June has quite commonly been associated with the conclusion of the winter sowing program.

The Australian Bureau of Agricultural Resource Economics and Sciences (ABARES) recently released its June report, tipping Australia to produce its fourth largest winter crop on record at 50.9 million tonnes. 

As much of the country shivers through a cold blast, one could be mistaken for thinking the weather had somehow managed to take the heat out of cash markets as well.

Of late, it would seem, a market-moving event was a daily occurence, with both domestic and international commodity values reacting accordingly. 

International wheat futures have consolidated this week after rallying last week on the back of India’s decision to abruptly ban exports. 

The global market caught a shock late last week when India announced an abrupt ban on its wheat exports on May 14.

The recent harvest provided a physical and emotional rollercoaster with the highlights of big yields and strong pricing counterbalanced by persistent harvest rains and the subsequent delays and quality issues.

Significant increases to crop input prices hasn't slowed the efforts to plant this year's winter crop as almost the entire east coast has been gifted a well-timed and wide-spread autumn break. 

As sowing programs across the country ramp up on what for the most part is a full moisture profile, Australian farmers look primed to capitalize on record prices for their product. 

In recent months 'volatile' seems to have been the word of choice to try and describe grain market movements and, given we unfortunately don't appear any closer to a resolution to the crisis in Ukraine, it appears this description is likely to remain popular for some time yet. 

Another week rolls by and another round of inputs into the discussion, more forcibly argued depending on the side of the fence you sit, seller or buyer. 

Without a meaningful resolution in sight for the crisis in Ukraine, the market continues to trade under the expectation that disruptions to Black Sea grains and oilseeds will be felt for a while yet, increasing the requirement for alternative origins to step up and fill the shortfall. 

International markets continue to trade erratically on the back of expected supply chain disruptions due to the situation in Ukraine. Whilst we all hope for a swift end to the conflict, it is impossible to predict how things will progress and as such international markets continue to trade volatile ranges on a daily basis.