Wheat market collapses
Global wheat markets did an abrupt about face during June. Better than expected early harvest results across both Europe and the US, lacklustre demand and aggressive Russian harvest selling contributed to markets giving up nearly all May’s gains. Chicago Board of Trade (CBOT) wheat futures plummeted $A86/tonne while European wheat futures shed $A65/tonne.
This chart shows prices for European milling wheat on the MATIF futures exchange. Source: Matif
Results from the latest Egyptian grain tender showed Russian wheat offers at $US227/tonne vs $US269/tonne last month ($A64/tonne decline) offering some explanation for the falls in global wheat values.
The global fundamental picture of tightening milling wheat stocks remains unchanged with the expectation that prices will need to work higher at some stage to ration demand and keep milling wheat out of feed rations.
We will be keeping an eye on export demand for US wheat as a signal to when prices might have found a bottom. US wheat prices have done a lot of work to encourage export demand. Indian buying may be another signal as it may see the decline in prices as an opportunity to replenish stocks that have been run down in recent years.
Australian prices have shed around $A40/tonne over the past month. Prices for grain in southern port zones have held up better owing to crop concerns and uncertain crop prospects.
This chart shows the price of milling wheat in Australia. Source: ProFarmer
Crops across South Australia and western Victoria have emerged and are surviving hand to mouth and will need a big turn-around in the season to ensure solid yields. Most grower selling has been in NSW with growers in southern states not keen to chase the market lower given production uncertainty.
Some WA growers will probably be keen to start selling a little on the next good lot of rainfall, although available moisture across much of the central and southern wheatbelt remains well below average. The good rain forecast for WA this week is becoming more moderate and patchier with each iteration.
Feed grains fair better
Global feed grain markets have declined just $A30/tonne this month, about half the decline seen in milling wheat markets. This market has been far less volatile than wheat and looks to be underpinned by a US corn crop that has been planted into ideal conditions.
This chart shows Chicago Board of Trade (CBOT) futures prices for corn. Sorce: CBOT
Aiding prices are thoughts that corn may have lost plantings to soybeans in the US. A USDA survey of prospective US plantings to be released in the US on Friday will give us a better idea of US corn supply.
Australian barley values have avoided most of the heaviest falls, particularly across southern areas.
Oilseeds to be pressured by large US soybean crop
Analysts in the US are baffled by the strength of US soybean prices and think that they should be lower given ideas that the projected carryout is growing by the day. Thoughts are that soybeans stole plantings off corn in the US, meanwhile large crops in Sth America are still sitting at the docks waiting for export demand.
Canola is a subset of the international oilseed complex and can trade its own fundamentals to an extent but given its substitutability, it is influenced by the much larger global soybean crop. Lower supplies forecast out of Europe and crop struggles in Australia have helped prices, however, they couldn’t avoid the overall weakness in the global oilseed complex and have fallen around $40/tonne.
This chart shows European futures values for canola. Source: MATIF
This chart shows the price of Australian canola. Source: ProFarmer
Elders’ market view
Global wheat prices are searching for a bottom and are looking to entice demand. With crop uncertainty remaining in Australia and supportive global fundamentals, growers should hold off on further sales until Russian harvest selling slows down.
The plantings report out Friday in the US may provide support for feed grain but could pressure the global oilseed complex. Crop conditions are too uncertain in key barley and canola growing areas of Australia to entertain sales at this stage.
This table shows grower trade bids for grain in major Australian grain markets.
Agronomy Update
Elders NSW Regions have approximately 90-95 percent (pc) of its area sown and established. Estimated that around 15 pc to 20 pc of the area sown has established, but struggling due to late sowing conditions, a cold snap with heavy frosts and continuing rainfall.
Around 30 pc of north-west NSW crops and other regions in the NSW Elders area are experiencing moisture stress in some of the long fallow country.
In terms of disease; experiencing Aphids in Faba Beans, Green Peach Aphids (GPA) in canola, slaters, snails, slugs, Lucerne Flea. Yellow leaf spot in grazing wheats and blackleg in Canola. - Adam Little, Technical Services Manager NSW
With good rainfall events over most of the cropping regions, crops have now had a chance to establish properly. The areas of most concern are those that received 2-5 mm of rain in late April. Some of this canola emerged then became moisture and heat stressed and died, out-side of this there has been a good establishment of crops in WA.
Areas in the southern parts of WA are still well below their average rainfall, there has been enough to establish crops. Pastures are more of a concern as their relative growth rates is far below the requirement for this time of the year.
Redlegged Earthmite (RLEM) have come out of their diapause stage later this year, due the warm dry conditions, however numbers are significant in many areas. With restrictions on insecticide options, many growers are concerned on future control options for this this pest.
At this time of the year, it is too cold for the expression of many of the common leaf diseases, so growers are planning for the next few months with high-risk scenarios to ensure they protect the leaf area of crops. - Bill Moore, Elders Technical Services Manager, WA
Planting for winter grain crops has ramped up across all grain producing areas of Queensland now that some fallow paddocks have dried out enough to enable planters to move in with an estimated 90 pc winter area now in. This area is predicted to be completed in the next week as planters are racing a weather change.
Areas planted to Wheat and Barley are up on the previous year along with a large increase in chickpea plantings on the back of the announcement of a tariff-free period for Australian chickpeas by India and reasonable prices.
New barley varieties Neo and Yeti have been popular while Raider Sunchaser and Sunmax have also been in demand in the wheat variety stakes.
We are currently seeing some disease in all crops with fungicides starting to move into sheds to combat Blotches and Yellow Spot in the cereals. We are seeing big differences in seed insecticide treatments this season already with moderate levels of green peach aphid starting to appear in paddocks. Winter weeds are also being sprayed namely Milk Thistle, Wild radish and turnips being the main target at present.
Small crops
The tree crops are slightly back on growth for this time of year especially avocados with low temperatures being the main issue. There is a new crop of Hass variety coming off for supermarket shelves now mostly from Burnett region growers. Strawberry crops are at various stages of flowering and fruit development. New crops of Zucchini are also coming off in time to take advantage of better prices. Our agronomy team are now beginning to work on the summer programs with clients now that we have a good idea of the winter crop area under production. - Maree Crawford, Elders Technical Services Manager, QLD/NT
The information contained in this article is given for the purpose of providing general information only, and while Elders has exercised reasonable care, skill and diligence in its preparation, many factors (including environmental and seasonal) can impact its accuracy and currency. Accordingly, the information should not be relied upon under any circumstances and Elders assumes no liability for any loss consequently suffered. If you would like to speak to someone for tailored advice relating to any of the matters referred to in this article, please contact Elders.
Read previous reports
Cropping update - late May 2024
Cropping update - May 2024
Cropping update - April 2024