GRAIN prices have drifted slightly lower in the past week, with last week’s US Department of Agriculture World Agricultural Supply and Demand Estimates (WASDE) report failing to provide much support to either bulls or bears in the market.
It was generally interpreted as a fairly lacklustre report, with the bullish news already factored in to the market.
Emerald Group’s general manager of risk and pricing David Johnson said a key focus of the report was the South American corn and soybean crop.
“We’ve been hearing from the governments of Argentina and Brazil that there are still ongoing dryness issues there, but while the WASDE report lopped off 4.5 million tonnes of production in the soybean crop, it wasn’t quite as big a cut as the market has been expecting, especially given the information from the two governments.
“There’s a window of about three weeks of rain being of use in South America before it is too close to harvest.”
He said the soybean crop had importance outside of its own complex in that if production dropped and prices kicked, North American farmers would substitute acres out of corn and into soybeans, which in turn would provide a kick to corn and by extension wheat prices.
However, the WASDE reduction in South American production was not enough to create significant interest in the oilseed market.
Other than South America, marketers are carefully monitoring the situation following the big chill in Europe, in particularly eastern Europe.
Mr Johnson said there could be issues with dormant crops, especially in Ukraine and Russia, but said market intelligence from these nations could be sketchy.
“We don’t know what’s happening in eastern Europe, but really, the critical crop is the US corn crop.
“Potentially, there is scope for dryness issues there as well if the La Nina persists, so that could be supportive of pricing, but we just have to assess how the season pans out.”
Chicago Board of Trade figures have fallen about US30c/bu over the past five days since the report was released, with March 11 figures now at US635c/bu.
Australian prices have not followed suit, as they did not follow the international market in running up over the previously fortnight.
On the wheat stocks front, the USDA dropped global consumption by a million tonnes, and increased ending stocks by a million tonnes but these alterations were driven by a drop in consumption and increased stocks in India, which is not a major player on the export front, so the news did not really capture the attention of the market.
Domestically, Mr Johnson said Australian growers were focusing on selling warehoused grain.
“There’s been a pretty strong push to market their grain in February, and growers seem to be taking the prices currently on offer.”
He said he would expect more grain to be sold off in the next month, before growers reassess, according to prevailing weather patterns, whether to save some grain for a weather-based punt on prices rising later in the year.
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