Grain Report Friday - 09th December
Our goal is to help growers and their agents determine the selling price for their grain by providing relevant price discovery each day. Check out the moves in overnight international markets and yesterday's actual traded prices across Australia. There's also market commentary giving context and comparisons to prices of international physical markets. If you need to change your offer price, simply edit it before market open.
What price do you want for your grain?
It looks like the wheat rally has ended after 1 day, with Chicago and Kansas off 1-2 cents per bushel.
Corn and beans were both up.
The market is positioning itself before tonight’s USDA Word Supply and Demand Estimate (WASDE).
It appears to be leaning towards a bearish report for beans and corn with analysts “forecasting” increased ending stocks and maybe slightly bullish for wheat with ending stocks down slightly.
It will be interesting to see what they do with the Argie Wheat crop, which is 42% harvested with an estimated 4.5 million mt recorded.
If I punch this into my calculator, the final number will be less than 11 million mt.
In the last report, the USDA called the Argie wheat crop 15 million mt.
Last year Argie produced 22 million tonnes and exported 16.25 million tonnes or 8% of world exports.
If they only grow 11 million tonnes, their exports will drop to 5-6 million tonnes, 10-11 million tonnes less than last year.
Russian and Canadian exports are up a combined 20 million tonnes, which should cover reduced exports from Argie and Ukraine.
The other interesting estimate tonight will be Argie corn, which is going in dry. South America is one to watch.
The ASX Jan 23 wheat contract was up $6 yesterday.
Maybe the growers have decided to take charge and control the market, lifting their offers.
If you are forced seller or just cash your wheat at the silo every harvest, the buyer doesn’t need to lift their bids to attract a seller.
This is why there is a large gap between export parity and buyer bids, it’s not the buyers fault.
Buyers, in a deregulated market always want to pay the minimal price and sell higher. That’s how a business works.
If your farm was worth $10 million and I offered you $8 million for it and you sold it to me at that price, that’s not my fault.
To buy your farm under the market, I would have told you there is huge surplus of farms available, and the Russians have heaps of farms to sell. I will use fear to convince you to sell.
Fear and Greed drive markets beyond the fundamentals.
On the grain market, if a farmer decides not to sell and warehouses their grain or lifts the offer price on an exchange such as CGX, the buyer needs to lift their bids to accumulate grain.
Again, the “buyer” side of the market will argue, we have a huge surplus, so you don’t want to miss the boat? Fear driven again.
Last time I looked, shipping stems are chockers, so the buyers need the grain…..so why drop your pants over harvest when you hold the power to manage prices.
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Call 1800 000 410 or Email support@cgx.com.au
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