Grain Report Thursday - 12th January
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?
Look Out!
Wheat markets firmer last night.
Corn up slightly and beans in the nearby market, but off in the back end.
Aussie dollar firmer as our trade relationship with China moves up another peg and coal exports recommence. More about that later.
We are all waiting for the USDA World Ag Supply and Demand Estimate (WASDE) to be released tonight.
It feels bearish for wheat on the expectations the Russian and the Aussie crop will be increased, adding a potential 10 million tonnes to production.
Markets see this as the world is flush with wheat, however, we can’t ship it, and neither can Russia. We are maxed out, so it doesn’t matter if the Yanks call the Aussie crop 40 million tonnes and the Russians 100 million; we cannot increase output.
Argentina’s wheat crop is 10 million less than last year and Ukraine is also down 10 million tonnes from the previous year, which will be offset by Aus, Russia, and Canada production increases.
So globally, yes production for major exporters will increase in tomorrow’s report, but if you can’t ship it, it’s like owning a Cruise Liner over covid.
But the market will see it as bearish and even though we all have these numbers pencilled into our spreadsheet, the markets will trade lower and world prices may soften, in the short term.
What is more interesting and slightly bullish for supporting wheat prices is 40-degree temperatures in Argentina over the next week which will hurt beans and corn production there.
Corn is a tight balance sheet, and with US corn stocks at 9-year lows, a bump in Argie production will add support to corn, which adds support to world wheat prices.
Just this week, South Korea bought 68,000 tonnes of corn at USD $339.97 per tonne C&F (Cost & Freight), which is around the same price they will pay for feed wheat, or what we now call WA ASW.
With strong corn prices, Asian markets will blend feed wheat in the rations; however, there is a limit they can use as it changes the chicken skin colour from pale yellow to a whiter colour.
In Australia, yellow coloured chicken would be considered off or inferior. In Asia, whiter coloured chicken meat is considered off or inferior.
Deep down, we are all racist when it comes to chicken meat. Don’t get me started on Red Rooster’s like Prince Harry.
Whilst we are still talking about chicken’s, Japan is culling 10 million chooks to stop an outbreak of bird flu in their country.
Back to China.
Interesting to see the Chinese Ambassador to Australia, Xiao Qian encouraging Australia to consider resolving the anti-dumping trade dispute in front of the WTO, to dismiss this claim, work on a bilateral solution and get on with trade.
My money has been on China removing the 80.5% barley tariff before the WTO decision is handed down before the end of March this year.
By removing this tariff, this would then make any decision irrelevant by the WTO, as trade would resume, and who cares what the WTO decides; fill the boats with barley and a box of wine.
But now the Chinese, to save face, have offered a panda paw to Australia, to achieve the same outcome.
Penny Wong and her father, Mr. Wong should sit down with China today and resolve it; Two Wong’s could make a Right.
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