By David Cripps - AWB
Certainly an interesting start to the new year from a grain marketing perspective with some big swings on CBOT wheat futures pushing past 670 US cents per bushel, barley tenders awarded and canola prices riding a roller coaster for the month.
Corn and soybeans have been the story with the other commodity markets following them as they push higher on global markets mainly driven by the strong demand from China. With production levels of corn not as good as expected this has exacerbated the pressure global stocks.
Whilst the global grain stocks are not a major concern just yet, the Black Sea region did not produce as much wheat as predicted and the government in Russia is applying an export tax to try and limit the amount of wheat leaving the country, this is certainly putting upward pressure on wheat prices. However as highlighted previously corn is certainly the main driver for the upside and so with the price (for corn) increasing wheat will follow as it finds more demand into homes traditionally filled by corn in the feed market.
Canola stocks are also tight with a large demand from China and a smaller Canadian crop being the main reasons for the supply/demand disparity. Prices have fluctuated violently in 2021 with AUD swings of $40 up and down over the month of January only to start February with the same erratic moves. The grower is well sold so expect there is only small amounts selling into this market.
With the focus for growers now firmly on preparing for the 21/22 cropping season, parts of the eastern wheat belt have already been lucky enough to get good rainfall totals over the first few days of February and as I’m writing this report a forecast for the tropical low that is in the northern Gascoyne region is for it to move south along the coast during the next 4-5 days and bring approximately 40-60ml of rain over much of the agricultural areas from Ajana in the north to Albany in the south. With it the forecast is also for strong winds, let’s hope we can get the rain first and eliminate any erosion issues from the forecasted gales. Getting a good moisture bank and a double knock on those troublesome weeds would be a welcome change for most after a late break for the last couple of seasons
Time also for those growers who haven’t already done so to think about what grain marketing strategies they are going to use this year. Most growers will have different risk levels they want to protect so think about how best to do this. Whichever option you decide on, whether its swaps, cash, pools , etc make sure you understand how the marketing decision you make is going to work best for you.