Grain Report Friday - 13th September
What price do you want for your grain?
Overnight moves in international markets and yesterday's actual traded prices across Australia are below to help you determine your price. If you need to change your offer price, simply edit it before market open.
Look Out!
Must be an election year in the US as inflation is not good for being re-elected.
Hence the USDA Supply and Demand guess for wheat was neutral to bearish by adjusting the starting stocks by 3 million tonnes, to offset a 2 million drop in production. The other balancing act to offset EU production decline was to ramp the Aussie wheat crop up by 2 million to 32 million tonnes. They took the A Bear In Their number and raised it by 200,000 kmt.
As mentioned, they finally dropped the EU production by 4 million tonnes to 124 million tonnes in line with everyone else. The balancing act in the EU is amusing. The Yanks knocked 4 million off production. If they keep exports the same, ending stocks would drop well under 10 million tonnes, which has never happened this century. The obvious is to reduce exports by 4 million tonnes, which is what happens to keep stocks in a country. But no, the Yankie number cruncher is not allowed to reduce exports by too much, as they cannot find a replacement country to pick up the slack other than the USA which would be bullish and drive inflation. So, they drop the exports by 2.5 and then adjust domestic use and imports by 2 million tonnes. Sacre Bleu, the French have decided to eat less croissants.
But then the Yanks increased world consumption of wheat by almost 1 million tonnes. So we are eating more in the world, apart from the EU, who have decided to eat less.
World imports were also increased by 1.65 million tonnes?
I thought demand was dead.
But it’s all good Australian exports will increase by 2 million tonnes next year to 25 million and our ending stocks will drop below 3 million tonnes. That’s a bit precarious. We have only been under 3 million (according to the USDA) once in the last 24 years and that was in 2019. But next year our ending stocks will go to 2.75 million tonnes. They also have Aussie consumption at 7.5 million tonnes which is at levels from 8 years ago. We must be all gluten intolerant. Our total use is over 8 million tonnes.
Anyway, at the end of the day, the Yanks were able to drop world production by 1.4 million tonnes, increase world demand, but also increase world ending stocks by 600k and keep a lid on any problems with the world wheat balance sheets. Eventually the numbers will speak for themselves and if the Aussie crop drops back to 30 million, our exports closer to 21 million and EU exports drop by another 2 million then things get interesting. And that’s before India steps in to replenish their empty cupboard.
Oh, I forgot to add in Russia. They still have Hokey Pokey exporting 48 million tonnes. It aint gunna happen and since they have lost some more tonnes of spring wheat in Siberia, pencil in 43 million tonnes. Not sure who picks up the Ruskie slack. The US is the only major exporter with stocks to export.
China, China, China (said like Trump). We are all worried about China and their imports. They have Chinese wheat imports at 12 million tonnes, which is 1 million less than last year, but they increased Chinese barley imports by 300k to 10.5 million tonnes for the 24/25 marketing year. If accurate, this is good for Australia. But there is still a slight concern about the size of the Chinese corn crop, which the Yanks have at 292 million tonnes, but some are saying over 300 million. However, sometimes the Chinese like to build stocks when markets are cheap, like they are doing with beans. Markets don’t stay cheap for long these days.
On the corn S&D, production in the US was increased by 1 million tonnes, which surprised a few who thought the yields might be slightly lower. Apart from that they kept world ending stocks around 97 million tonnes, which is 1 million tonnes less than last year.
The Soybean S&D was bearish with world production and US production up slightly and ending stocks up just a tad at 134.6 million tonnes. These ending stocks are 42 million tonnes higher than the ending stocks at the end of the 2021/2022 marketing year.
Overall, from this report, wheat is a Bull dressed up as a bear wearing lipstick. Corn has started to turn the corner and has decided to leave Beans in the cave with the other bears, like oil.
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