WHEAT continues to have an erratic run in terms of international futures prices, but Australian values remain trading at a significant premium due to tight domestic stocks and the threat of drought associated with El Niño.
Meanwhile, there's finally some positive news for the canola industry, with the International Grains Council slashing its estimated worldwide canola and rapeseed plant by a whopping 26 per cent year on year.
This has seen gains on the world’s largest canola trading exchanges, Winnipeg and the French-based Matif.
Hannah Janson, ProFarmer senior analyst, said the world canola crop was down across almost all major production zones.
“In Australia, we’ve obviously had a swing out of it, due to a combination of agronomic and pricing factors.
“Farmers are looking at alternative broadleaf crops such as pulses due to the good prices on offer in that sector.
“In Europe, the ban on neo-nicotinoid insecticides has had an impact on plantings, while StatsCan is also forecasting a below average plant in Canada.”
Paul Deane, commodity analyst with ANZ, said canola may have reached the bottom of its cycle in terms of pricing.
“There probably isn’t much downside risk there now, prices have fallen and that will be reflected in supply.”
He said even soybean stocks, which at face value are ample, could also prove positive for oilseed values.
“There are good stocks there, but a lot of them are captive stocks in Argentina and won’t necessarily find their way onto the world market.”
Mr Deane said with the threat of El Niño, the Australian domestic wheat market was at present looking increasingly likely to price out international sales.
However, he said the big corn plant in the US and China would limit the extent of big upside in the wheat market.
“Early USDA forecasts for US corn yields are the second highest on record, while China’s area planted to corn will set a new high,” he said.
“We saw US corn futures fall to an eight month low last week and that has in turn pushed Chicago wheat futures below US500 cents a bushel again, before rebounding sharply to US512c/bu this week.
“Having said that, although wheat keeps having small rallies, there is already a chunky premium for wheat above corn and that can’t get out much further.”
Ms Janson said along with the big corn crop, concerns with wet weather in the US were easing, putting pressure on prices.