AN EQUAL mix of positive and negative production news on either side of the Atlantic Ocean, combined with the extension of the Black Sea corridor sending Ukrainian grain to the world has meant the grain market continues to wait for a definitive market move leading into the critical northern hemisphere harvest period.
At a time of year where production shocks or timely rain can create price volatility this year the poorer than average US winter wheat crop is being balanced out by strong crop prospects in Europe.
Last week's US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report, failed to sell the market on either a bullish or bearish outlook.
Analysts regarded wheat and barley as slightly bullish, while canola may be one of the major crops grown in Australia likely to struggle to hold its value, albeit off historically high prices.
Currently Australian APW grade wheat is around $400 a tonne delivered port, a quote which has changed little over the past week while canola is $635/t slightly up over the past seven days, with Chicago Board of Trade soft wheat futures at US616 cents a bushel, having risen in the wake of the WASDE report.
Episode 3 commodity analyst Andrew Whitelaw said while the benchmark CBOT futures had risen slightly in the US, the French futures exchange equivalent MATIF was dropping due to a solid spring in Europe.
"The wheat crop in France is currently 93 per cent good or very good, which is the highest since 2015," he said.
He said with Europe still in the critical late spring period there was still room for a scaling down of yield estimates but added the crop was in better health than last year, when the very good / good condition percentage fell from 82pc to 63pc from May to June.
"This year, however, seems to look much more likely to perform than last."
"We are currently seeing Matif wheat futures fall to a historically high discount to Kansas futures, the US equivalent in terms of wheat quality as Matif, as conditions in the French look ideal versus the poor outlook in Kansas."
Mr Whitelaw said the disappointing American crop had seen the US, traditionally one of the world's biggest wheat exporters, buying wheat from Europe.
"US buyers have purchased 210kmt of wheat from Europe for shipment to the USA over the next couple of months, highlighting the severity of the drought."
However, he said the winter wheat crop was only part of the story.
"Spring wheat, while a smaller percentage of the overall US crop, is not looking anywhere near as bad."
Mecardo analyst Angus Brown said global supply and demand trends meant relatively good news for barley.
"The broad takeout from the WASDE forecasts is that barley should find price support, relative to global feed markets, with stocks remaining relatively tight," he said.
Domestically, he said Australian farmers would be watching to see if a change in Chinese government policy could also boost values.
"There are factors like the China trade which could move barley higher if the tariffs on Australian product are removed without a change in supply."
The outlook is less rosy for canola.
"If the USDA forecasts come to fruition canola prices are likely to remain under pressure."
"Soybean prices will continue to underpin canola, but the recent premiums are likely to continue to erode if the northern hemisphere seasons progress as expected."
Mr Whitelaw said it unrealistic to expect canola values to remain near the $1000/t seen in recent times.
"In recent years canola prices have been globally strong."
"This was in part due to the drought conditions in Canada, followed by the invasion of Ukraine.
"Globally there are three main exporters of canola; Australia, Canada and Ukraine, and two of these nations had major issues in the past two years."
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