By Paul Willows
A strong rally in grain and oilseed prices this week as grain merchants quickly shifted their focus from fears of a macro recession to weather in the Northern Hemisphere.
The US grain growing areas are the primary focus, with the corn crop entering the pollination window and planting has just been completed for soybeans. Forecasts are showing that most growing regions will receive below average precipitation and above average temperatures. We are likely to see below average yields for the US crops placing the global supply and demand under all sorts of pressure.
During the week the Russian Government significantly changed the way it was going to tax grain imports- with the tax now in Rubles rather than US dollars. This means exports of grain are going to be a function of the Ruble exchange rate making life very complicated for those trying to export a record wheat crop.
Grain merchants are seeing weather issues in Argentina and the EU reducing production and placing more reliance on Russia to fill the gap between supply and demand. The Australian crop is off to a fantastic start despite a few planting delays in NSW.
Locally the winter crops look to have established well. Fingers crossed for a kind spring.