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Grain Comment, 21 July

Global agricultural future prices continue to be volatile – driven by fear, hope, and greed. The market continues to ‘fear’ the US weather, with deferred forecasts showing persistent dryness in the corn belt.

The forecast for Canada looks even worse, and as a result canola prices continue to rally on fears of a repeat of 2021 production. All eyes were on Russia this week, with the expiration of the 'grain corridor' agreement, and military action that saw a reported 60 kt of grain destroyed. Chicago Wheat prices saw their biggest one-day rally in over ten years, increasing by 9 per cent; A reminder that these are still volatile times.

It is interesting to note that Chinese domestic prices for corn have significantly outperformed US and Brazilian corn prices over the past three weeks. The weather has been very hot and dry in some parts of the Chinese growing regions.

Has Chinese corn production taken a hit? If this proves to be true, then any import demand from China is very supportive to Australian wheat and feed grain prices.

No clear news out of Beijing this week on how it wants to treat Australian barley imports. Let’s hope common sense and economics prevail over politics.

East coast Australia continues to receive timely rainfall- with most regions looking great. Seems El Niño will be something to deal with in 2024 rather than this year.


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