The agricultural markets traded significantly lower over the past week driven by confirmation that Russia will continue to export grains at a record pace. The ‘grain corridor’ was extended for another two months, despite the demands from Russia for re-inclusion into the world banking system (swift).
A drier than normal start to the corn and soybean season in the US has allowed summer crops to be planted at a record pace. Traders know that there is a positive correlation between an early plant and final yields. However, many weather risks remain especially for the US corn belt and Russian spring wheat areas.
Locally, prices have largely ignored the selloffs in global markets with weather maps starting to show real signs of the El Nino. Most of the key growing regions will not get a lot of rain in May. While it is still very early in the growing season, concerns are starting to mount about yields.
XLD will segregate white and red wheat in Tasmania next harvest to increase the demand for local wheat. Many consumers prefer white wheat over red wheats and have largely relied upon the mainland for their white wheat requirements.