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Grain Comment, 3 October

Australian climate continues to dominate the discourse around the coming season, with a long, dry, and warm summer the most likely scenario.

Livestock gross margins, competitive with cropping last year, have collapsed following a year of freefalling meat prices. Should this trend persist, expect some area to shift from livestock to cropping, particularly in the northwest and northeast of the state.

Last year, many growers were enticed by record high canola prices and decided to try the crop for the first time. A number of these growers struggled with the agronomy of the oilseed. Facing lower prices and higher costs, it seems many growers have returned to grain this season. Soil moisture has been an issue at both ends of the spectrum, with reports of both waterlogged fields reducing harvestable percentage and very dry fields reducing yield.

Following successful trial runs, five more bulk carriers are to be loaded with grain at Ukrainian Black Sea ports, says Ukrainian Minister of Infrastructure Oleksandr Kubrakov. These five cargoes will total 120,000mt and are destined for Africa and Europe. A resumption at scale of Black Sea grain exports appears ‘priced in’, with significant downward pressure on prices in recent weeks. As always, any disruption to the status quo could cause significant shocks.

Donald Trump campaigned in Lowa this weekend, pledging support for Midwestern farmers. As the largest US corn and ethanol producer, Iowa enjoys significant political influence. Expect the pandering to ramp up in the coming months. Any promises of changes to subsidisation would impact global corn and energy markets.


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