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Grain Comment, 9 May

Planting of the Tasmanian grain and oilseed crops is well underway, in fact, it is complete in some regions. XLD is forecasting area planted to wheat and barley will increase, while area planted to canola is likely to decline year on year.

Canola prices are well off their highs and it would appear that some farmers have elected to plant barley instead of canola this season. Local prices for wheat and barley have been pretty steady over the past few weeks, despite the volatility in overseas markets.

The price volatility in US agricultural futures markets continued this week with funds selling corn and soybeans aggressively. These macro funds now have the smallest long position in the market in three years and are now short corn and wheat. Grain merchants are a bit perplexed by the positioning in corn, as we are about to enter the US weather market.

Russia continues to ship wheat and barley each week, despite the uncertainty surrounding the ‘grain corridor’. Grain merchants will watch to see what happens after May 16th, as this is the expiry date of the agreement. At the moment, most traders are assuming exports will continue with or without an agreement.

Weather remains the key focus, the US is dry, but rains should seasonally pick up, while Russia and most of Europe looks in great shape. The threat of El Nino for the Southern Hemisphere lingers, but it is unlikely to make an impact until the fourth quarter of this year.


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