Chinese buying frenzy gives market positive turnaround
See how international volatility has opened new selling opportunities for growers and created higher feed costs for grain users.
IN A volatile market, domestic buyers took a break last week, but Chinese buying has pushed international markets back into recovery mode.
The void in the market from last week’s changes to the broader commodities and its risk-averse mood has been replaced by a buying frenzy from China.
Chinese buyers are reportedly behind a large accumulation program of US corn that tallied 3.73 million tonnes after three days of buying.
Such a sharp increase in demand for corn is making some fundamental shifts to supply and demand of wheat as new feed demand for wheat will open up.
The turnaround from last week has been impressive.
Chicago futures benchmarked the changes, with falls of $19.50 a tonne for wheat and $17.80 a tonne for corn last week followed by prices surges of $13.70 and $24.90 a tonne respectively this week.
Earlier rumours that the Russian wheat export is about to double to €50 a tonne ($79) have been confirmed.
This appears to be tapering the price of Russian wheat and may achieve the curbing of inflation, which is the intention of the Russian Government.
To add further volatility and uncertainty to the market, a floating export tax on Russian wheat is now rumoured.
Black Sea wheat futures eased $2 a tonne last week.
Fresh demand for US soyabeans also sent Chicago futures up $28 a tonne for the week. Although canola markets have not been closely tracking the US soyabean price trends, Australian canola prices have spiked $27.
Victorian prices opened this week at $641 a tonne delivered to Geelong less freight to local sites.
Uncommitted canola in the Port Kembla zone is also $22 stronger at $633 a tonne delivered to port.
Exporter bids for wheat have followed this trend and prices for most grades in our tables are up $10 to $12 a tonne.
This returns wheat to levels achieved briefly in October and early November last year.
The activity and volatility is a little different on the domestic markets.
All wheat grades were $2 to $3 a tonne weaker last week, with Australian General Purpose wheat quoted at $305 a tonne delivered to end-users in Melbourne.
Pulse prices are continuing their rising trend as well.
Lentil are up again with brokers quoting nugget lentil prices at $700 a tonne delivered to grain packers in Melbourne.
Some growers have chosen to store lentils as they can earn higher return on their storage capacity than other lower valued grain commodities.
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