Global outlook, weather and yields boost cereal markets

GRAIN TALK: WEATHER delays and low yields have combined with a bullish outlook on international trade talks to boost cereal grain prices.

Weather delays and low yields have combined with a bullish outlook on international trade talks to boost cereal grain prices.

Wheat markets are higher around the country. The ASX wheat futures on the east coast is $6 a tonne higher, which is reflected in similar rises for wheat in the Riverina, South Australia and Western Australia, but the Victorian wheat prices are up $12 to $16 a tonne.

Feed 1 barley is $13 a tonne higher in Western Australia this week and the rise has flowed on to a corresponding increase in trader bids in the Riverina.

The delivered end user markets of Melbourne and Geelong are also following this trend particularly for lower protein grades of wheat. Stockfeed grade is trading at $425 a tonne delivered to Melbourne buyers, up $12 from last week.

At the other end of the protein spectrum, number two grade Hard wheat has softened $2 a tonne this week to $440 a tonne delivered Melbourne. Prices are adjusting to the improved quality of the harvested grain and the higher than expected supply of high quality milling grain on the east coast.

International analysts and futures traders are optimistic that the trade talks of the G20 meeting in Argentina will improve the prospects of trade between the US and China. Already the parties have agreed not to impose new or higher tariffs on goods traded between each country.

This speculation has led to a weekly rise of $7 a tonne in soya beans and an $8 a tonne lift in wheat traded on the Chicago futures exchange. The lift in soya bean prices is impressive given the backdrop of a 6 per cent rise in year-on-year production from the world’s three largest soya bean producers: Brazil, the US and Argentina.

Canola prices have not followed suit as European rapeseed futures have eased $1.50 a tonne and Canadian canola futures lifted $2 a tonne for the week. Canola prices delivered to Melbourne rose $5 to $617 a tonne but trader bids into receival points have eased $2 to $3 a tonne.

A standout feature of the pulse market recently is the $50 a tonne lift in the price of nugget type lentils. Australian lentils remain uncompetitive in the world’s largest pulse importer, India, however some bulk shipments of lentils to Bangladesh have lowered stocks and tightened supplies.