US corn market changes prompt Aussie price rise
A spate of corn buying has resulted in some bullish action in the marketplace.
CHANGES to the US corn market have triggered some bullish prices, ending five weeks of falling prices for cereal grains globally and in Australia.
Global grain markets have factored in all the bearish factors as they come to light including the accumulating global wheat stocks and falling corn demand for ethanol production.
Accordingly, speculators in futures exchanges have been punting on lower corn prices and have been heavily shorting corn futures for some time.
But when some fundamentally bullish news appears in the market, these short sellers become increasingly nervous.
Two factors triggered a spate of corn buying that has changed Victorian prices.
On Tuesday last week the US Department of Agriculture released its estimates of grain supply and demand, modifying the area planted to corn this season from 97 million acres down to 92 million acres. The market had considered the area would be down but at 95 million acres.
Also last week, weather forecasts for the US corn belt were indicating warmer and drier conditions. As US corn is entering the sensitive pollination phase, yields can be vulnerable to hot and dry conditions in July.
With the combination of those weather forecasts and lowering the area planted to corn by three million acres, Chicago corn futures surged 10 per cent.
Wheat future markets were caught up in the bullish corn market with Chicago lifting $8.30 a tonne, Paris lifting $7.00 and the ASX is up $6.00 a tonne.
New crop Australian Standard White wheat prices are $6 higher at $292 a tonne delivered to Melbourne end users.
The USDA also lowered the area planted to soyabean by one million acres. As there was also some encouraging export demand, Chicago futures lifted $18.70 a tonne.
Winnipeg canola futures followed soyabean and opened this week up a $7.00 a tonne.
Canola prices in south eastern Australia, however, were impacted by the one US cent lift in the value of the Australian dollar. Trader bids are $3 a tonne lower at $583 delivered to Victorian ports less freight to local sites.
In order to fill harvest shipping slots in Geelong, traders are bidding $589 a tonne for December-January delivery and $592 a tonne for January-February delivery.
With the drought demand subsiding and energy grains more freely available, feed oats have tumbled $35 a tonne to the equivalent of $385 a tonne delivered to Melbourne end users.
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