It has been a wild old week in the ag commodities, swinging from limit down to limit up in the space of a couple of days. The initial move lower was sparked by a dearth of new bullish news and an opportunity for some managed money to capture profit.
However, just a few days later, Chinese corn purchases (1.36mmt in one day, 2.04mmt over two days) ramped up which got the bulls excited again. Adding fuel to the fire was a raft of other news which has kept the market ticking higher. Firstly, Russia finally confirmed its intention to implement a higher export tax on wheat (€50/t) by the 15th March. This is on top of the €30/t export tax due to come into play by the 15th February.
Ukraine capped corn exports – in another example of Government intervention to stabilise feed prices – which had been widely expected. Brazil, which had been suffering from drier than average conditions, is now suddenly wet. This is a boon for later sown and later maturing crops, it has however seen the supply of beans to port drop considerably. This weeks bean exports totalled 225kmt, compared to a weekly forecast export program of 1.03mmt.
A week can be a long time in a market that is grappling with supply issues.
Closer to home, Australian barley has been a big winner from a recent Saudi tender. The original tender specified an amount around 430kmt of optional origin feed barley. The final amount bought was 660kmt with a price of US$277 CnF (18% above the previous tender) or roughly AU$350/t. The Black Sea will supply about 60kmt, with the remainder being sourced from Australia. This is a welcome return back to the Middle East for Aussie barley which has had too many question marks hanging over it for too long. If China continues to mop up European and Black Sea origin barley like it has this year, it will hopefully mean our barley producers will barely notice the absence of China as an export destination.
Next week
This week should see Saudi announce a wheat tender. If the barley result is anything to go by, it should be a shot in the arm for export wheat prices.
Canola pricing has continued its rollercoaster price trend in recent weeks, as international values fluctuate on political announcements. Wheat has been much more benign, although
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In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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Swings and roundabouts
However, just a few days later, Chinese corn purchases (1.36mmt in one day, 2.04mmt over two days) ramped up which got the bulls excited again. Adding fuel to the fire was a raft of other news which has kept the market ticking higher. Firstly, Russia finally confirmed its intention to implement a higher export tax on wheat (€50/t) by the 15th March. This is on top of the €30/t export tax due to come into play by the 15th February.
Ukraine capped corn exports – in another example of Government intervention to stabilise feed prices – which had been widely expected. Brazil, which had been suffering from drier than average conditions, is now suddenly wet. This is a boon for later sown and later maturing crops, it has however seen the supply of beans to port drop considerably. This weeks bean exports totalled 225kmt, compared to a weekly forecast export program of 1.03mmt.
A week can be a long time in a market that is grappling with supply issues.
Closer to home, Australian barley has been a big winner from a recent Saudi tender. The original tender specified an amount around 430kmt of optional origin feed barley. The final amount bought was 660kmt with a price of US$277 CnF (18% above the previous tender) or roughly AU$350/t. The Black Sea will supply about 60kmt, with the remainder being sourced from Australia. This is a welcome return back to the Middle East for Aussie barley which has had too many question marks hanging over it for too long. If China continues to mop up European and Black Sea origin barley like it has this year, it will hopefully mean our barley producers will barely notice the absence of China as an export destination.
Next week
This week should see Saudi announce a wheat tender. If the barley result is anything to go by, it should be a shot in the arm for export wheat prices.
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Click on graph to expand
Click on graph to expand
Data sources: USDA, SovEcon, Reuters, Mecardo
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.