pdf files

[malleefarmer]

Had my latest grain report sent today and was wishing to send it to you guys for a ausssie view of the market I cant attach a pdf file as its to large.

Klause or admin how to I go about it?

Can cut and paste pdf or can you?

thanks in advance

[malleefarmer]

As a background we already know that the world is awash with grain and wheat is no exception. Global wheat pro-duction and ending stocks are forecast at record levels

Seasonality- Trying to find a bottom - That said the feeling is that wheat prices are trying to put in place a seasonal bottom. Typically wheat prices can see an interim low around early July which correlates with the Northern Hemi harvest. In a year, such as we are currently in (minimal production threats), we can see prices remain subdued as we approach the Northern Hemi corn harvest in Sept/early Oct. Post US corn harvest, we may see prices post a modest rally as the market starts looking forward and starts to build in a risk premium for new crop. We also expect demand to be strong as wheat has priced itself very competitively to attract feed demand.

Despite the very bearish Aug USDA report, where record US corn and soybean yields were reported, prices have actually seen some mild strength across the three major grains (Wheat, Corn & Soybeans) as fund short covering has provided support.

Black Sea - Big Crops and very competitive – The Black Sea region will be very competitive on the world stage, their FOB pricing is definitely undercutting other major exporters. Aussie FOB values are looking expensive in comparison. To make the situation worse, with very low freight rates we are seeing Black Sea wheat gain market share through Australia’s natural markets of SE Asia.
We were seeing some relief as Russian FOB prices were on the way up due to strength in the Rouble (on the back of stronger oil). Unfortunately the Rouble strength is now
losing momentum, this should stem any further upside in Rus-sian FOB wheat values. With Russia’s inability to store a very large wheat and corn crop, we expect that they will remain the low cost exporter on the world stage.

Competitive pressure out of the Black Sea may be exacerbat-ed as there is talk that Russia will remove its Export duty. With Russia potentially looking to export a massive 28-30MMT of wheat, there is a high probability that the duty will be lifted. The duty is a hangover from the previous season to stem ex-ports where stocks were relatively tight.

Basis – Whilst we are gaining more confidence that wheat price downtrend is coming to an end, there are real fears that Aussie cash basis will come under pressure. If we get a mild spring we could see a national wheat crop of 28 to 30MMT. With grower forward sales very low against increasing yields we could see a step up in grower selling as we move closer to harvest. Despite cash prices being historically low (decile 2), growers will be looking for harvest cash flow. They will gain some comfort that they will still be looking at strong gross margins on a per hectare basis due to potentially high yields.
Aussie values do look expensive on the world stage and basis will need to do some work in order for Aussie wheat to remain competitive and ensure this large crop can be exported with-out a huge carry out. Recently Adel basis peaked at 50c/bu over US wheat futures. We have been seeing basis start to grind lower as we head into harvest (currently 36c/bu).

Price Outlook – In summary we feel that wheat prices are find-ing tentative support, however we have a neutral outlook through Sept whilst the US corn harvest gains momentum. Into Oct/ Nov there is a higher chance of a rally as the market starts looking forward and espe-cially if the expected demand story unfolds. Wheat is priced as a feed grain and is currently trading at a tight spread to corn. We are forecasting US corn ex-ports to be strong as stocks in South America are tight. Also worth noting is precipitation for July & August has been unusual-ly dry across Ukraine and parts of western Europe and we are starting to see corn yields wound back.

Wheat Basis Hedge– Opportunity?
Basis Hedge
We feel that basis is currently at reasonable values and there is risk that basis will come under pressure into harvest. Basis pressure will come from the po-tential size of the Aussie crop and the very competi-tive values coming out of the Black Sea. Therefore we suggest that growers look to lock in up to 15- 20% of their basis exposure.

You can do this via the following strategy:
Enter into a forward sales contract (multi-grade) and simultaneously enter into a bought swap or call option (or call option structure) with a maturity date which approximately aligns with the delivery date on the forward contract.
This strategy leaves you with upside potential via call option (or bought Swap) but no further exposure to domestic basis or currency moves. It therefore reduces your risk from futures + basis to futures only. If you look to participate in upside potential into our harvest via a US wheat call option, you will not benefit if the $AUD falls as your cash sale has removed this exposure.
Why would you use this strategy:
1) It locks in a known worst case price for your grain as you are no longer exposed to any downside market price risk as the grain is already sold. 2) The call option continues to provide upside potential via the futures market into our harvest. 3) If you use a call option and the market continues to trend lower, the most the option will cost you is the initial premium.

See below for current option pricing;
Cash and Call Strategy
Still Holding Old Crop Grain?-For those growers still holding old crop grain, it can be a ex-pensive way to participate in any rallies. Whilst you are waiting for a rally, storage and interest costs continue to build. Come Sept Viterra will be charging an addition-al $3.40 storage.
This strategy may be appro-priate for growers who are committed to storing grain out several months. It in-volves selling grain for cash, rather than storing it, and then using the funds that would have been spent on storage to buy a call option.

Why would you use this strategy:
1) It locks in a known worst case price for your grain as you are no longer exposed to any downside market price risk as the grain is already sold. 2) The cost of the call option should be approxi-mately covered by savings from not storing the grain. 3). The call option continues to provide upside potential via the US wheat futures market. 4) If you use a call option and the market contin-ues to trend lower, the most the option will cost you is the initial premium.

[malleefarmer]

Pulses - Canadian Excessive Moisture?
As we have seen over the past few months, pulse prices have come under significant pressure with news of the world’s largest producers planting record hectares. The market is now focused on how production is progressing particularly for the likes of India, Canada and Australia, with any supply threat potentially being supportive of prices. Indian subcontinent (India, Pakistan, Sri Lanka and Bangladesh) is vitally important to the outlook for pulse prices as they are the world’s largest consumers and importers of pulses. Subcontinent pulse production regularly falls well short of domestic demand, this can be exacerbated by unfavourable sea-sonal conditions.

India Production – India’s Kharif season, which accounts for 30% of the country’s pulse production, has got off to a pretty good start. According to the Indian Agricultural Ministry, planted pulse acres for the Kharif season, as at 19 August, were up almost 40% at 13.6 MHa compared to 10 Mha this time last year with good monsoonal rains buoying the increase. This year’s monsoon is currently 3% above average with rains covering most of the pulse growing regions last week.

The increased plantings can also be associated with new incentives introduced by the Indian government. As part of their new plan to achieve self-sufficiency, the government recent-ly hiked minimum support prices (MSP) for pulse growers as well as significantly increase funding into pulse farming. This has seen growers shift from other crops like cotton and oilseeds towards pulses. We will keep monitoring India’s Kharif season as well as their monsoon progression which is also crucial for the Rabi season (the major pulse producing sea-son). If favourable weather and increased planting continues we could see further pressure on prices.

India Demand – Demand into the subcontinent continues to in-crease as the Indian economy grows and income per capita rises. According to the Indian Food & Consumer Affairs Minister, imports are forecast to increase to 6.5MMT, up 1MMT on last year. The increase has been aided by the Indian government indicating that they will be buying 650kMT of pulses this year in attempt to slow further domestic price inflation. Specifically they will be buying 300kMT of green lentils, 200kMT of peas, and 100kMT of red lentils. The red lentils could potentially come from Australia. The increase in total demand could soften the impact of the huge pulse crop expected this year and potentially reduce its impact on price.
Canada Update – This year’s record Canadian pulse crop has come under some stress lately with concerns of excessive mois-
ture issues being raised after recent heavy summer rains across major pulse growing province, Saskatchewan. The heavy rain has caused lodging, flooding, and hail damage whilst also significantly delaying harvest. As at 19 August, harvest progress stood well below average with lentils only 5% harvested. There have also been reports out of Canada that up to 25% of the lentils crop could be written off whilst yield could also be down by as much as 11%. The Canadian Department of Agriculture, as at 23 August, reduced their forecast of lentil production by 13% (500kMT) and yield by 15% to 1.35MT/Ha. We have seen prices rise already $100-$150/MT del Adelaide in the last couple of weeks in reac-tion to the crop concerns. As Canadian harvest progresses we will gain a better understanding of the crop condition and where pric-es are likely to head.

Australian Pulse Update – Australian lentil production could poten-tially double this year with increased planted acres and favourable growing conditions across the country. Of the lentil crop planted, we estimate 60% to be Nipper Type, while Nuggets and Large Red form the remaining 40%. Many growers have sold 20-30% of their forecast new crop production to protect against downside, locking in values over $1000/MT del Adelaide earlier in the year and around $850/MT more recently. There are still selling opportuni-ties around $850-65/MT del Adelaide with sliding scales attached to them.
Growers did not react as strongly to increasing pea planting as they did lentils, with sowed hectares only up slightly on last year. And although prices have come under pressure with the large Canadian crop currently being harvested, stocks to use across the globe are little tighter compared to lentils so we expect prices to find some support once this seasonally low period passes.

Outlook –Despite concerns over moisture stress to the Canadian crop and news that Indian imports will increase by almost 1MMT, the world is still forecast to have an abundance of pulses with planted acres increasing significantly in major producing countries (Canada, India, & Australia). Recent wet weather in Canada has provided some support for cash values but we will only know the true extent of upside potential in price once more of the crop is harvested and quantity and quality becomes known.

Seasonality of Wheat
The seasonality of wheat: have we seen a bottom of the market?
Chicago wheat futures hit lows not seen since 2007. Massive production in the US and Black Sea have overshadowed rain damaged crop in Europe and Chicago futures have tumbled since the beginning of harvest. The world is heading to a record ending stocks of 257MT, breaking last year’s record. With so much grain supplying the world, have we seen a bottom of the market yet?
CloudBreak has completed a seasonal analysis by averaging the percentages moves against a rolling 30-day average. The season-al analysis explores the relative price movement of each month compared to an average to demonstrate the seasonal nature of wheat markets. The below graphs separate years without signifi-cant production issues including droughts or government inter-vention such as the Russian invasion of Ukraine in 2014.
Analysis of Futures Markets: Prices typically come under pressure during the Northern Hemisphere harvest when the bulk of the worlds grain is produced. United States harvest kicks off late June and finishes late July to early August. The effect on world grain prices is evident in that prices on average are 2% lower in June/early July than the previous month. Our analysis suggests that we may have seen a low already in July as the US harvest was quicker than usual thanks to ideal harvesting weather.
Prices typically stay flat during August, trending sideways with some minor speculation about the corn and soybean crop condi-tions. Speculation on the corn and soybean crop conditions can have a flow on effect to wheat markets, providing some minor support during August. Prices can spike during August with post-harvest speculation but on average over the month prices stay flat and rallies are generally small.
Post the August rally in corn and soybean crop conditions prices find a second low in September. By September the conditions of the corn and soy crop are known, Europe and the Black Sea have completed harvest. The excess grain including corn hitting the world market from the Black Sea place further pressure on world prices. The Black Sea is extremely aggressive and usually set a benchmark for the cheapest wheat in the world. Interestingly, more than half of the seasons analysed displayed a low in Sep-tember as low or lower than June/July. Meaning we may not have seen an ultimate low in the market for the year.
What to look for: The coming few months prior to the Southern Hemisphere harvest prices will likely find lows through Septem-ber. Growers looking to top up forward sales may take advantage of speculation in the corn and soybean crop conditions in August. However, the US is on track to harvest a record corn crop this year and both corn and soy conditions appear almost ideal at 76% and 71% good to excellent respectively. The support from the corn and soy crops will likely be lessened during August and rallies for the wheat futures will be understated.
All eyes will now turn to any news of events that could shake up the market and provide some support to futures prices for wheat. Early June rains through Europe have damaged crops reducing quality and yields through France and Southern Germa-ny. Yields have reduced by 40% and up to 70% in some regions with crop quality at 47% good to excellent vs 76% last year. Mar-kets are still assessing the full impact with European harvest pegged at 17% complete vs 53% last year. Any developing signif-icant weather events through the Corn Belt could provide sup-port for prices through August and September. Current weather forecasting models across the United States suggest weather is looking generally favourable through the US Corn Belt with no extended patterns of heat and dryness. Major disruptions to the market could pull the trigger on record short positions held by the speculative funds to buy back positions and prop up the market.
Outlook: This season has shaped up to be almost ideal growing conditions across the world bar France and Southern Germany. Few disruptions to the markets are prevalent this season and futures prices appear to be following a similar trend to those years analysed. Discounting any curve balls thrown into the mar-ket with weather events or government intervention futures mar-kets will continue to be subdued through September. Fleeting short covering and speculation rallies will likely occur in August but the extent of the rallies understated.

[malleefarmer]

Oilseeds, Where to Next?
Canola prices have staged a recovery in the last few weeks, from lows of just below $500/T in early August to $526/T in Adelaide.
European crop was damaged in early June with significant rainfall through France and Germany the two primary producers of can-ola/****seed in the Europe. Expected harvested tonnes in Ger-many and France is to be down 11% on last year. Futures prices have since been supported through July/August with lower har-vested tonnes and additional 0.2MT of non-GM canola demand into Europe.
Seasonally North American soybeans trend downwards into Au-gust as plants begin flower and yields become more certain. As the crop condition post flowering becomes established futures find a bottom in early to mid-August. Just prior to the October harvest markets begin to speculate about the September frost damage if weather turns mild and a relief rally can be found into September and early October. Ultimately harvest pressure mounts during October and November as North America com-pletes harvest and futures find further seasonal lows.

Similarly, Canola finds a seasonal low point as European harvest completes in August. Markets begin speculating about the Cana-dian harvest through August before finding an ultimate low in September. Prices find support through November to mid-July. Growers considering topping up forward sales prior to harvest should target the late August early September rallies in soybeans and canola.
Soybeans are finding resistance at the 1020 USc/Bu after a mild rally from early August. Oil has driven the rally in soybeans unlike earlier in the year which was driven largely by meal. Soy oil has ridden the wave of palm oil where prices have rallied 21% this month as shown in the graph below with Matif ****seed futures and soybean oil in purple.

Exports in Malaysia have risen by 31% in August with strong de-mand ahead of seasonal festivities in both China and India. Pro-duction issues through Malaysia and Indonesia, the two largest producers of palm oil, have dampened production forecasts. In-donesia is expected to reduce its full year output by 15-20% amid ongoing dryness and heat from a lingering El Nino through much of the country. Malaysian stocks for palm oil dropped to their lowest level in July since 2010 which has triggered sharp rises in Ma-laysian palm oil futures.

China has already begun to release some of the government stock piles of canola onto the market which has less-ened the effect of the price spike in palm oil. Releasing stock piles of cano-la into the Chinese market have capped the price importers are willing
to pay for palm oil before substituting to canola.
Longer term demand for soybeans and in particular meal re-mains strong into China. China is expected to increase total do-mestic consumption of soybeans by an extra 6% this coming season compared to the previous season, and generally has been growing at 5-6% in the past 3 years. Soybean meal has been driving the oilseed complex in the last 6 months as Chi-nese hog producers prize the meal as a high protein feed.
Flooding through China has decreased the swine population in China and overall year on year production is down 3.6% which has curtailed some of the recent strength in soybean meal de-mand. However, record high pork prices have attracted Chinese producers to increase the number of piglets/sow ratios showing demand for pork in China will remain strong and high protein feed including soybean meal will continue to provide support to the oilseed complex.

Weakening wheat prices have some growers wondering what to sell at harvest time and turning to other crops to cash in. The Canola to Wheat price ratio has been strengthening in the last month as canola prices rally while wheat follows the market lower. The current ratio is sitting at 2.2 times (or Canola prices are about 2.2 x the current wheat price). Historically this ratio is high and suggests that come harvest time Canola may be one of the lowest hanging fruits and be up on the list to sell early for growers seeking cash flow in harvest.
Outlook for Canola remains positive with strong demand in soy-beans from China and non-GM Canola into Europe after rain damage. It is important to remember not to fight the tide, work-ing against the seasonality as soybean and canola futures which find lows late September. Growers looking to top up forward sales to the 15-20% mark should look at the end of August with opportunities presenting again in late September early October.


Recommendations
Wheat —Total Hedge 20% - Potential Basis Hedge Opportunity
Current— See Page 2 Wheat Basis Hedge Opportunity
Previous Week—This season has shaped up to be almost ideal growing conditions across the world bar France and Southern Ger-many. Few disruptions to the markets are prevalent this season and discounting any curve balls thrown into the market with weath-er events, markets will continue to be subdued through September and October (Northern Hemi corn harvest / spring wheat). Fleeting short covering and speculation rallies will likely occur in August but the extent of the rallies understated.

Growers looking to top up forward sales may take advantage of speculation in the corn and soybean crop conditions in August. However, the US is on track to harvest a record corn crop this year and both corn and soy conditions appear almost ideal. As a result any short covering rallies will be subdued. Take advantage of any Aug rallies preceding corn harvest, cash prices on a historical dec-ile range are poor, however it is going to be a tough year for cere-als.

We have had two wheat recommendation on wheat (Jan and early June) which will bring total hedge levels to 10-20% sold forward. In this difficult market we have been targeting 1617 prices over $270. June we saw wheat stage a rally on weather issues in the US coupled with some $Aud weakness.
Canola —20% Sold
Current— We are currently stalking this recent uptrend. This rally looks like it is loosing momentum, stay posted as we will be recom-mending an additional sale soon.
Outlook for Canola remains positive with strong demand in soy-beans from China and non-GM Canola into Europe after rain dam-age. It is important to remember not to fight the tide, working against the seasonality as soybean and canola futures have a high probability of finding lows late September. Growers looking to top up forward sales to the 15-20% mark should look at the end of August with opportunities presenting again in late Septem-ber.

Previous—In our last report we were watching to see if there were any heat events across the US Midwest. Unfortunately the heat disappeared from the forecasts and as a result oilseed prices suf-fered. We currently hold a neutral-bullish view for canola and the focus will remain on the Aussie/Euro currency and particularly the upcoming RBA interest rates decision. A neutral outlook for soy-bean remains while any weather threats through the US Midwest will mean a lift in soybean futures and possible support for ****-seed, particularly as funds now have more ammunition to buy after recent liquidations. Growers looking to top up forward sales or clear remaining old crop tonnes should wait for a break in these trends.
15th June– We recommended to sell an additional 5-10% of 1617 canola around $A565/T. Matif ****seed futures uptrend has bro-ken down and this has been reinforced by weakness across the whole oilseed complex (mainly soybeans). Recent weakness has been attributed to kinder weather across the US Midwest.

Barley 10% Sold– Better Opportunities Elsewhere
Lets start with the positives, we expect malt premiums to be rea-sonable this year, after plenty of quality issues through Europe has seen malt stocks tighten. Look to market malt through har-vest.
With feed prices trading at very low levels historically (decile 1), we suggest that you look at other low hanging fruit for sales prior to barley. Ranking these opportunities are– Lentils, Canola, wheat and last of all barley.

Seasonally feed/ corn prices tend to bottom out in Sept which correlates with US corn harvest. We suspect that we could see a modest rally post harvest as the market starts looking forward and prices a risk premium back into prices. Remember that corn stocks in South America are relatively tight.
Previous Week— New crop Barley prices are not great trading around $210/T. Prices recently maxed out around $218/T. Corn prices have decidedly broken its recent uptrend with better weath-er forecast. There is a glut of feed grains around the globe and wheat is being priced as feed. It is a bitter pill to swallow but we recommend you get some sales on the book (5-10%) around the $210/215/T mark. As this price is sitting at a low decile, I would not blame growers if they decided to wait and see if any produc-tion issues develop for Northern Hemi row crops, however it will need to be a significant event as there is a huge buffer of supplies to absorb any losses.

Lentils—Canadian moisture stress? 35% Sold
Current—As per our previous recommendation, the extent of moisture stress incurred by the Canadian crop will be better known as their harvest progresses. Initial estimates have the crop reduced by 500kMT but this could potentially be worse. At this stage, we recommend a stand aside and monitor until more is known on the Canadian crop.
Previous — Despite concerns over moisture stress to the Canadi-an crop and news that Indian imports will increase by almost 1MMT, the world is still forecast to have an abundance of pulses with planted acres increasing significantly in major producing countries (Canada, India, & Australia). It is likely prices will con-tinue to be pressured lower in the latter part of the year, howev-er the extent of downside may have been reduced by potential decreased yields in Canada.

[bucket]

Seems you have a better handle on our pulse crops than most in Canada.

More lost overnight here. Grade and yield due to rain.

[Rareearth]

Thanks Mallee
As our grain traders and buyers use global crop monitoring and local price info for their own business purposes, it's awesome that growers with similar technology, but limited big picture view or understanding of the risks and opportunities can also participate.

The world is becoming flat-er, or the playing field is is levelling off.

[grassfarmer]

For future reference google "how to reduce PDF file size" lots of free sites where you upload your PDF file to, they reduce it and email it back to you in a few minutes. I use it on a newsletter we send out to reduce from say 30MB (lots of pictures) to 140kb. Doesn't reduce the quality of pictures either.

[malleefarmer]

I get this weekly will post if I can send it as a file reduced in size thanks grass farmer.