MMM

[malleefarmer]

In the northern hemisphere, conditions are generally favoura-ble as winter wheat continues to emerge from dormancy. Wheat in the EU escaped the recent cold spell without major damage. While low temperatures and snow are affecting win-ter wheat in the Black Sea, prolonged drought continues to affect the southern plains in the US. Australia, meanwhile, watches on and hopes for rain.
Australia
Dryness concerns linger in Australia, where rainfall since early Feb is at multi-year lows. Some showers mid-April provided little additional topsoil moisture in advance of wheat and oth-er winter crop planting. More rain would be most welcome to help condition soils prior to sowing. Yet, time remains for more significant rains to overspread the wheat belt. For 2018/19, the outlook appears favourable compared to last season. The BOM continues to forecast average rainfall and temperatures, but a dry April means that further rainfall is still necessary for successful crop planting and development. Relative root soil moisture levels remain low, with the excep-tion of the Western Australian Mallee which resides at aver-age or above average for much of the wheat growing region. Europe
In many parts of Europe, unfavourable weather conditions caused delays to the sowing of spring and summer crops, however, reports indicate that there was no substantial dam-age to the crops themselves. After a pronounced cold spell during the latter half of March, rapidly rising temperatures (3-10°C above normal) from France and Germany into eastern Europe eased the lingering developmental delays. Winter crops, which were developing 2-3 weeks behind the average are now only 7-10 days behind in northern and eastern Eu-
rope. Germany’s winter wheat production is pegged to de-cline by 3%, due to a downturn in acreage.
Black Sea
The Russian wheat market continues to find record demand, which along with minor logistical issues has kept fob offers at about $30/MT above last year. In the south of Russia, this March was among the wettest recorded, with precipitation totals ranging up to 200mm. Whilst the wet topsoil conditions were cause for delay in the south, snow cover in the north as well as in Ukraine made sowing practically impossible until early April. Thick snow cover in Ukraine which outstayed its welcome caused a downward revision in wheat yields. Cur-rently, wet conditions in Ukraine are expected to cause some further delay to spring sowing as well as to the application of fertilisers. Following the cold weather, warmth though April has promoted winter crop development. Recent tempera-tures have averaged 3 to 8°C above normal in Belarus, Mol-dova, Ukraine, and south-western Russia. Current crop devel-opmental delays range from 7 to 10 days in Ukraine to nearly three weeks in west-central Russia. Despite the delays, a quick check of some estimate figures will remind us how insignificant these minor set-backs will be in the scheme of things. If you assume an 80 MMT 2018 Russian wheat crop and 42-43 MMT of Russian domestic wheat consumption, then this will allow another 38 MMT of Russian wheat exports next year without touching stocks. Add to this fact that the Russian Ruble has weakened of late amid US sanctions. This has made Russian wheat even more competitive in global market. There is little doubt that the Black Sea ports will re-main a strong and competitive export gateway for wheat in 2018.
Spring Wheat
Shortly after the market digested news of an increase in US Spring wheat area of 15% compared to 2017, planting delay worries set in which generated some new support for wheat. Frigid temperatures descended upon the central U.S., with daytime highs dipping several degrees colder than normal in parts of the Plains. Planting is progressing measurably slower due to the weather, currently at 9% behind last year’s pace, and 12% behind the 5-year average. Spring wheat area in Canada is also expected to receive a boost (of about 3%) from limited crop rotation options due to concerns over soil moisture conditions. However, with many areas still experi-encing snow cover and frozen soil, the overall delays may yet push more growers into shorter season crops like oats or barley. Old crop stocks are still quite plentiful, so 2018 pro-duction concerns are a bit muted. Regardless, spring seeding season for the Northern hemisphere will be busy and com-pressed.

[malleefarmer]

US Winter Wheat Progress
The US winter wheat crop is coming out of dormancy. It’s sitting at 9% headed as of April 15. That figure is only 1% behind the average pace but is well behind the 18% pace from last year. Recent USDA crop ratings now have US winter wheat at 31% good-to-excellent, but 37% rated poor-to-very poor. The lower trend has remained supportive for the wheat market so far this year.
Wheat Futures Market
All through the winter, the Plains were in desperate need of some precipitation to build soil moisture reserves for the spring. By this stage, one would consider that most of the weather issues con-cerning the US winter wheat have been be factored into the mar-ket. Notably, a drier forecast in the US over the last 3 months has been supportive for wheat futures. Currently, the majority of the HRW Belt is experiencing drought ranging from moderate to excep-tional. As a direct result of the area affected, Kansas futures have consistently gained a premium over Chicago wheat futures. As soon as wetter weather hits the forecasts, the premium retracts once more. At the end of last week, HRW sat at 482.75 c/bu and SRW at 463.25 c/bu. As the week progressed, multiple forecast-ing models seemed to line up, promising drought areas their first decent rain for months. It is important to realise that at this point, the sheer amount of rain required to end the current drought conditions over the next month is huge. In key growing areas in the US, between 6-10 inches of rain is needed. Soon enough, it will be too late to make any difference to yields.
WASDE
In its April WASDE report, the USDA increased global wheat end stocks by 2.3 MMT to 271 MMT. This revision was mainly based on Morocco’s higher production estimate as it recovered from a
severe drought in 2016/17. Global supplies also increased with a multi-year reduction in Iran’s food, seed, and industrial use, which raised carry-in stocks. One other point to note was the increase in HRW stocks by 950,000MT which relieves some of this year’s production pressure; the timing of which correlated with a drop for futures prices back to support levels, accompanied by the aforementioned rain forecasts.
Outlook:
Global wheat stocks have been revised upwards by the USDA in almost every monthly report since 2015. Ultimately, the funda-mentals of high US and global wheat stocks will win and damp-en any upside from production issues this year. Any volatility currently injecting its way into the market will produce opportu-nities for pricing new crop wheat. Wheat’s most recent rally saw APW forward prices hit $275 a tonne at Pt Adelaide, close to $300/t in the Kwinana zone, $294/t in Victoria, and above $300/t port basis in NSW. If you are still holding onto old crop wheat, then it is worth tidying up stores over the next fortnight and focusing on the new season. Lower grade wheat is starting to gain interest, particularly in the Port Lincoln zone. At the end of last week, ASW and AGP prices were more-or-less on par with each other, and the spread from APW narrowing to only -$6/T in the Port Adelaide Zone. For forward marketing, keep a watch-ful eye on opportunities at or above $275 APWMG Port Ade-laide equivalent to take some forward risk off the table

[malleefarmer]

Barley
New crop barley prices have remained firm this fort-night fluctuating in a range of $250 and $252 in most port zones. Forward prices are trading between the 8 and 9 decile range with relatively little selling occurring. Prices may be attractive historical-ly, however an uncertain weather outlook for the coming year has kept grower selling at bay.
Basis continues to remain firm with a dry-to-average outlook on the cards. New season barley basis is currently at 85c/bu which equates to an 8.5 decile basis. In the near term we expect basis to hold relatively firm, at least until the first wet weather front moves through the SA post seeding. With barely area expected to be the biggest climber this year we expect basis to fall away once some production certainty is achieved.
Corn futures have reached a cross road. The corn belt in the US has had an ample supply of moisture over the last fortnight. This has led the futures market downward as growing conditions look to be ideal. This potential issue at this stage is if this moisture is likely to continue and delay seeding in some key growing areas. Although corn sowing has just began there are reports of excess moisture and thus, slowing the seeding progress. If this does oc-cur, we are likely to see corn futures trend higher in the near term. However, if the weather clears and growers are able to ramp up seeding programs we are likely to see the market trend downward to a strong support level of 390c/bu. The weather market in which corn is currently trading will remain volatile until mid-May when a clear acreage estimate is established. On a technical analysis note, Decem-ber corn sits on a very strong support around 400c/bu, the next major support sits around 390c/bu, thus, in the short term we see the corn market at the very worst reaching 390c/bu.
Currency - The US/China trade dispute continues to add uncertain-ty to the market as one of Australia’s biggest trade nations is in-volved. Obviously, a lower Australian dollar will add to the competi-tiveness of Australian grain exports and its looking like a trade war would lead to a lower AUD. However, the greatest benefit would be an increased demand for Australian grain exports as tariffs are added to US sorghum and Corn. Recently, China has imposed a 179% tariff on US Sorghum, which, has been contributing factor for the recent strength in Australian barley prices.
Demand for barley is currently dominated by 2 major destinations, China and Saudi Arabia, whom last year imported 6.5 and 8.5 million tonnes respectively. This combined import demand ac-counts for about 60% of global barley demand. With a trade war looming between China and the US, barley markets are exposed to sovereign risk. As in 2014 China has the ability to change trade
policies with very little to no warning.
The world barley balance sheet looks to tighten for the second consecutive year. In particular, production numbers from the Southern Hemisphere crop will fall below last year’s as Australia looks at an average crop production. Similarly, below average crop production in Argentina may potentially be on the cards. Argentina has experienced record droughts through key growing regions since the new year and accordingly sub-soil moisture is at record lows. Northern Hemisphere appears healthy at this stage and global production is set to increase. Sowing for cere-als will begin in July for Argentina so production numbers could vary a great deal until then. Global consumption is also set to rise with the China likely to subsidise barley for sorghum. Look-ing at Southern Hemisphere barley exports, Australia generally accounts for 70%, this number could increase to as large as 80% as production is estimated lower for Argentina. This would be positive for Australian barley since between Northern hemi-sphere harvests Australia will control the market share.
Scenarios - For the short to medium term barley prices look to remain range bound. This range is slightly wider than previous scenarios as with corn seeding in the Northern hemisphere, the futures market is slightly more volatile. In addition, with barley seeding domestically likely to commence this month basis has begun to waver.
Outlook - Our recommendation is to increase forward barley sales by an additional 5% which would bring total sales to 20% by the end of April. With cash prices and basis at high decile levels, coupled with corn futures trading at the upper end of its medium term trading range, we recommend another tranche of sales. With the barley market dominated by China, there is sov-ereign risk that also needs to be considered. China in the past has not been adverse to changing policy depending on their domestic prices and stocks. Barley is also currently exposed with ongoing uncertainties regarding trade disputes between China and the US and has warranted a recommendation to take some risk out of the market.
At these % sold levels it allows for future sales pre-harvest if prices are attractive and production certainty is gained.

[malleefarmer]

Pulses
entil Demand Appears
Previously the pulse markets traded on an anxious note in the face of "strong rumours" India is considering a ban on pulse imports. The rumour stemmed from a recent meeting between a group of domes-tic pulse processors and Indian Politicians. Whilst explaining the meeting to Indian media, the group's leader, Suresh Aggarwal, said "We have huge stock of pulses with the government as well as the traders in the country. If we continue to import pulses, it will be diffi-cult for farmers to get MSP (minimum support price)." Last year's imposition of a 50% import duty on peas, 30% on lentils, and 60% on both desi and Kabuli chickpeas has already had a chilling effect on trade. These rumours have since been put to rest as in a recent announcement the Indian Government said it was to completely ban pulse imports. At this stage the tariffs have not helped domestic markets resulting in bids to farmers remaining below the minimum support price for most pulses. The implication is that some compa-nies which accumulated stocks in the belief prices would jump after import duties were imposed, now regret building a speculative long position. It is not hard to imagine them trying to push the govern-ment into a decision which might have a bullish impact on India's domestic markets.
Peas- China again bodes as a major consumer of global produce and in particular, peas when talking about pulses. Market partici-pants at the recent agriculture outlook conference in Chongqing, China, suggested the country's import demand for pulses will ap-proach 1.4 million MT in the 2018 calendar year. An estimated 300,000 metric tonne of peas have already been bought by com-pound feed manufacturers. This contributed to a 25% increase Chi-na's field pea imports in January and February at 256,000 MT. More importantly, they believe demand will continue to grow. Their opti-mism about demand for pulse protein, starch and fibre fractions is matched by investors in Canada and the United States, which are also seeing several new plants come on stream. While not offsetting the loss of demand from India, it demonstrates the fact that all the markets for peas have yet to be discovered. Pea prices in the short term remain under pressure with the Indian duties in place. The past week has seen some improvement in track pea bids pushing $310 Port Adelaide. This has closed the gap between track and delivered markets to only $5-10, its tightest in some time. Delivered bids will need to improve to find supply, but the numbers for container freight peas aren’t quite enough to prompt bid in-creases and thus grower selling at this point. Sadly, there are no signs to suggest this will turn around anytime soon although, due to feed values and lack of liquidity the price shouldn’t be expected to drop dramatically.
Chickpeas- Some market participants were dismayed by the USDA's seeding intentions report, believing land in the crop would see a dramatic increase this year. Instead, farmers say they intend to plant a record 665,000 acres of all classes of chickpeas in the United States, up 7% from last year, but well below some trade estimates. Small chickpea intentions, at 185,500 acres, are 3% above 2017, while large chickpeas, at 479,500 acres, are expected to increase 9% from the previous year. A return to average yields would see production jump from 315,600 metric tons (MT) to just over 441,000, leaving the United States with a substantial exportable surplus. If exports climb from this season's estimated 185,600 MT to around 229,000 in the coming marketing year, residual supplies of
chickpeas would be expected to soar from 20,000 to 103,000 MT or roughly enough product to cover three months of demand. With India imposing a 60% import duty on both desi and Kabuli chickpeas, im-ports are expected to drop sharply, suggesting there should be more competition for available demand in other destinations. Prospective increases in North American output are following bigger Kabuli chick-pea harvests in both India and Mexico. Improved supplies have al-ready resulted in a general decline in world trading levels as we have seen locally since December highs. Prices have been stable for the past fortnight with quiet trade. Most growers are relatively well sold on chickpeas which is favourable as production and acres look to expand this year. At this stage and with so much uncertainty in the market we are unable to price chickpeas forward. Last year forward prices began to be published by traders around the June period and we expect this to be the case this year, if not later.
Lentils- International nipper lentil markets finished the week's trading mainly unchanged, helped by confirmation that farmers in North America intend to reduce seeded area this year. The gainers this week were the Nuggets and Jumbos which rallied by about $20/MT in most markets and buyer depth is much deeper. The USDA seeding intentions report said growers in the United States intend to reduce land in lentils 28% from 1.1 million to 791,000 acres. Reductions reflect a steep decline in prospective export demand and grower dissatisfaction with income levels from the crop. Although average green lentil bids are up three cents per pound in the Pacific North-west, they are down almost six cents from the previous marketing year in North Dakota and Montana. Combined with lower average yields because of last year's drought, gross income levels in the main producing regions have fallen sharply. Farmers in Canada are also expected to reduce land in lentils. Statistics Canada will release its seeding intentions report this week, but markets generally believe area will be down at least 25% at 3.3 million acres, with nearly all of the drop accounted for by red. This is on the back of a similar reduc-tion in area for the previous year. Despite the intended 28% drop in plantings, a return to average yields in the United States would see production climb from around 340,000 to 378,600 metric tons (MT). By contrast, Canadian output could drop from 2.55 to 2.18 million MT, for a net reduction in North American output.

[malleefarmer]

pulse continued

Nearly all the U.S. crop is green lentils, while Canada grows more red than green. Canadian red lentil production is expected to drop from 1.84 to 1.46 million MT, but green could be unchanged at 712,000. The net result is the North American green lentil harvest could inch upward from 1.05 million to 1.09 million MT. Markets have long expected the green lentil premium over red to shrink to more normal levels. So far this marketing year, Canadi-an farmers have been paid an average of CDN 14.9 cents per pound more for No 2 Canada large green lentils than for No 2 grade red. During the previous five years, growers saw a 6.7 cent per pound premium for large green. Current bids for new crop lentils reflect a shift, with growers only seeing an average premi-um 5.76 cents per pound for large green over red. At the same time, new crop large green lentils bids are discounted 3.6 cents per pound to spot.
Lower average prices for lentils for shipment after July than be-fore suggest exporters expect more intense competition for avail-able demand. On the other hand, an inverted market should dis-courage buyers from accumulating stocks in the April through June shipping periods. It makes more sense to buy on an as needed basis and/or clear current inventories and wait for the harvest. One impact of the current price structure and its effect on trading decisions is that it may result in greater price volatility during the Canadian growing season.
Forecasts of colder than normal temperatures are a concern across western Canada because of the risk it will delay seeding and slow germination. Studies have shown that the earlier crops can be sown and germinate the higher the yield potential. At the same time, forecasters think western Canada expect conditions to become hotter and drier than normal as summer approaches. That kind of weather is generally good from a quality perspective, but the combination of delayed seeding followed by hotter and drier conditions raises the risk of lower average yields. As export-ers and processors begin to doubt the yield potential of the Cana-dian crop, prices would be expected to inch upward. But there is no reason to believe buyers will respond by covering new crop needs, preferring instead to wait for the harvest. The prospect is for a weather driven market through July followed by a demand driven market.
Closer to home, nipper demand is now on par Jumbo and Nugget counterparts for the first time this season. Overall nipper prices were much unchanged this week with bids around $485 and the bigger lentils now trading at similar levels into Adelaide. Lentil prices within the Viterra system have also lifted around $20/Mt most likely due to the increase in trade confidence with funda-mentals still bearish. The reason for the decline in demand is based on a range of factors but primarily it boils down to this; Consecutive years of decent lentil produc-tion and strong imports have led to building stocks in the sub-continent and exporting
nations in Canada and Australia. Due to this, overseas buyers are in no hurry to accumulate stocks with most holding the view that there is little upside in the market, thus no reason to buy ahead of time. We are seeing more ‘hand to mouth’ trading this year than the previous few.
Outlook –Lentils- Little upside remains in the sort term for lentils and the potential for further Indian duties looms. Tight grower li-quidity throughout May should provide some short term stability to the market providing there is no market shocks. Look to continue sales around $480 del Adel equivalent on large lentils and $490+ on nippers.
Peas- Pea prices picked back up the past fortnight to $330 Port Adelaide in Viterra. Demand seemed to be limited to the Viterra system though with delivered bids not matching the price increas-es. As we stated last outlook report, pea prices should have limited down side purely on a feed perspective with feed grains across Australia relatively tight. The key demand for PEAK grade comes from China and India. India with the 50% duty in place and a big pea crop themselves will certainly not be bidding up the market anytime soon and potentially, quite the opposite with rumours of restricting imports further. Key demand will come from China but as always, we are competing against Canadian exports where they have significant stocks. Look to keep sales ticking over targeting a $335 delivered or $330 Viterra. Whispers of a buyer doing a bulk shipment out of Adelaide are circulating which could see prices hit this range.
Chickpeas- The global balance sheet can swing sharply as yield is never a certainty- but for now the Mexican harvest looks safe and the market will be flat whilst Mexico floods the market. Current projections have stocks to use at the highest since 2014 this year with planting intentions up for North America. Growers holding significant tonnes of chickpeas should consider taking some risk off the table before Mexican exports really kick off and sell at cur-rent levels whilst taking advantage of what is left of Ramadan

[malleefarmer]

Soy comments
The past fortnight has seen canola across the Outer Harbour Zone continue on a downward trend. 2017/18 canola peaked at $475 on April 9th, while the month of April has seen new crop slide from $515/MT to get as low as $502. New crop canola made a recov-ery on Friday 20th April to rally $8 and finish at $510/MT. The recovery came as the AUD/Euro began to trend downward after reaching 0.6338 on April 13th to now sit at 0.6243. Basis has continued to recover as the Matif ****seed futures continue to fall away. After peaking at €353.5/MT a fortnight ago, ****seed is now on its contract lows, closing at €340/MT.
Europe - Across Europe, heavy rain and cold snaps have left EU ****seed in varying condition, however temperatures from mid-April are expected to be warmer than average. Should these pre-dictions eventuate, we may see fields dry out quicker than ex-pected and boost plant development as a result. This has lead to an upgrade in the European ****seed yield forecasts for the com-ing season, up to 3.33mt/ha in April from 3.28mt/ha in March. This is despite the cold, wet start to the season, which saw tem-perature fall to as low as -8 degrees Celsius.
Canada - While recent tension between the U.S. and China has created uncertainty for American growers, their northern counter-parts have seen the recent events as an opportunity. Should a 25% tariff on U.S. origin soybeans be announced, growers are looking towards canola to act as soybean substitute in cooking oil and animal feed. The bullish attitude towards canola has seen Canadian canola futures rally 7% to this point in the year while canola area planted is predicted to be up to 9.71 million hectares. If this were to eventuate, it would see area planted up 4.4% on last season and may be needed with talk Chinese canola imports from Canada may be up several hundred thousand tonnes. There is also speculation Canadian soybean area is also likely to be up this season. However, currently the season has the potential to be delayed. March saw 20 days below the 30-year average tempera-ture, while 12 of the first 13 days of April also came in below aver-age and has meant large parts of the arable land are still have a reasonable snow pack.
WASDE - The latest release of the USDA’s WASDE Report revealed a decline in U.S. soybean ending stocks to 14.97mmt, down
136,000mt on last month. This reduction comes on the back of increased soybean crush, up 272,000mt to a record 53.6mmt. This has reflected the strength in the soymeal prices, currently trading at $380.7/ short ton. Globally, total oilseed production has been revised lower largely on the back of Argentina’s soybean pro-duction being reduced by 7mmt to 40mmt as the lack of rainfall has seen harvested area and yields reduced. Global oilseed pro-duction has been lowered 5.7mmt to 568.8mmt, with the reduc-tion out of Argentina being partially offset by higher projections for ****seed, sunflower seed and palm kernel, as well as higher pro-duction for Brazil. Brazil’s soybean production is now pegged at record levels, up 2mmt to 115mmt.
The past week saw soybean futures slide lower on the back of seasonally slow export demand and large supplies also weighing on values. The Buenos Aires Grain Exchange on Thursday estimat-ed the Argentinian soybean harvest to be 40% complete, right in line with the 5-year average. Early reports have yields at 2.46mt/ha, down 31% on last season. The abandonment rate is however sitting at just 4% where in previous drought years it has finished between 6%-8%.
International trade tensions - Continued tension between the U.S and China has seen local soybean prices in Argentina increase. The large premiums being seen in Argentina has seen the nation purchase 240,000mt of U.S soybeans, its largest purchase in 20 years, which may indicate the Argentinian crop is worse than ex-pected, or it signals the beginning of new soybean movements. While a proposed 25% tariff on U.S origin soybeans would likely cause volatility in the market upon announcement, it is likely the dust would settle with traditional soybean trade routes being al-tered. The rising cost of South American soybeans has also im-proved the competitiveness of U.S. supplies in other markets such as the European Union, the world’s second largest importer. If China sweeps South America clean of soybeans, other big import-ers such as the EU, Mexico, Japan, Taiwan, Thailand, Indonesia, Vietnam and Egypt will have to find new supplies. The rising prices have already seen trade flows shift, with the EU switching from Brazil to the U.S for their soybean imports. The trade tensions have however seen crude oil futures rise to 68.29, rallying from 62 on April 10.
Outlook
While it may be a tough sell signal, Friday’s recovery of new crop canola may present an opportunity for growers. Growers will be reluctant to forward sell a large proportion of their canola produc-tion, however, for those growers looking to get a sale on the books and mitigate some price risk, a small sale at $510/MT may pre-sent this opportunity. The AUD/Euro has been coming off over the past week and may add some more value to cash prices. It will also be interesting to see if the Matif ****seed futures can re-bound off their lows. However, while European yields look to be increasing with the improving weather and Canadian area planted has the potential to have a strong increase this season, it may be worth it for growers within the next week to consider getting their first forward sale on the board

[malleefarmer]

Aussie reccomnedations
1718 Wheat – Tidy up remaining tonnes, Total 90-100% Sold
World wheat markets have hit new seasonal highs, the rally is still driven by logistics in Europe & the Black Sea (the French rail strike is ongoing; bottlenecks continue in Russia), adverse weather in the US, where drought continues to deepen, and a complete lack of soil moisture across much of Australia, wheat seeding there imminent. Official Aussie soil moisture at the end of March is be-low, and aside from coastal regions the situation is becoming rather concerning. 10-day forecasts from all major computer mod-els indicate limited precip. Longer term drought persists in Argenti-na, and really only the Black Sea region has had any sort of fa-vourable weather thus far in the growing season – and even there spring planting is a bit behind average. Global trade issues aside, weather premium will be added in the weeks ahead without major pattern changes in both hemispheres. We expect that the month of April should be used to tidy up remaining old crop wheat stocks and tack advantage of the current volatility. It may pay to monitor current trends closely, however once the market consolidates this should be the trigger for sales. As we get into May, I suspect that the majority of weather premium should be factored into the mar-ket and will start looking forward to the Nth Hemi harvest in June. Typically we see market weakness into this period. Also it is im-portant to remember that global wheat stocks are still extremely burdensome (high) and are only forecast to pull back slightly. The International Grains Council has projected a downward move of world wheat ending stocks for 2018/19, but only by 3.4 MMT (about 1.4% from 2017/18).
1819 Wheat – Incremental sales, Total 5%-10% Sold
Current— Global wheat stocks have been revised upwards by the USDA in almost every monthly report since 2015. Ultimately, the fundamentals of high US and global wheat stocks will win and dampen any upside from production issues this year. Any volatili-ty currently injecting its way into the market will produce opportu-nities for pricing new crop wheat. Wheat’s most recent rally saw APW forward prices hit $275 a tonne at Pt Adelaide, close to $300/t in the Kwinana zone, $294/t in Victoria, and above $300/t port basis in NSW. For forward marketing, keep a watch-ful eye on opportunities at the $270-$275 Port Adelaide as we recommend another 5% tranche to bring forward sales levels to 10%.
Forward Put Option Strategy - For growers looking to lock in for-ward prices at these levels, but are uncertain about production an option strategy may be the way to go. For those growers who wish to create a forward minimum price, take advantage of the forward premiums, not lock in basis (as currently weak) and have the abil-ity to participate in rallies in the physical market then a Put option strategy is worth considering for CloudBreak Advisory clients.
1718 Lentils— Increase Sales, Total 70% - 85% Sales (Nippers)
Increase sales, Total 40% - 50% Sales (Nuggets/Jumbos)
Current — Lentils- Little upside remains in the sort term for lentils and the potential for further Indian duties looms. Tight grower liquidity throughout May should provide some short term stability to the market providing there is no market shocks. Look to con-tinue sales around $480 del Adel equivalent on large lentils and $485+ on nippers otherwise holding.
Peas- Pea prices picked back up the past fortnight to $330 Port
Adelaide in Viterra. Demand seemed to be limited to the Viterra system though with delivered bids not matching the price in-creases. As we stated last outlook report, pea prices should have limited down side purely on a feed perspective with feed grains across Australia relatively tight. The key demand for PEAK grade comes from China and India. India with the 50% duty in place and a big pea crop themselves will certainly not be bidding up the market anytime soon and potentially, quite the opposite with rumours of restricting imports further. Key demand will come from China but as always, we are competing against Cana-dian exports where they have significant stocks. Look to keep sales ticking over targeting a $335 delivered or $330 Viterra. Whispers of a buyer doing a bulk shipment out of Adelaide are circulating which could see prices hit this range.
Chickpeas- The global balance sheet can swing sharply as yield is never a certainty- but for now the Mexican harvest looks safe and the market will be flat whilst Mexico floods the market. Cur-rent projections have stocks to use at the highest since 2014 this year with planting intentions up for North America. Growers holding significant tonnes of chickpeas should consider taking some risk off the table before Mexican exports really kick off and sell at current levels whilst taking advantage of what is left of Ramadan hype.
Previous- Little upside remains in the sort term for lentils and the potential for further Indian duties looms. Tight grower liquidity throughout May should provide some short term stability to the market providing there is no market shocks. Look to continue sales around $460-$470 del Adel equivalent on large lentils and $485+ on nippers otherwise holding. Be wary for tonnes in the Viterra system– warehouse fees begin to accumulate quickly from here on out, especially on 16/17 tonnes for those who have them.
1718 Canola - Total 100% Sold
1819 Canola - Targeted Sales, Total 5-10% Sold
Current-While it may be a tough sell signal, the recent strength of new crop canola may present an opportunity for growers. Growers will be reluctant to forward sell a large proportion of their canola production considering the dry start to the season, however, for those growers looking to get a sale on the books and mitigate some price risk, a small sale at $520/MT may pre-sent this opportunity. The AUD/Euro has been coming off over the past week and will add some more value to cash prices. It will also be interesting to see if the Matif ****seed futures can rebound off their lows. However, while European yields look to be increasing with the improving weather and Canadian area planted has the potential to have a strong increase this season, it may be worth it for growers within the next week to consider getting their first forward sale on the board.
Previous-The current situation sees certain elements of the oilseed complex performing positively for Australian growers. Most notable of these was the Matif ****seed futures, which broke its range on Wednesday and has since moved higher. How-ever, the Euro’s short-term trend seems to be in the downward direction at this stage, which should continue to provide support for ****seed values going forward. Unfortunately, this means the

[malleefarmer]

reccomendations continued and finished the novel....
AUD/EUR is moving up, making Australian canola less attractive. Soybean meal is the other element of the complex which is also in an upward trend. It is suggested growers continue to target sales around the $520 for the 18/19 season, and look to make a sale once the current ****seed trend looks to consolidate.
1718 Barley– Total sold 95–100%
1819 Barley– Increase 5% , Total sold 15-20%
Current— Outlook -Our recommendation is to increase forward barley sales to 20% sold by the end of April. With cash prices and basis at high decile levels and with corn futures at a relatively high level compared to medium term price levels, we recommend an-other tranche of sales. This coupled with sovereign risk barley is currently exposed with ongoing uncertainties regarding trade dis-putes between China and the US, has warranted a recommenda-tion to take some risk out of the market. At these levels it allows for future sales pre-harvest if prices are attractive and production certainty is gained.
Previous- World barley ending stocks in 17/18 are projected at 17.9 MMTs, down 4 MMTs from the previous year, the lowest since 1981. World barley stock/use ratios in 17/18 at just 10% are the lowest since 1983 and the third lowest since records be-gan in 1960. The barley markets since late 2017 has rallied sharply, and we suggest downside risk in global barley prices may be rather limited throughout the 2018/19 crop year! World weath-er patterns at present are concerning. It’s much too cold (and snowy) in parts of Europe & the Black Sea, where spring planting typically peaks in the second half of April, and where there’s talk barley acreage is being shifted to corn. Dryness in E Australia is ongoing (planting there begins in May), and Argentina’s crippling drought shows no sign of abating prior to the beginning the dry season in Jun/July. Argentine barley planting occurs in May/Jun. Argentina, Australia, Russia and Europe account for some 75% of world barley trade
It is estimated that a 2 Mil Hectare (4%) boost in harvested area is needed to stabilize world barley stocks in 2018, but such an in-crease is unlikely amid adverse global weather patterns. Instead, it’s likely that meaningful increases in planted area occur only in the US & Canada, while acreage elsewhere is steady to perhaps slightly lower. Assuming trend yield, world barley production in 2018/19 is likely to exist at 144-145 MMTs, up only slightly on 17/18. Then even, assuming a modest contraction in total world barley demand, stocks & stocks/use decline further. Stocks/use at just 9% would be just fractionally above the prior record low set in 1983/84. Note that the Mid-East & N Africa are likely to require barley imports of 17 MMTs in 18/19, vs. 16 MMTs in 17/18. De-mand trends are not reflecting any rationing.
One year ago, barley was the world’s cheapest feed grain, and typically over the last decade barley has been priced at/near pari-ty with global corn. Currently barley is trading at a large premium to corn, indicating the rationing effort that’s occurred this year, and in the last 30 days barley prices in Argentina have rallied some 15% as concern over new crop acreage develops. Without a higher than expected boost in major exporter seeding, or near perfect summer weather, cash barley prices in the second half of 2018 will again be well supported. The point is that it’s not just Argentine crop loss that’s driving US corn trade, but rather the
rapid decline in minor feed grain supplies across the globe. This situation doesn’t look to change in the near term and implies that prices should remain well supported until surplus production is confirmed .
Current forward prices are very strong, especially for this early in the season. 18/19 prices are circa $251, which would be around a 9.5 decile. At this stage we are recommending to have 10-15% forward sales on the books. As always it is a balancing act in locking in forward sales and juggling your production risk. Obviously with things to date being so dry use conservative pro-duction estimates.

[sumdumguy]

Thank you Mallee for your generous contributions.👍

[malleefarmer]

Thank you Mallee for your generous contributions.👍

Its actually meant to create debate not having much lick one more "mallees marketing memes" next week if not interest i wont waste my time

[farming101]

Regarding wheat:
China is forecast to have almost a year's worth of ending stocks. They are forecast to export less than 1% of that. China stocks to use is 108.4%. Take China out of the equation and world stocks/use is 23%.

Mallee, the report says Black Sea values are 30USD higher than last year. To me that's a positive. With the Ruble going nowhere you can imagine what that means to Russian trade.

Also the report mentions that the market advisors recommend being 100% sold old crop. Better than not being able to find a market.

As far as North American production goes, the report mentions that US areas are going to need more rain. Forecasts for prime production areas in Kansas are for small amounts over the next 2 weeks. Heavier amounts in the eastern part of the state. That might actually see more wheat taken out and seeded to row crops. Spring wheat areas prospects have improved is some areas with regard to soil moisture but it is getting late. Lots of US farmers hate to seed spring wheat after May 1.

One thing that could happen is that Canada's ending stocks are going to wind up higher than forecast. There will have to be a good export program for the remainder of the year.

[malleefarmer]

101

China any information from there is either 100% correct or 100% wrong or somewere in between lol.

Canadian stocks you talking wheat or canola?

Alot of growers here are thinking about not growing wheat, barley cheaper to grow for similar yield and may be just a slightly tougher crop.

Our last note worthy rain was novemeber but we are used to long hot dry summers but usually you get some stroms to top up soil moisture hasnt happened this year.

Our spotdec to end of april rainfall thinking will be a record dry.

See wheat down again today havent read why weather funds or what.

Pattern emerging 2 steps foward one big step back repeat process.

Never traded options will have to brush up if i go down that path doubt i will.
Have done straight futures and wheat swaps at times.

Wonder if larry or errol read my ramblings from aust and wish to comment i believe its actually a amrketing forum rather than ploitics/govt policy page

[farming101]

Canadian all wheat ending stocks was what I was referring to. Likely to be higher than WASDE forecast
Wheat prices have a small cushion before I would say we're going down.