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Summary—After out last outlook we saw the wheat market take another run up on the futures market based on US crop conditions and some speculation on potential weather impacts on some of the major world wheat exporters. Some of these gains were given back as weather forecasts improved and some profit-taking took place.
Wheat Futures—The wheat market continued to hold its rally through to the Thursday. The futures market rose from 510.4c/bu to 572.75c/bu, which resulted in a change of just over 12% in 9 days of trading. Techni-cally, the futures market rallied to its highest level since the start of August last year. While there was speculation surrounding northern hemisphere spring wheat crop and southern hemisphere winter wheat crop, the futures market was able to maintain its mo-mentum. As the weather worries ease, the market slumped, awaiting direction from the WASDE which was not supportive for wheat. Stats Canada released their quarterly stocks report, with March 31 wheat stocks slightly lower than last year by 3.9% may provid-ed some support to futures prices, yet the trend con-tinues downward after the latest WASDE.
WASDE— The latest report from the USDA revised US ending stocks upward for 2017/18, estimating higher all-wheat pro-duction. Globally, 2017/18 wheat ending stocks declined slightly from April estimates of 271 MMT to 270 MMT. For 2018/19, the US combined (winter & spring) wheat crop is projected up 5% from last year due to a greater harvest area. Global wheat production is projected to decline 10.6 MMT from last year, mainly based on conservatively lower produc-tion estimates for Russia by 13 MMT. Global wheat consump-tion is again projected to increase for the 6th consecutive record. With total use rising faster than supplies, global ending stocks are projected to decline 6.1 MMT to 264 MMT for 2018/19.
In spite of the estimated reduction, world wheat ending stocks is indeed remain high. The reminder of such large ending stocks regularly puts doubt on the strength and longevity of wheat rallies. Production issues will need to be relatively sig-
nificant to be of any great effect; however, it is important to note where to look. The world’s top 7 wheat exporters are Russia, the EU, USA, Canada, Australia, Ukraine and Argenti-na. Combined, they are projected to make up a little over 88% of the worlds wheat exports for 2018/19. These same 7 ex-porters only make up about 26% of the worlds wheat ending stocks. As a result, changes in wheat prices based on produc-tion issues for these regions of the world will be amplified. Recall, the majority of the world’s wheat stock is held by Chi-na, who’s relative wheat trade footprint on the world is very limited.
North America—In the US last week, the Wheat Quality Council performed their crop tour in Kansas, the biggest U.S. winter-wheat producing state. Reports from the tours readily con-firmed poor winter wheat yields for the region after the ex-tended drought through the crop’s dormancy. There was little doubt that this would be the case, yet it helped support the market for a few days. Yield drops for the region were signifi-cant, reaching a 9-year low, but the average yield dropped by only 0.4MT/ha. It is not clear if late season moisture would enable the crop to recover. The rest of the US is currently under favourable conditions since weather forecasts have improved, now relatively wet compared to the last few months. Over the last month we have seen the US crop condi-tion begin to stabilize and tend upwards, with ratings of good-to-excellent raising by 4% from its lowest point a month ago. Rainfall was causing delays to seeding progress for spring

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wheat growing regions, however, with the improved weather this has ramped up by 20% in the last week. As quickly as planting has progressed, they are still 21% behind the 5-year average as of 7th May.
In Canada, conditions are mixed as limited snow cover during much of the winter in the prairies may contribute to winterkill. In the main winter wheat producing province of Ontario, emergence is delayed due to persistent cold weather in April. A little less than 10% of the wheat fields in Ontario have not progressed in the last week. Affect-ed crops are under careful observation, with growers considering terminating and planting another crop.
FSU & EU—In the Russian Federation, conditions are favourable for winter wheat with the majority of the crop out of dormancy. Condi-tions in the south are above average owing to ample water availa-bility and favourable temperatures. Rumours of dryness is Russia disappeared as quickly as they came, with Moscow-based SovEcon reportedly stating that the wetter end to winter in the south provid-ed sufficient moisture reserves to offset the risk of dryness. Never-theless, the news of potential dry concerns in a period when Rus-sian spring wheat is sown certainly added further support to the wheat market. Russia’s spring crop accounts for approximately 40% of their total production. Russian wheat exports continue to increase to new highs now at 9.7MMT for the first quarter up 3.6MMT from the previous year. For the 2018/19 season, produc-tion forecasts for the FSU are now 72 MMT, which is a sizable drop from 2017/18 estimated to be about 85 MMT. Agricultural repre-sentatives from Moscow appear to doubt this reduction, stating that based on current conditions, harvest may well be bigger than last year. In Ukraine, winter wheat conditions are favourable with very warm weather and good soil moisture in April accelerating crop development and compensating for earlier delays.
Conditions in Europe continue to improve, with warmer weather alleviating lingering wheat developmental delays in France. South-ern Germany saw some moderate showers which eased some top-soil moisture shortages. 2018/19 production estimates are cur-rently at 150.4 MMT for the EU.
Australia—Over the past week some rainfall has finally hit some Aussie wheat growing areas, notably in parts of South Australia, Victoria and southern NSW. However, northern and central areas of NSW, along with Queensland and Western Australia have not been as lucky, with wind damage also having become an issue in parts of WA over the past week. A firm basis is expected to prevail in the short term if the average Aussie conditions remain dry. New crop basis for wheat was relatively strong between 30c/bu and 40c/bu.
Some of the wetter weather coupled with a lower Aussie dollar has seen this fall back to around 25c/bu. However, it is unlikely to fall away drastically in the short term unless the BOM forecasts rapidly change or if the dollar finds new lows.
Outlook- For those still holding old crop, consider the timeframe you are willing to hold it for and the realistic chances of achieving your target price, particularly in the context of recent deciles. Consider, also, if it’s tonnes in the system, then you are already looking at about $7/T in storage fees alone – a figure that needs to be factored into your ideal price point. Spreads to ASW and AGP grades of wheat have continued to narrow as domestic de-mand firms. Old crop sales of these grades are almost equivalent of APW prices. Beyond these sales of the few remaining tonnes, most of the focus will be on 2018/19 crop seeding and pricing.
In the rallying market last week, local basis held which effectively means the cash prices in South Australia generally moved 1 for 1 with the futures market and continues to do so. At the end of last week, prices were $291/MT for new crop wheat in the Outer Harbour, Port Lincoln and Port Giles, and $286/MT Wallaroo. CloudBreak encouraged growers to make the most of the higher decile prices and provided a recommendation to make sales of 10%-20% of conservative estimated production. This proved to be fruitful for many CloudBreak clients who were able to take advantage of the rally. Smaller, incremental sales have helped some growers increase their weighted average price whilst simul-taneously profiting from the upward price movements and reduc-ing risk.
Prices have since retreated $6-$9/MT for new crop wheat, how-ever it was the first time since July last year that prices hit these higher deciles. New crop wheat decile currently sits at about 7.7 after peaking at just over 8 in the Outer Harbour last week. Rec-ommended sales at this level are at 5-10% of your estimated conservative production, which should again be extended up to 20% if we see any further prices around the $290/MT mark (OH basis). Remember in these weather markets how quickly rallies break, so if you’re a fan of stalking the upward trends when they appear be sure to act quickly when they start to run out of steam.
When looking at forward marketing, consider the current grade spreads which are being presented by the top buyers. Unfortunately, the stronger bidders are currently only pre-senting fixed spreads which are not historically favourable. However, when it comes time to transfer, it will simply be a case of performing an arbitrage across the contracts and allocating the APW grade to those contracts with weaker spreads. Some buyers will offer the floating spreads which would be a more favourable option if the base price is com-parable.

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The last fortnight has seen 1819 barley prices in most reach decile 9 levels of $258/MT in Adelaide and Lincoln Zone. At this stage production concerns are limited to few origins, of which, all are in an early stage of development. Larger production for the majority of major exporters is expected at around 5%. Demand for Australian barley will continue to be supported by China, however, the trade dispute could spark a phase of adverse sovereign risk.
AUD- The long-term driver of the AUD/USD has been the expected interest rates hikes in the US over the coming year, the result of this will lead to a weaker AUD. However, short term the continued US-China trade dispute has continued to play havoc with global mar-kets. Along with that, the US has withdrawn from the US-Iran nuclear deal adding fire to already uncertain markets. These conflicts have led to a rally in commodity prices, in particular crude oil. Corn prices have been boosted by the rally in crude oil. The combination of tight crude oil stocks and tension between the US and Iran has seen crude prices rally 20% since early March. The rallying crude has made alternatives such as ethanol relatively cheaper and thus, in-creasing its usage for corn. The outlook for the AUD is for it to con-tinue to fall, to as low as 0.73. The heavy falls in the AUD will add to the competitiveness of Australian grain exports and support prices for export commodities, such as barley.
There is uncertainty across the market due to US-China trade dis-pute which has continued to escalate over the past two weeks. Also, the US withdrawal from the US-Iran nuclear deal has added fire to an already volatile market. This led the AUD to fall against a strengthening USD. However, it has slowed and regained some of those losses due to rising commodity prices including crude oil. The heavy falls in the AUD will however have benefits for Australian grow-ers with prices increasing due to the relative affordabil-ity of Australian grain ex-ports.
Corn futures have rallied from 402.2c/bu to 422.6c/bu, a change of over 5% in the last 10 days of trading.
The rally was largely driven by the slower seeding progress in the US with excessive rainfall and below average temperatures. Last week seeding progress was at 17% compared to the 5-year aver-age of 27%. For the current week some catch up has been made with 39% seeding progress compared to the 5-year average of 44%. However, this catch up is expected to be limited with more rain expect cover the next 7 days in key growing regions.
Adverse weather for harvest in Argentina and sowing in Brazil has also supported global feed prices. Argentinian growing regions have received 5 inches of rain over a week which has stalled har-vest at about 31% complete. Brazil is on the other end of the scale as dryness spreading through the biggest producer of corn in the nation. Brazil’s corn crop estimate rests between 82-84 MMTs without immediate rainfall and 2018 South American pro-duction looks to be down 24-26 MMTs from last year.
Basis currently sits at 75c/bu which has fallen from 90c/bu fol-lowing the end of April/early May showers. This is the second highest level for this time of year since season 14/15. Basis is likely to remain firm with dry outlook on the cards. However, with a relatively large jump in barley area in Australia, a reasonable season and yield improvements will be magnified by the volume of land sown with barley.
Global Barley- Northern Hemisphere barley production is expected to be roughly 5% larger than the previous year. The EU has favour-able growing conditions through majority of the season with all regions expected to produce average or above average produc-tion. Production for the EU is pegged at 6.08 million tonnes up from the 5-year average of 5.79 million tonnes. Canadian produc-tion should be up by at least 5% with an increase in barley area of 5% and yields to return to average with better growing conditions expected compared to last year. Increases of around the same are expected for Australia with strong prices signals leading into seeding. Global production is expected at 148 million tonnes up from 145.3 million tonnes the previous year.
Outlook- Many growers have taken on CloudBreak’s advice and have forward sold approximately 15%-20% of conservative pro-duction and strong decile prices. This recommendation still holds and if you have not reached this level it is advised you do so. Seeding so far has been better than expected and thus, growers should have slightly more confidence to forward sell. Barley pro-duction globally is expected to increase and at this stage no pro-ducing origins will fail.

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Summary - After some better pre Ramadan demand and a weaker AUD we saw lentil prices firm $20/T to trade up to $495 del Adel. Ramadan starts this week and as a result demand has now backed off during this religious month. This coupled with a stronger $Aud has seen pric-es drift lower to now be trading around $480 Del Adel. Many growers took advantage of these relatively strong pre Ramadan prices ahead of seeding, most growers focussing on Nipper Lentil sales. Grower liquidity is now expected to dry up as they are busy seeding plus a lack of interest in these current lower prices.
Much of the current price drivers are associated with India's protectionist policies and Canada’s Stocks and new season planting intentions.
Demand Slumps - With India putting up the ‘Closed for Business’ sign with the introduction of significant duties and quotas, it is not surprising that demand has slumped.
Aust exports as per ABS stats are running at 239KMT for the period Nov to March, this is a massive decrease of 54% on lasts years exports for the same period. Canadian Exports are also seeing simi-lar reductions in exported volumes. For the Aug to Mar period Cana-da has exported 1.01MMT, this is down 50% on same time last year.
Canadian Stocks are huge – Canadian stocks have ballooned over the last couple of years. Total March stocks for lentils in-creased 34.8% from March 31, 2017, to 1.5 million tonnes, mainly driven by on-farm stock levels that rose 41.1% to 1.4 million tonnes. This continues the trend of rising stocks, lentil stocks in the 1617 season increased 104%.
Meanwhile, stocks of dry peas rose 12.7% to 1.9 million tonnes. These increases continue a pattern seen for the commodities in the last stock report taken on December 31, 2017.
These huge stock increases can be attributed to a large production response to high lentil prices over the last four seasons (excluding 2017/18) and a large increases to import Indian import duties.
Canadian Seeding - Seeding of this year's crops is now 9% com-plete in Saskatchewan, compared to the recent 5-year average of 19% complete, according to the latest crop update from Saskatche-
wan's department of agriculture. Seeding progress was not broken down by crop, but judging from the level of progress in individual crop districts, it seems likely that 9% of the peas, lentils and chick-peas crops have been planted, while 11% of the intended mustard area is in the ground and 5% of this year's canary seed crop.
Strong and warm winds have dried fields throughout the province, and many producers will need rain in the coming weeks to help crops germinate and establish. Provincially, topsoil moisture condi-tions on cropland are rated as 3% surplus, 67% adequate, 25% short and 5% very short.
Canadian Planted Acres - Lentil markets were surprised by Statistics Canada seedings intentions report. Having expected farmers to say they would reduce area by around one million acres, the reported 355,000 acre reduction to 4.05 million was a surprise! This was a lot less than analysts had expected. Most analysts still anticipate acres to be dropped further in subsequent reports.
Looking at the relative market performance of lentils, it seems cer-tain that land in reds will drop, while land in all classes of green should increase. Moreover, the longer seeding is delayed, the more likely farmers are to consider shorter season crops such as peas, lentils or polish canola; and those crops which can withstand a late harvest such as flaxseed or canary seed.
Globally - In the same theme as Canada, global production is actual-ly forecast to increase despite a pull back in acres planted. With a normalisation of yields with an aver-age season, production will be little changed. This will not help the burdensome stock situation that is plagu-ing lentil prices. It is forecast that global production (see table) will increase marginally to 5.823MMT.
Lentil Outlook - Given diminished demand prospects for India, residual supplies of lentils in Canada would be expected to rise again unless growers end up planting much fewer lentils than intended.
If Canadian growers stick with their seeding inten-tions and yields are average, we will enter a buyer’s market. That means buyers will have more influence over price than growers. Even though seeded area will be down, there is a chance production could increase from 2.56 to 2.68 M tonnes. If realised, the available supply of lentils would jump from 2.89 to a record

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M tonnes. Improved availability would be expected to result in lower average prices in the coming marketing year.
Canadian export demand could improve as green lentil buyers re-stock pipelines. Total lentil exports could climb from this season’s estimated 1.49 M tonnes to just over 2 M in 2018/19. Domestic use might also increase a little, though seed demand should drop, now that seeded area is trending lower. Canada could end the com-ing marketing year with an 890,000 tonne carry-over, or enough lentils to cover four months of normal demand. Taking advantage of times when prices rally to sell part of your production will not be a bad strategy. This will only change if the actual seeded area is much lower than the intentions, and yields or quality is poor.
Chick Peas - Canadian & US farmers plan to massively increase land in chickpeas this year. Australia is also expected to see a big increase in planted acres after looking at the cropping plans com-ing in. Prospective acreage increases in Canada and the United States are not currently having an impact on values because of early worries about prospects for a volatile weather market. Statis-tics Canada seeding intentions report said farmers intend to seed 346,200 acres, up from 209,000 last year and more than double the previous five year average of 171,700. A return to average yields would see output more than double from 109,100 to 250,000 metric tons (MT).
Markets are not overly concerned with Canada's increase in in pro-duction data. The country is a price taker, with the direction of world chickpea markets ruled by exportable surpluses in Mexico and India. This year has seen output recover from their recent lows, resulting in lower average prices. However, values remain at levels which would be expected to encourage expanded output in India during the coming Rabi planting season and possibly in Mexico next year.
The implication for growers is with such a large % increase in plant-ed acres globally there is a risk of further price declines in 2019.
Field Peas - India has since restricted yellow pea imports to 100,000 tonnes through the end of June. Markets had been con-cerned India would massively increase the import duty. This change was unexpected and completely freezes trade to that country. Giv-en the risk that the restrictions could be put back in place, markets have written off India. It seems that Aust Kaspa peas are also
caught in these restrictions.
In recent years, Canada exported between 1 to 2 M tonnes of peas to India, but when things look bleak for peas, new demand emerges. Since January, we have seen China buy feed peas, and our domestic market is expanding rapidly because of the new fractionation plants. Those plants mill peas to make protein, starch, and fibre fractions for the food industry. Farmers in Manitoba and Saskatchewan are clearly excited about the domestic market. While pea growers in Alberta say they will reduce area from 1.87 to 1.56 M acres, farmers in Saskatchewan say peas will be basically unchanged at 2.17 M acres, and Manitoba growers intend to increase area from 65,000 to 70,000 acres.
Within the next two years, Canada’s fractionation capacity will total at least 750,000 tonnes per year, making it the second or third most important market. But it is not there yet. If farmers stick with their intentions and yields are average, Canada will harvest 3.94 M tonnes of peas, down from last year’s record 4.11 M tonnes harvest. It looks like this summer’s carry-over will total 1.29 M tonnes, versus 301,000 last year. This would give Canada a record high available supply of 5.26 M tonnes. It would not be surprising to see this weigh on the global pea market. From time to time, peas could be a com-petitive ingredient for livestock feed manufacturers in China and elsewhere. Assuming exports could rebound to almost 3 M tonnes, and the domestic market expands to around 1 M, we will still end the coming crop year with over 1 M tonnes of peas on hand. Even so, it is important to remember that peas are in a transition period.
Outlook –Lentils- Little upside remains in the sort term for lentils and the potential for further Indian duties looms. Look to continue sales around $480 del Adel equivalent on large lentils and $485+ on nip-pers otherwise holding.
Peas- Pea prices picked back up the past fortnight to $320 Port Adelaide in Viterra. Demand seemed to be limited to the Viterra sys-tem though with delivered bids not matching the price increases. Pea prices should have limited down side purely on a feed perspec-tive with feed grains across Australia relatively tight. The key de-mand 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 signifi-cant stocks. Look to keep sales ticking over targeting a $330 delivered or $320 Viterra.
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 current levels.

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After recent weakness, the past fortnight has seen 18/19 season canola continue to claw its way higher. After reaching $510/mt on the last day of April, canola has rallied to peak at $522/MT in Outer Harbour on the back of strengthening Matif ****seed Fu-tures. Basis through this period has remained relatively un-changed against the Matif futures to now sit at -€35.80 after get-ting as low as -€37.33 early in May.
Futures - This fortnight has been a positive period for Matif ****-seed futures, rallying £13/MT since late April. After breaking high-er in early May, ****seed has continued to climb higher through May to €353.5, 3.8% above its recent low. The reasoning behind the strengthening ****seed can be largely put down to the weak-ening Euro and the fact that it has fallen over 4% since mid-May. Despite the 3.8% increase in ****seed, local canola prices have rallied just 2.35% in the same period. With basis virtually the same as at the start of the period, this difference can be put down to the strength in the AUD/EUR, which has just reached its highest level since early April.
Europe - Whilst the Matif ****seed Futures have seen support recently, what can be described as a fragile situation is taking shape in Europe’s ****seed market. As cheap oil substitutes from Argentina continue to flood the EU market, producers have begun to slash their biodiesel production, seeing ****seed demand de-cline as a result. This has meant that a market that normally ab-sorbs two thirds of the EU ****seed production continues to de-cline. It is reported that EU ****seed demand could drop another 20% - 30% as a result. In another blow for ****seed, there has been a challenge against the proposals to outlaw Indonesian palm oil, which if successful, will mean another oil substitute continuing to flood in past the proposed 2021 deadline.
It is also being reported EU farmers expanded plantings amid higher prices in 2017. Despite this, there are now reports EU ****-seed production estimates have again been reduced this month to 22.2mmt, a 1.4% decline on last month’s predictions. These declines have come on the back of hampered crop development in top producing countries such as Germany, France and Britain. Despite lower production, ending stocks will continue to increase as usage declines in the EU with the projected ****seed ending stocks at 1.065mmt, up 0.47% from 17/18 and 2.83% from 16/17. EU ****seed is also being curbed by the fact that the shortage of Argentine soybeans has seen soybean meal futures
rally around 19% in 2018, making it more attractive for processors to crush local beans into soybean meal, rather than ****seed.
WASDE - The latest release of the USDA WASDE Report that Brazil is projected to produce more soybeans than the US for the first time in history in 2018/19. US soybean ending stocks were re-vised down 544,000mt to 14.42mmt whereas world ending stocks paints a slightly different picture, revised up 1.36mmt in May. Ar-gentine production has again been revised down by 1mmt to 39mmt, despite significant rainfalls recently through the nation. However, Brazilian production increased 2mmt to 117mmt to more than make up for this decline. Global soybean production has been revised up 1.89mmt while total oilseeds were also re-vised up 3.98mmt to 568.81mmt, with higher ****seed produc-tion contributing to this increase.
Soybeans - After a period of downward movement, soybean futures continue to be at the mercy of the US-China trade spat. With the two nations meeting to discuss the proposed tariffs late last week, it was expected that the two parties would walk away from discus-sions with a resolution. These expectations were unfounded with the two nations ending negotiations with no resolution. As a result, soybean futures moved lower. The downward trend continued through Monday as news broke that Chinses buyers are cancelling orders for U.S. origin soybeans after no resolution was reached on Friday, with CBOT soybeans falling 3.8% over these two days. At the same time, Chinese farmers are being encouraged to plant more soy in order to help offset any shortfall. Data from the U.S government has shown that sales of soybeans have fallen from 255,000mt in the first week of April when the trade dispute began to just 7,900mt in the week ended April 26.
Canada remains the only question mark as seeding gets under-way, with scepticism still surrounding the latest planting intentions report, as well as the release of the Stats Canada stocks data re-port on Saturday, with early projections tipping canola stocks to be increased by 1.4mmt on last year. The weather through the West-ern cropping regions has begun to clear, allowing growers in to make headway with their planting. However, the fact that seeding is underway just a few short weeks after snow was on the ground is being seen as bearish.
Outlook—Canola is currently testing levels above $520/mt, values not seen in more than 4 months. While sales have been previously recommended around the $520/mt level, the current ****seed rally looks to be running out of steam. In order to capitalize on this rally another 5% sale is recommended at this $520 level in order to get sales between 5% - 10%. Other bullish factors to consider is the fact that EU ****seed production is likely down this month as well as the fact that while many South Australian growers have had a reasonable start with their rainfall, many growers are still after a larger soaking and with minimal rainfall on the forecast for the next fortnight, are now facing the reality of either dry sowing or reducing canola hectares. However, with Canadian stocks at their second largest for this time of year, another sale is recommended

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1819 Wheat – Incremental sales, Total 10%-20% Sold
Current- For those still holding old crop, consider the timeframe you are willing to hold it for and the realistic chances of achieving your target price, particularly in the context of recent deciles. Con-sider, also, if it’s tonnes in the system, then you are already look-ing at about $7/T in storage fees alone – a figure that needs to be factored into your ideal price point. Spreads to ASW and AGP grades of wheat have continued to narrow as domestic demand firms. Old crop sales of these grades are almost equivalent of APW prices. Beyond these sales of the few remaining tonnes, most of the focus will be on 2018/19 crop seeding and pricing.
In the rallying market last week, local 1819 basis held which ef-fectively means the cash prices in South Australia generally moved 1 for 1 with the futures market and continues to do so. At the end of last week, prices were $291/MT for new crop wheat in the Outer Harbour, Port Lincoln and Port Giles, and $286/MT Wal-laroo. CloudBreak encouraged growers to make the most of the higher decile prices and provided a recommendation to make sales of 10%-20% of conservative estimated production. This proved to be fruitful for many CloudBreak clients who were able to take advantage of the rally. Smaller, incremental sales have helped some growers increase their weighted average price whilst simultaneously profiting from the upward price movements and reducing risk.
Prices have since retreated $6-$9/MT for new crop wheat, howev-er it was the first time since July last year that prices hit these higher deciles. New crop wheat decile currently sits at about 7.7 after peaking at just over 8 in the Outer Harbour last week. Rec-ommended sales at this level are at 5-10% of your estimated con-servative production, which should again be extended up to 20% if we see any further prices around the $290/MT mark (OH basis). Remember in these weather markets how quickly rallies break, so if you’re a fan of stalking the upward trends when they appear be sure to act quickly when they start to run out of steam.
When looking at forward marketing, consider the current grade spreads which are being presented by the top buyers. Unfortu-nately, the stronger bidders are currently only presenting fixed spreads which are not ideal for anything other than APW grade wheat. However, when it comes time to transfer, it will simply be a case of performing an arbitrage across the contracts and allocat-ing the APW grade to those contracts with weaker spreads. Some buyers will offer the floating spreads which would be a more fa-vourable option if the base price is comparable.
Previous 1819 Wheat — 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 volatility currently injecting its way into the market will pro-duce opportunities for pricing new crop wheat. Wheat’s most re-cent 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 watchful 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. The implied Basis at-tached to current forward physical prices is relatively weak trad-ing around 20 to 30c/bu. It is looking as though the dry start to the Aussie 1819 season has not been fully factored into prices. There are strong forward price premiums embedded in US wheat futures, Dec18 is currently trading at a 50c/bu or $24/T premi-um to current spot prices. For those growers who wish to create a forward minimum price, take advantage of the forward premi-ums, not lock in basis (as currently weak) and have the ability 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 75% - 90% 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 $320 Port Adelaide in Viterra. Demand seemed to be limited to the Viterra system though with delivered bids not matching the price in-creases. 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 $330 deliv-ered or $320 Viterra.
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 hold-ing significant tonnes of chickpeas should consider taking some risk off the table before Mexican exports really kick off. and sell at current levels.
1718 Canola - Total 100% Sold
1819 Canola - Targeted Sales, Total 5-10% Sold
Current—Canola is currently testing levels above $520/mt, values not seen in more than 4 months. While sales have been previous-ly recommended around the $520/mt level, the current ****-seed rally looks to be running out of steam. In order to capitalize on this rally another 5% sale is recommended at this $520 level in order to get sales between 5% - 10%. Other bullish factors to consider is the fact that EU ****seed production is likely down this month as well as the fact that while many South Australian growers have had a reasonable start with their rainfall, m

[malleefarmer]

many growers are still after a larger soaking and with minimal rainfall on the forecast for the next fortnight, are now facing the reality of either dry sowing or reducing canola hectares. However, with Ca-nadian stocks at their second largest for this time of year, another sale is recommended.
Previous—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 production, however, for those growers looking to get a sale on the books and mitigate some price risk, a small sale at $510/MT may present 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 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.
1718 Barley– Total sold 100%
1819 Barley– Increase 5% , Total sold 15-20%
Outlook- Many growers have taken on CloudBreak’s advice and have forward sold approximately 15%-20% of conservative pro-duction and strong decile prices. This recommendation still holds and if you have not reached this level it is advised you do so. Seeding so far has been better than expected and thus, growers should have slightly more confidence to forward sell. Barley pro-duction globally is expected to increase and at this stage no pro-ducing origins will fail.
Previous -Our recommendation is to increase forward barley sales to 15-20% 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 another tranche of sales. This coupled with sovereign risk barley is current-ly exposed with ongoing uncertainties regarding trade disputes between China and the US, has warranted a recommendation to take some risk out of the market. At these levels it allows for fu-ture sales pre-harvest if prices are attractive and production cer-tainty is gained.
Current forward prices are very strong, especially for this early in the season. 18/19 prices are circa $255, 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 lock-ing in forward sales and juggling your production risk. Obviously with things to date being so dry use conservative production esti-mates.

[malleefarmer]

Crunched some numbers a few weeks back toyed with idea of put options.
Depending on month and price was between $14 and $17 ,per tonne 550 dec put was $14.70 plus brokerage would have a nice protected price at moment.

Didnt do it doesnt matter just being hypothetical, but was close never had luck with options never want to spend more than $5 always lose it.......maybe the key is above higher price option less risk higher return perhaps over to you gurus

Sorry for the length of my garbled waffle from down under