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Current Issue
Get used to the mixed signals
It can be breathtaking sometimes....swings in market sentiment from bullish to bearish.
Up until recently we were finding problems with crops from the US mid-west, through south-eastern Europe and Canada. With yields only likely to be average, plantings weren’t going to be enough to meet demand that wasn’t falling as bad as expected.
Wheat copped it
But over the past 2-3 weeks, wheat futures have pulled back some 10%. Local new crop multi-grade prices have pulled back around $20/t since the year high of $300-310/t (southern port zones carrying a $10/t premium).
An improved outlook for some crops – with strong carry-in stock levels and the commencement of harvest – have all calmed the market.
But it would be interesting to see what sentiment would be if outside market momentum was pulling our way. It seems equity markets are questioning whether they have run too hard, too fast. Some profit taking and risk aversion has seen the $US strengthen, adding some additional weight. But oil seems to be holding on at over $70/bll which is a good sign.
Financial markets are expecting a lift in volatility as recovering markets send out mixed signals. For example how do you interpret this data;
*In the US, new housing starts and permits surged in May from record lows, but a separate report showed factory output fell another 1% in May, with factory capacity utilisation falling to a record low of 68%*
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Word on wool
A sigh of relief – but there’s still a long way to go
Last week’s sales were certainly a relief to all. The eastern market indicator lifted by 18¢ to close at 781¢ and the western market indicator moved up 13¢ to finish the week at 767¢. The dollar did not see any dramatic falls but did manage to slip under 80US¢, which helped the finer micron types gain 10-20¢. Carding types still remain unchanged, so don’t ignore those oddments at the back of the shed. Buyers, ABB, retain a strong presence in all auction rooms along with Techwool, Fox and Lillie and Lempriere. Across the country it was not a bad week at all but we still have a fair bit of ground to make up
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Sorghum exports steam ahead; barley focuses on domestic market
Sorghum exports
Sorghum has once again been the outstanding export commodity for the month. A total of 221,292t was exported in April – 66,254t more than in March. The Year To Date (YTD) total is currently at 612,053t which exceeds the greatest number of YTD exports up until April in the last 10 years by 140,717t (2007).
A strong production year and attractive pricing have supported exports until April. However, current prices and currency are now making Australian sorghum uncompetitive in international markets, and the focus has turned to the domestic market. It is estimated that there is still 500,000t left in on farm storages.
Japan remains the strongest buyer of Australian sorghum, taking over 500,000t this year, with 182,337t purchased in April. New Zealand and Taiwan are the second and third largest buyers – purchasing over 50,000t (combined).
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