20/2/20 Prices

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After the nice rally of the previous session Chicago wheat succumb to a round of profit taking last night. The punters were happy to take some profit and start the next round of speculation which is centred around what the USDA will say in the Ag Outlook Conference that kicks off tonight their time.
Topics at this year’s conference are varied, from Food Price Outlook to the growing hemp market. Later on the first day there will also be a session on China which is sure to get some attention.

Thailand picked up 50kt of feed wheat at US$243.50 CFR. Reversing this we see it would be equivalent to roughly AUD$270-75 ex farm Liverpool Plains, NSW. This is probably a reasonable guide to new crop values unless we see something change dramatically during the next 5 months in the northern hemisphere. When Australia comes back on line this will also put a little pressure on the market. So potentially for feed wheat we may be looking at local values a little lower around harvest. Spreads to the premium grades are harder to determine and will probably remain so until we know what Canada are up to with their spring wheat sowings.
In the UK flooding and wet weather has seen a sharply lower projected area for canola and wheat. Winter wheat area is back 300kha to 1.5mha that’s a 17% decrease in area. The decline may see the UK cut the smallest wheat crop in 30 years. Canola area is back to about 1/3 of what it usually is. About 210kha is expected to be sown. This should support oilseed values in that area.

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