With the AUD at just under 71c this morning, and most futures markets for grain flat to softer, it’s not painting a pretty picture. The move in the AUD alone is worth roughly -AUD$3.20/t against the Chicago SRWW contract. Paris milling wheat futures are lower, Minneapolis spring wheat futures are lower, Chicago hard red winter wheat futures are lower. Looking around at world cash wheat values we see most ports of origin are lower, before throwing the AUD into the conversions. Even international bulk grain ocean freight is mixed, but generally a US dollar or two higher for most trips week on week.
US wheat out of the Pacific Northwest shows a reduction in the conversion from Friday of roughly AUD$4.00 to AUD$5.00 for most grades, once the stronger AUD is taken into account.

The AUD will be an on going problem for major exports as it climbs higher against the US dollar, and many of our trading partners. But will the stronger AUD actually allow for cheaper imports, potentially reducing the cost of enough items to have an impact on inflation for consumer goods. I’m yet to see this happen, but I can’t see it happening quickly either. In the furniture game sales have been slow, stocks of goods bought with a much poorer exchange rate will need to be cleared first and then the incentive may well be to keep prices flat and take a little greater profit to help cover some of the last 12 – 24 months, time will tell Wholesale “sales” are increasing though. For the primary producer looking for a cheaper tractor, good luck, the income to expense ratio isn’t exactly exciting.

The grain market may find some direction from the USDA World Ag Supply and Demand Estimate report due out tonight. The punters are talking it down though. Comparing the Feb report to other years, tends to make it a nothing report compared to the March report. If this is the case, than we might be in for another month of directionless trade. I can’t see domestic markets dropping much further, basis is holding, but I can’t see it jumping higher in hurry either.