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Money flow rallies grain markets

Story Added : 17th November 2009

Money flowed into the commodity sector as investors, exiting the $US dollar, looked to hard assets like commodities for their upward potential due to inflationary signals. The $US index fell to its lowest level since August 2008 and, with gold futures rising, to a new all-time record high. Crude oil,
grains and oilseed futures all followed that lead.

Pressure on the $US is in part related to expectations that the US President Obama will discuss the possibility of China revaluing the Yuan. Despite negative fundamentals, international wheat values are following the Chicago lead, with eastern european wheat values taking on a firmer stance.

India has struck its first wheat import deals since 2007, buying the grain from Australia in containers.

One trader reoprted that up to 10,000 tonnes of wheat had been sold for arrival at southern Indian ports in January. The deals were sealed between A$270-300/t, inclusive of cost and freight, mostly for Australian Prime Wheat (APW).

Here in Australia, new crop wheat prices have firmed on support by firmer US futures and lack of grower selling as harvest pace increases.

The trade is concerned about covering for Jan/ Feb shipments already booked, concerned that if the grower shuts down completely after the harvest/ Christmas period, then the marketing Pools will be the main avenue for stock to fill boats.

Early harvest reports are of lower than expected yields in NSW and variable quality, caused by the dry finish and frost damage. Victorian crops in the north are reporting the same, while in SA lower proteins are the early trend. Reports of protein levels in SA coming in lower than expected has meant that higher protein H2, min 11.5% protein, is becoming more keenly sought.

In WA, harvest has resumed after widespread storms and showers last week. High moisture levels are restricting the pace of harvest.

Rain last week is likely to cause some downgrading, but it is too early to tell the extent of damage.

Growers are concentrating on fufilling existing contracts and pre-harvest pool commitments.

 

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