Where to from here for grain
In recent months 'volatile' seems to have been the word of choice to try and describe grain market movements.
In recent months "volatile" seems to have been the word of choice to try and describe grain market movements.
Given we unfortunately don't appear any closer to a resolution to the crisis in Ukraine, it appears this description is likely to remain popular for some time yet.
Black Sea exports have been significantly hindered and it was recently reported that Ukraine's spring crop sowing area could amount to only seven million hectares, which is less than half of what was planted in 2021.
The impacts to global supply from the Ukraine/Russia conflict will be felt for a long time to come and has understandably been the biggest driver in recent grain pricing action.
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Markets will continue to react to each new headline out of the Black Sea region but other inputs will certainly play a part as the grain industry looks for further direction in the coming months.
Concerns are rising regarding drought conditions across the US Plains as forecasts remain dry and crops are looking for crucial spring rainfall.
In the recent US Department of Agriculture's (USDA) first crop progress report for the year, the US winter wheat crop was rated at 32 per cent good/excellent versus 53pc for this time last year.
Spring wheat and corn plantings are also likely to be impacted by the late rainfall and will need to be watched closely.
China has suffered their own winter wheat production issues and significant focus will be on recently planted South American corn crops to help meet global demand.
One factor that's impact won't be known for some time is the high cost of crop inputs and the potential sacrifice on yield and quality as farmers look to manage expenses.
Locally, it feels that marketing has recently taken a back seat as focus shifts to the planting activity getting underway across the country.
The trade will be closely monitoring early new crop prospects while growers are busy watching weather forecasts and starting their planting programs.
While some areas are eagerly looking for more rain after a dry summer, large parts of south-east Queensland, NSW, eastern Victoria and WA are well placed with substantial sub-soil moisture providing a fantastic starting point for the 2022/23 crop.
Much has been made of Australian grain prices in comparison to global values in recent months.
Basis levels are low as cash markets struggle to keep pace with the much more reactive futures trade.
Global demand remains strong, however, should the outlook for the Australian crop stay favourable we can anticipate our prices to continue to lag behind global parity.
Following a record winter harvest last year, exporters have worked tirelessly to ship grain to overseas destinations with ports running at full capacity for months now.
Nevertheless, despite these efforts we will undoubtedly have significant carryover stock that the trade will need to take in to account when pricing new crop markets.
Volatility is sure to stay as the world tries to make sense of the impacts from the unfolding situation in the Black Sea as well as grappling with ever-changing weather conditions.
This market will continue to pose challenges to those looking to participate in it and a well-planned marketing strategy may provide you with some structure in otherwise turbulent times.