La Nina continues to bite. Although rains have arrived in dry parts of the world, including the United States southern plains, the Black Sea and Argentina, La Nina is strengthening according to some reports, and places like Argentina are returning to a dry pattern.
Here in Australia we continue to get rains, with large areas of NSW getting another dose last week, along with parts of Vic and SA. At least on Monday this week the eight-day forecast from the Bureau of Meteorology had very little rain for those areas, but there were rains for parts of WA where harvest is now under way.
We now need a burst of fine, dry weather to get harvest well and truly under way in Australia. Many regions are now ready to go on crops like canola, with barley and wheat already in the bin and many more crops sitting there ready to go.
The wet weather has already seen some shortages of new season grain for the northern feed industry. With limited old season stocks left, many end-users are relying on deliveries from newly harvested crops to cover their immediate needs.
With rain induced delays, prices have risen to attract grain from those growers who have some in the bin already. Those price premiums will evaporate if the headers can get going this week in the regions where this has been the situation.
Meanwhile in global markets rains in the US Midwest, Russia and Argentina have seen wheat prices pull back from multi-year highs, and on Friday night last week, closed just below 600 US cents a bushel.
The high in the market had been 638.25 USc/bu on the December contract back on October 20. After five straight sessions in decline, the market had a low of 595.25 USc/bu to end last week. There is strong support on the charts closer to 588 USc/bu, but we will need a weather induced reason for that support to hold.
In Australian dollar terms the market is still at a healthy $A313 a tonne, down from the daily closing high of $A329.49/t when Chicago Board of Trade futures peaked.
A part of the decline late last week was associated with end of month profit taking and winding back of a large bought position held by funds.
That pressure should lessen, and we could see La Nina kick in again with some support. While it has rained in the US southern plains, and crop condition ratings should improve, more moisture is needed, but the forecast is turning dry and warmer again.
Likewise in Argentina. Rains there have halted the decline in their crop, but it too is facing another round of dry weather.
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