Sam Davidson, Agfarm Account Manager Victoria
Victorian wheat markets continued their sleep walk sideways this week as offer bias makes price discovery somewhat difficult. However, we have seen a slight uptick in buyer interest this week which may provide just enough demand to either hold cash markets at current levels or, dare I say it, move higher as we move closer to harvest. Grower liquidity remains tight as speculators gamble on higher prices to eventuate throughout the second half of the year. In general terms bid/offer spreads sit anywhere from $5-8/MT, however as the eventual cashflow driven selling lifts grower engagement, it still feels as though buyers are not willing to lift the bid in order to secure supply.
Delivered market structure looks neutral over the short to midterm. Buyers look covered on both prompt and forward positions for the time being, which should explain why we have seen offers outweigh bids this week. It should also be noted that while northern regions have been driving domestic values this season, exports from SA and WA look to have adequately supplied these markets for the time being thereby capping short term upside.
Both end users and traders will be looking for further wet weather to wash risk priced into the market away. 2018/19 -2017/18 spread has moved anywhere from +$20/MT at the start of April to +$7/MT this week, indicating lower production forecasts for new crop wheat.
Canola markets had another solid week with both delivered and track markets managing to build week on week. Demand sits predominately with domestic crushers and buyer depth remains reasonably thin, however with a tighter than forecast carry out and low selling liquidity, old crop canola might have further upside. With that in mind we need to remain vigilant and engage buyer demand when and where it presents itself.
Prices as at 5th July 2018