Grain prices have drifted lower in early 2024 on the expectation of good production in the major producing regions of the world.
The last monthly World Agricultural Supply and Demand Estimates published by the United States Department of Agriculture had global wheat stocks-to-use "decreasing" this year.
This estimate assumes trendline (or reasonable) yields. So why the decrease in global wheat prices? Partly it's because of the expectation for global corn supply to increase.
A large part of the estimated global corn supply increase is based on an expected increase in US corn production. This corn crop has not yet been planted.
Winter wheat crops are emerging from dormancy and spring crops such as corn, soybeans, high protein spring wheat, barley, pulses, and oats are still to be planted in the northern hemisphere.
Last week, the USDA released its annual Prospective Plantings report for 2024 which provides the first official survey based estimates of US farmers planting intentions.
All wheat planted area in the US is estimated to be down 4 per cent in 2024 from 2023. Of this the "winter wheat" crop, which is already planted, is expected to be down 7pc year-on-year.
This means "spring wheat" is estimated up 1pc year-on-year, which is still to be planted.
The Prospective Plantings report has US corn plantings "down" 5pc year-on-year.
That's in contrast to the March USDA WASDE report estimating US corn area "harvested" to be up 10pc year-on-year, which would be a fair effort if plantings end up being down 5pc.
Chicago Board of Trade corn futures lifted 3.5pc after the report was released as a result.
The point is, there is a long way to go before production is known and global prices have already pushed lower factoring in reasonable crop expectations in 2024.
If that doesn't eventuate prices have the potential to be supported and improve.
The market is focused on weather forecasts and crop conditions in the major producing regions and while it is early, crop condition reports are not necessarily reflecting the overly optimistic outlook already factored in by many market estimates.
Locally, grain buyers participating in the Australian market have stepped up their engagement to secure tonnes in the past few weeks.
There have been some significant lifts in prices bid and traded for many grades of wheat, barley, canola, and pulses around Australia as buyers try to match price levels growers have been targeting.
Demand remains for Australian grain with the world and Australian crops remaining largely uncertain.
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