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Chicago Board of Trade July 2024 wheat futures closed 26 US cents a bushel higher on Friday night to end the week up 41 USc/bu or 6.6 per cent.
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This converted to a A$24 a tonne move higher in Australian dollar terms over the week and led to more strength in Australian grain prices.
CBOT July wheat futures have now rallied 111 USc/bu since the lows reached on April 17, or A$54/t accounting for exchange rate movements.
Deteriorating crop conditions in large grain exporting countries during the critical northern hemisphere spring period has driven global wheat prices higher.
On Friday night the United States Department of Agriculture released its monthly World Agricultural Supply and Demand Estimates for May.
It was the first time the USDA estimated 2024/25 season grain supply and demand numbers, which is more than a year away so we're likely to see revisions each month from here.
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The market is taking note, however, and interestingly the USDA estimated 2024/25 global stocks-to-use will tighten for both wheat and corn. Most market participants were expecting an increase.
Remember world stocks-to-use indicate the amount of grain on hand versus how quickly the world consumes it and for wheat it's estimated to decline this year to the lowest levels since 2007.
If wheat stocks-to-use is expected to tighten next year it will help support global wheat prices.
On the other hand, the USDA has estimated the 2023/24 global corn stocks-to-use to increase by about 0.5pc to 11.4pc which has weighed on wheat prices.
There is, however, some conjecture over global corn production estimates, particularly in Argentina.
The USDA revised its Argentine corn production down 2 million tonnes to 53mt. This compares with Argentina's Buenos Aires Grain Exchange estimate of 46.5mt recently.
It's a significant discrepancy given the Argentine corn crop is expected to contribute a large chunk of the USDA's estimated increase in global corn stocks-to-use.
The result of Friday's USDA WASDE report was more risk premium being added to prices, which adds to the recent bullish momentum in global grain prices and is good for Australian growers.
Within Australia, the buyer intensity to try to secure grain continued last week creating a broad improvement in grain prices.
Another record 59 different buyer businesses bid up to match grower offer prices and purchase grain through Clear Grain Exchange last week with an additional 64 buyers searching for grain.
Buyers made over 10,000 searches for Australian grain on Clear Grain Exchange just last week.
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