China gets cold feet, leaving the West at the altar; Last minute contract breaches

 

Last time we finished in Australia, this is where we will begin today. Earlier this week the GPA (Grain Producers Australia) called for increased research on red imported fire ants (RIFA). This happens after several discoveries, both last year and earlier in January, indicating a spread of the pest. Worry and concern grows within the grains industry of the potential impacts of RIFA. There are however studies within this field already, but these are from the US and focus on soybean crops, which is not a major grown crop in Australia. 

We continue north to China where they have canceled and postponed wheat delivery from the U.S and Australia, from Q1-Q3. They have also agreed to pay penalties in the form of carrying costs, Reuter states. By doing this, possibilities for other buyers to get Australian wheat without having to wait has opened, according to a Dubai based wheat-trader. China's decision to cancel or delay cargoes is a major contributor to the decline in global price to a 3-1/2 year low. At the same time, Russian wheat is dominating the market at lower export prices, making the lowest March prices since 2017. According to the U.S. Department of Agriculture, Russia is projected to export a record 51 million metric tons of wheat in the crop year ending May 31, up from 47.5 million the previous year. It's worth noting that the Russian wheat export prices have dropped below $200 metric tons, ($5.44 per bushel) this week. 

The USDA published their monthly feed outlook for March this week. There are no changes to the 2023/24 U.S. corn outlook this month. The season-average price forecast received by U.S. farmers is lowered to $4.75 per bushel from $4.80, based on prices observed to date. Production outside of the U.S. is down by 2.3 million tons, compared to last month, leaving total world production of corn at 1,230.2 million tons in March. 

The March futures contracts for both wheat and corn settled yesterday, March 14th. The wheat contract settled at $519.4 per contract, and corn at $422.4 per contract.

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