Grain prices lift after USDA outlooks

Southern Queensland wheat bids finished the week $5 higher at $293 delivered into the Darling Downs. Barley and sorghum were unchanged at $263 and $300 a tonne, respectively.

Global grain futures rallied before the release of the USDA report on Friday in expectation of tightening in US corn stocks and held these gains after its release.

Pundits picked it right, with the report offering few surprises. As expected, the USDA reduced US 2020/21 corn ending stocks by around 4 million tonnes to 34.3mt.

The report offered limited fresh inputs for wheat. The most significant change was that USDA raised China's wheat feeding by a further 5mt to a record large 40mt, up from 19mt last year. USDA has lifted China's wheat feeding by 10mt since February on the strong import pace.

USDA left its forecast for China's 2020/21 wheat imports unchanged at 10.5mt.

Grain markets are often fickle and move on what may or may not happen in the coming months with weather or demand. Market interpretations of day-to-day information can swing from 'glass half full' where the mildest of inputs can be supportive, to 'glass half empty', where almost everything is seen as negative.

China's massive grain imports has left investors cautious about global weather problems and possible production shortfalls. USDA is currently forecasting China's combined corn, wheat, barley, and sorghum imports for the 2020/21 season at 51mt, more than double the previous year.

Dry weather in Brazil and parts of the US in recent weeks triggered last week's pre-emptive rally in corn and wheat futures before the USDA report.

Persistent dry weather across the US Northern Plains and Canadian Prairies is lending support to US wheat prices as well as Canadian canola.

New crop wheat and barley prices in Australia are also finding support on the global weather worries.

Tropical Cyclone Seroja may have battered the WA coast on Sunday night but is also delivered timely rain for the state's grain farmers. Cropping areas around Geraldton, near where the Seroja made landfall, received a general 30-60mm of rain. Rainfall totals ranged from 20-40mm across the wider WA cropping belt.