International grain markets finished sharply higher in the past week on doubts over how much grain will be exported under the freshly signed Ukraine safe corridor agreement as well as crop threatening weather in the United States and Europe.
United States wheat, corn and soybean futures all surged higher last week, with some analysts saying seasonal lows may have been set in the past weeks. US wheat futures rallied by 6-7 per cent for the week. Corn gained 9pc while soybeans surged 12pc higher for the week.
The rally ends two months of declines in US grain markets where the value of Chicago Board of Trade wheat futures plunged by more than a third after investors factored in additional grain exports from Ukraine.
Scepticism remains whether Russia will adhere to the safe passage agreement with Ukraine or if it will look for other reasons or ways to block or restrict their grain exports. Traders doubt there will be a flood Black Sea wheat on the international market in the coming months despite progress in establishing a corridor to export Ukrainian grains.
Difficulties in accessing Black Sea wheat has seen global buyers scramble to secure as much European supplies as they can in the coming months. Black Sea supply concerns is also expected to benefit Australian wheat exports in the 2022-23 season.
Hot, dry weather in the US and Europe also helped drive world grain markets sharply higher. US soybean and corn futures surged as arid, hot weather threatens yields. Timing could not be worse for US summer crops where soybean and corn crops are in the middle of pollination and seed fill, when crops yields are most exposed to adverse weather.
Europe's corn production estimates are also in retreat as the region swelters through its worst drought in years.
Domestic markets were little moved last week where buyers are mostly comfortable against old crop positions and are in no rush to chase new crops sellers. Nonetheless, strengthening global markets bodes well for the new crop prices.
Southern Queensland farmers are looking for top-up rains after several weeks of dry weather. Weather models are tipping showers through the week with the best chance of rain on Thursday and Friday.
Extended weather outlooks for Australia are favourable for eastern Australia and SA, but WA could see a drier than normal finish.
Sign up for our newsletter to stay up to date.