Rainfall Boosts Wheat Prospects as Cottonseed Values Eased

Rainfall in eastern Australia has boosted production prospects for northern cereals and made southern wheat crops appear even larger. The southern wheat market is bucking this week's trend, supported by buying for export cargoes as Asian customers look to shore up uncertain supplies from the Black Sea.

Northern consumers are comfortable with the region's wheat carry-out and new-crop production will provide plenty of grain available. However, narrowing the spread is the outlook for new-crop freight rates, at least 25% above levels available earlier in the year due to expensive diesel.

Cottonseed values have eased in response to recent rain, which has not been enough to bolster the new-crop production outlook. AgVantage Commodities director Steve Dalton said northern NSW crops are a long way from turning and will happily soak up the rain. However, he warned that growers are saying crops are hanging in there, but the test will be if it doesn't rain and the weather warms up.

Woodside Commodities managing director Hamish Steele-Park said cotton crop production is expected to decline significantly next season, with most calling for 3 million bales. Indicative values for cotton ex-gin are $545/t in the Gwydir Valley, $540/t in the Murrumbidgee, and $515/t in the Macquarie Valley.