Our grain markets have been in a downward spiral over the last few weeks which was exacerbated on Friday night when the United States Department Agriculture (USDA) released its latest global wheat, barley and corn production report.
The release put more pressure on our markets with forecasts that global wheat production will increase to 705 million tonnes globally with an increase of 3.5 million tonnes in the last month, and Australia’s forecast tonnage will increase 0.5 million tonnes to 26 million tonnes.
To put that into perspective, December wheat futures in the Chicago Board Trade (CBOT) have fallen from $7.65/bushel in early May to $5.57/bushel today.
In Australian dollars that equates to an $83/t or a 27pc drop from the start of May. Corn production globally is forecast to total 980 million tonnes. The CBOT corn price has decreased from $5.10/bushel in May to $3.85/bushel, which equates to a drop A$45/t.
It is interesting to note that in the US, values for corn ex-farm equate to about A$160, or $A180 landed when the $20 freight to feedlot component is included. Today wheat delivered Darling Downs feedlot is trading at $330, so crux of the story is that wheat delivered in Queensland is currently trading at a premium to export values, which is on the back of drier conditions, poor yields and consistent demand into stock feed markets.
However, contributing to our softer markets in Queensland is information that GrainCorp announced that 85,000m/t of wheat and barley would be shipped into Port of Brisbane from South Australia and Victorian ports, and reports of excellent conditions of southern winter crops, and with rain of up to 40mils in Dubbo overnight their production in the south remains promising. Will supplies for the southern Queensland feed sector have to be shipped from Southern NSW for a second year in a row?
Grain markets on the Downs this week are softer with wheat trading at $330 for August. Barley is still relatively scarce in the north and there is not a lot of buying interest. Reports of small parcels trading at $335. Sorghum is under pressure with good harvest conditions in Central Queensland and yields have been above average. Against limited export demand the market has been trading at $285 delivered Downs. Sorghum values have dropped $30 from early May.
Liverpool Plains wheat is trading at $300 and barley on the Plains is at $295 with little demand, sorghum is also quiet on the Plains. Riverina old crop wheat is trading at $268 and barley non-existent. Demand is equally difficult to find in Victoria, which seems to be a common theme throughout the East Coast with most domestic consumers happy to watch the local price fall with international markets. Delivered Goulburn Valley wheat is offered $265 and barley $250. Are you as confused as a Brazilian goal keeper?
- Prices quoted in this column are of an indicative nature only to illustrate trends and do not represent a definitive buy or sell price at a given point in time. For specific prices for your region contact the author at email@example.com or (07) 4659 0755 or twitter @lukergtgrain