WHEAT and barley values have traded mostly steady to lower in the past week as growers and traders reduce their stocks of current-crop grain and advance sales of new crop.
Tempering the fall is the mixed outlook for south-eastern Australia’s new-crop barley and wheat.
Victoria, eastern South Australia and nearly all of New South Wales are looking at above-average yields provided adequate rain falls in the next few weeks, but prospects are shaky for many crops in Queensland, and most of SA’s central and western growing areas.
|This week||Last week||Change|
|Barley Downs August||$350||$350||Steady|
|Barley Downs Jan||$265||$265||Steady|
|Barley Melbourne August||$272||$278||Down|
|Barley Melbourne Jan||$250||$243||Up|
|Wheat Downs August||$400-$405||$400-$405||Steady|
|Wheat Downs Jan||$300||$305||Down|
|Wheat Melbourne August||$358||$360||Down|
|Wheat Melbourne Jan||$295||$300||Down|
|Sorghum Downs August||$310||$314||Down|
|Sorghum Downs Mar-Apr||$270||$275||Down|
North eyes local supply
Feedlots on southern Queensland’s Western Downs appear to be connecting with growers within roughly 100 kilometres of them who have wheat and the odd barley crop with good yield prospects.
These will be available from September onward and, after a drought-driven run which for many started in early 2018, has allowed some feedlots to slow their buying of transshipped grain out of the free-on-truck Brisbane port market.
“It’s hard to get consumer bids out of the Condamine district because wheat is on their doorstep and those crops are looking pretty handy,” one trader said.
However, tonnage will be limited, and those feedlots are expected to switch supply to northern NSW early next year.
NSW crop looks solid
Apart from dry patches mostly north of Moree, the NSW crop seems to be the best in Australia for subsoil moisture and above-average yield potential, and traders with eyes on the Queensland feedlot and export pathways via Newcastle appear to be competing on new-crop grain.
“NSW is looking on track to produce a good crop, and will bolster Queensland’s grain needs,” Cory Johnston senior grain trader Justin Fay said.
The shrinking inverse between current and new-crop values for Victorian grain has pushed grower-owned tonnage into the market.
“Old-crop stocks are starting to come out of the woodwork,” he said.
While Victorian grain has been moving north by road and rail into NSW and Queensland for months now, the flow appears to have slowed ahead of its expected stop once new-crop northern NSW barley hits the market in late September, with wheat to follow in October.
Victoria therefore looks like having a big wheat and barley export program from January on.
“If you look at basis levels, we’re ultra-competitive, and we should be able to get sales away.”
Based on the current wheat-barley spread on new-crop of $35 per tonne delivered Downs, southern Queensland appears likely to opt for wheat, which should make bulk barley exports out of NSW for the first time since 2017 a possibility.
Mr Fay said a premium for wheat over barley of up to $40/t should keep wheat in feed rations well into 2021.
“If the spread doesn’t widen, you’d think wheat would be the grain of choice across most species.”
However, export customers are hoping harvest pressure weighs on Australian new-crop values by the time they have taken advantage of the same thing in the Northern Hemisphere.
Talk of China booking new-crop cargoes of eastern Australian wheat has been mildly supportive of new-crop values in port zones as far north as Newcastle.
“The trade is trying to clear out its stocks, but the consumer won’t want to buy one extra tonne at the old-crop price,” one trader said.
Sources report finding Victorian barley at a low enough price to fill even one B-double bound for Queensland has gotten difficult in the past week as consumers in Melbourne and the Goulburn Valley step into the market to book a load or two.
“Farmers that don’t need to sell are the ones that have grain left.”
Most crops in northern NSW are forecast to get 5-15 millimetres of rain on Sunday, which would consolidate their yield prospects for now.
At Narrabri, Agvantage Commodities broker Steve Dalton said crops were looking very good as they moved into the flowering stage, and some growers were advancing their forward sales program.
He said the market has been quiet in the past week as focus shifts into new crop.
“I haven’t been inundated with people trying to buy current crop, but there’s been some willingness to sell new crop.”
“The trade’s been buying and selling, and the grower’s been selling.
“Farmers really want to see rain soon, because if they don’t get rain they won’t be able to realise their potential.”
“These crops have set themselves to be big, and there’ll be using a lot of moisture once the weather warms up.”
Mr Dalton said some growers were heeding the longer-term forecast for a wet spring by booking a small tonnage of downgraded wheat as the segregation seen as having the greatest downside on price.
Cottonseed slips, new crop will buy demand
While the high price of current crop cottonseed reflects that the crop picked this year was very small, asking prices well into the $500s per tonne are doing a good job of rationing demand, according to Woodside Commodities manager Hamish Steele-Park.
“Current crop values continue to slip lower due to lack of demand.
“Nominal asking prices for August 2020 pickup are $515/t ex MIA and Macquarie Valley sites, $530/t ex the Namoi Valley and $540/t ex Gwydir Valley sites.
“New crop is a different story.
“Crop production next year may be 1.7 million bales according to industry sources with production in Queensland up substantially. New South Wales production however still an issue as NSW dams are low and water allocation in most valleys at this stage is at best 10-15pc.
“New crop 2021 prices are inverted and cottonseed is competitive compared with meals and new crop grains which means cottonseed new crop will buy demand.
That prediction is supported in essence by much improved cattle grainfed trading budget figures published in yesterday’s Beef Central story here.
Nominal values delivery gin spread 2021 were $300/t ex Namoi Valley, $310/t ex Gwydir Valley and $285-290/t range ex MIA.
Delivered Downs was quoted approx $350/t even spread delivery May to Dec 21.