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Feed grain update: heat wave drives market surge

by Luke Walker, Alliance Grains, Toowoomba, 16 February 2018

Luke Walker, Alliance Grains

2018 Australian grain markets are proving to be as unpredictable as a Friday night political staff party.

February has been a shocker for crops with record breaking heat waves and extremely dry conditions creating supply concerns for the market and causing grain prices to surge as a result.

Rain gauges are dying of thirst, leaving everyone scratching their heads wondering what happened to the predicted La Nina. Markets will continue to firm until we see a formidable rain event and some good falls in the gauges.

The sorghum harvest is just getting started in southern Queensland. Growers report a mixed bag with some crops that had a good moisture profiles at planting still in good shape. Others areas though have seen yield and quality losses from the hot and dry conditions.

We also saw the Australian Bureau of Agriculture Resources Economics and Sciences (ABARE) release its official estimates of 2017/18-sorghum production this week – it expects the crop to come in at 1.47 million tonnes, with Queensland expected to harvest about one million tonnes and New South Wales almost all of the rest.

The sorghum market has had a cracker up it for the past two weeks. Prices Delivered Downs have rallied $25 for the month of February, with delivered Downs trading this week at $305/t for March/April delivery. Early January the same market was trading at $260, so we’ve had an overall increase of $45 already this year.

The volatility in the sorghum market has caught buyers off guard and most are waiting for a dip or some harvest pressures in this market. Although we are still seeing buying interest into export markets from China and demand from poultry and ethanol buyers locally.

Wheat and barley markets had been very subdued for the past three months, with prices trading on the Darling Downs delivered local feedlot in the $320 -$330/t range. But the recent fireworks in the sorghum markets has also cranked up the white grains as well.

Wheat and barley have seen a $15 increase in price in recent weeks, with prices delivered Downs trading at $345/t this week.
Southern markets through New South Wales and into Victoria have all fired as well buyers widen the drawing arc for wheat and barley.

Cotton seed markets have had a fascinating past 12 months with seed trading within a range of $180 range.

This is from lows of $240 to highs earlier last year of $420 in Southern Queensland.

Markets in recent months have had little export demand and domestic buyers are happy to watch prices drop.

The new crop cotton harvest is just kicking off in Central Queensland and the Darling Downs is expected to start picking in early April. New crop cotton seed has also been lacking of support with limited export demand and a domestic market happily watching it slide. Current seed prices for new crop would have April to October delivered Downs at sub $280.

The potential to export our seed into China can change if clarification and certain hurdles currently under negotiation can be agreed to.

China start their New Year festivities today, with celebrations marking the Year of the Dog with holidays running for the next two weeks, so we wouldn’t expect to see any change or export demand from them for the time been.

    • Wheat into Darling Downs Feedlots trading $340 delivered March.
    • Southern NSW in Riverina area wheat delivered $270 and Victorian Goulbourn Valley wheat prices has held values pretty well at $266.
    • Barley markets continue to trade at parity or above wheat. Barley is losing favour with buyers as they look to wheat as their preferred grain.
    • Sorghum has had no interest from feedlot buyers at $305 delivered Downs.
    • Liverpool Plains new crop sorghum delivered at $290 wheat $315 and barley $306
    • Feed wheat delivered Murray Bridge in SA $255


  • 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 luke@alliancegrains.com.au or 0427 372 793 or twitter @lukewalker711


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