Grain markets on the East coast of Australia are rocketing along at breakneck speed and, to date, they haven’t been able to find a reason to soften.
A recent factor causing markets to rally was the Ukraine/Russian blow up which has pushed global wheat prices about $25 higher, and on our domestic grain market in Australia about $10 a tonne higher.
Ukraine and Russia have developed into large players over the last decade in wheat and corn exports, and combined contribute about 18pc of the global wheat trade. Ukraine accounts for about 16pc of the world corn trade.
If the situation escalates into a warlike conditions grain exports from Ukraine and Russia could be impacted if their governments would impose wheat and corn export bans/restrictions. It is worth keeping an eye on but this situation could yet blow over as well.
Globally there aren’t too many other supply issues and most are comfortable with production, particularly India. With plenty of supply this spring they should harvest more than 100 million tonnes. India produced 94 million tonnes in 2013. A jump in the area planted this year with favourable weather conditions are the main reasons behind expectations of a record crop. India needs 76-77 million tonnes of wheat a year to feed its population. Canada has had major logistics issues in rail and road with freezing conditions still in the early part of spring and no end yet in sight for their cold winter.
Strong demand is still being seen from consumers on the Eastern States for predominately wheat and small amounts of barley. Wheat and barley supplies are still originating from the Southern NSW area and sometimes from Northern Victoria too. Its a long way to cart grain, but the surpluses in the south are still filling the deficits in the north. We expect this to continue and potentially increase further.
Sorghum has largely been too expensive as yet to find its way into too many rations. But with wheat values continuing to surge this may change in coming weeks, as wheat gets harder to find and sorghum harvest pressure increases. The sorghum crop is definitely in need of a drink, and fast, if it’s going to hang on until it’s harvested.
Prices firm every day, although limited demand from cattle and poultry consumers, and we are still $15 away from working into China. Numbers this week on sorghum $338 delivered downs and delivered Newcastle $340
So, while local values seem excessively high, compared to international values, it’s purely a freight thing. Aussie wheat in the south can still work into export markets so for the short term prices seem well supported. When the Northern Hemisphere logistics ease after the thaw and the new crop winter wheat starts enjoying the spring weather the market sentiment may be a bit more relaxed.
Wheat delivered downs Feedlot April $365 Barley $350 and sorghum $338, cotton seed $435 landed downs for April.
- 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
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