BARLEY is trading steady to $15 per tonne higher this week, despite China as Australia’s biggest market announcing this week that it has imposed an 80-per-cent tariff on Australian feed and malting grades for five years.
Trade sources have told Grain Central the market factored the tariff into values in the previous week when China flagged the announcement.
They say domestic and export customers have absorbed any tonnage earmarked for China now that the drought premium has eroded in the northern domestic market, and cargoes are being offered at export parity.
Nearby wheat markets have softened as reduced demand from poultry impacts values, but new-crop wheat prices have lifted on concerns in Queensland and Western Australia, where much of the crop is not yet planted or established.
|This week||Last week|
|Barley Downs June-July||$345||$345|
|Barley Downs Jan||$255-$260||$245|
|Barley Melbourne nearby||$260-$265||$250|
|Barley Melbourne Jan||$245||$240|
|Sorghum Downs Jun-July||$390||$390|
|Wheat Downs July||$420-$425||$435-$440|
|Wheat Downs Jan||$310||$310|
|Wheat Melbourne nearby||$370-$375||$375|
|Wheat Melbourne Jan||$305||$300|
Table 1: Indicative delivered grain prices in AUD per tonne.
Barley buys demand
Two cargoes of Western Australian barley and one now loading in South Australia are expected to discharge as scheduled in China.
Trade sources say a limited number of forward sales of malting to China are now booked into new homes in the feed markets of Saudi Arabia and Thailand, and this has taken supply-side pressure off Australia’s domestic market.
“The positive is that Australia hasn’t washed out any cargoes,” one source said.
“Our barley into Thailand is cheaper than Black Sea wheat, so it’s good buying.”
Cory Johnston senior grain trader Justin Fay said traders rather than growers have been selling new-crop grain in the past week.
“There’s a little bit of new-crop happening, but it’s all trade.”
He said barley’s rebound this week followed the sharp falls of up to roughly $25-$35/t in the previous week, when markets were coming to terms with the prospect of China exiting the Australian market.
“The market’s absorbed it completely.”
At Junee in New South Wales, Hanlon Enterprises trader Peter Gerhardy said most Riverina growers were 90-95 per cent planted, and the crop was looking “exceptionally good”.
“Growth has been phenomenal, and the biggest thing the growers face now is getting enough stock on the crops to keep them down.”
“There’s no doubt that Monday a week ago, when the news about China hit, there was a considerable amount of uncertainty, and markets fell away.
“This week they’ve rebounded $10-$15 for old and new-crop, because people have to remember what isn’t around from the light season we had last year.”
Mr Gerhardy said growers have been particularly reluctant to forward sell.
“A lot of NSW growers have just had two bad years, so they’re sitting back and waiting to make sure their crop will be a good one.”
Poultry, cattle numbers down
Mr Gerhardy said consumers appear to have taken out cover to July, and are now waiting on dips in the market to extend their positions.
Food-service is one of the industries hardest hit by COVID-19 restrictions, and trade sources have said the poultry sector has cut production in the short term by up to 15 per cent, which mirrors the drop in cattle on feed numbers over the March quarter.
“People are still grappling with what demand looks like,” one source said.
While demand may be subdued, so is selling interest from growers, who are unlikely to want to sell any stored grain before the new financial year starts on 1 July.
Showers improve prospects
Most growers in Queensland have been waiting for 10 millimetres or more of rain to get the wheat-planting program started in earnest.
In central Queensland, up to 25mm is forecast to fall by the end of next week.
Southern Queensland has today had falls of up to 20mm in patches, but generally much less.
This is pushing some intended wheat area into chickpeas and faba beans, which can be planted at depth to access subsoil moisture already present.
Wheat and barley in Queensland and Western Australia can be planted with confidence into mid-June, and WA is looking like having light but general rain in coming days to help get its dry-sown crops up and away.
Concerns are developing for some early-sown wheat crops between Moree and the NSW-Queensland border, where some districts are in desperate need of follow-up rain.
Tariff hurts ASX barley, wheat
Barley nearby futures fell another 4pc on China’s imposition of stiff barley import tariffs. Nearby wheat futures also fell, but new crop was practically unchanged and red crop quoted 2pc firmer.
July 2020 feed barley ASX futures on Wednesday settled at $245/t, 4pc lower than the $255/t price a week earlier. The January 2021 barley contract settled 1/2pc lower over the week to Wednesday, at $224/t. The 2022 January barley contract settled 2pc lower at $234.50/t yesterday.
The east coast (WM) wheat fell on the news of China’s barley tariff imposition. Current crop July closed yesterday 5pc lower than a week earlier, settling at $350/t while January 2021 wheat traded roughly within a 1pc range to settle yesterday at $300.50/t. Red crop, January 2022, wheat traded 2pc higher compared with a week earlier, to settle yesterday at $311.50/t.
Cottonseed values for 2020 current crop are drifting lower as ginning is slowly getting underway.
“There’s very little cottonseed trading activity in both seasons,” Woodside Commodities manager Hamish Steele-Park said.
Quotes gin spread ex Gwydir Valley sites were $590/t, ex Namoi Valley $580/t, ex Macquarie Valley $560/t and ex MIA $550/t. Cottonseed delivered Darling Downs gin spread was quoted $615/t delivered.
“The high price of current crop cottonseed is rationing demand, but there’s only a very small crop to shift.”
Previous quotes for 2021 cottonseed had indicated around $330/t ex gin gin spread and around $360/t delivered Darling Downs.
“Next year may be 5/mt lower now, but there has been no real activity.”
“Next year, 2021 delivery, prices are competitive into the feedlots with grain and other substitutes, but uncertainty over cattle numbers, beef export demand and political/trade issues has cottonseed users wary of the risks of buying forward now.”