A LULL in consumption markets may be signalling a change in tempo as consumers, with their orders mostly covered to early December, reduce their buying volume to weigh up prospects for the winter-crop harvest now under way and chances for a summer-crop plant.

Traders said the catalyst – the rapidly falling bid price for barley at heavy discounts to wheat – had suppliers keen to get sales booked for first-half 2020 delivery to southern Queensland and northern New South Wales consumers.

“People are trying to sell Downs,” one Victorian trader said.

“Wheat is pretty much holding its ground and the southern barley market is falling away.”

Feedlots nearby cover

“While business has been getting done for October, November and December, feedlots are sitting aside now on January to March,” ADM regional grain accumulation manager Peter Dorney said.

“Supplies from Central Queensland were in strong demand a couple of weeks ago for prompt.”

Recently, November and December CQ wheat was booking slots into the Condamine feedlots at values around $420-425 per tonne.

Meantime northern NSW feedlot requirements are being fed the same way as has occurred for more than two years now.

“Rail and road movements are continuing to arrive in Moree from southern NSW and Victoria,” Mr Dorney said.

It would appear old-crop tonnes of wheat and barley presently were being cleared from southern grower storages to make way for imminent new crop harvest.

The market for sorghum saw little or no input this week in view of the presently slim chance of widespread summer planting of sorghum in both NSW and Queensland this year.

Sorghum current-crop was still coming out of storage in small volume at prices delivered Brisbane of around $410-415/t November/December.

Delivered Downs sorghum current crop would value around $400/t delivered Downs, meaning the current discount of sorghum under wheat would be about $25/t.

CQ yesterday, southern today

Robinson Grain Toowoomba-based trader, Anthony Furse, said the $20-25/t dip in new crop barley cash prices this week switched the focus away from CQ where harvest was well over halfway and towards interstate barley.

“Barley fot Brisbane would be $355/t delivery January plus carry,” Mr Furse said on Wednesday afternoon.

“That market is following through on the huge downward moves we’ve had in southern barley.

“The $355/t Brisbane fot would value barley at $380/t delivered Downs January plus carry and likely you could expect to trade sub-380.

“Wheat Brisbane January would be $395/t fot.

“Boat barley will continue through the year and SA barley overland will work into Narrabri.”

There’s still an inverse between October to December prices and January to March prices.  In the case of wheat, $405/t wheat fot Brisbane nearby and $395/t January suggests the inverse remains around $10/t.  Barley’s inverse arguably may have increased compared with the previous week.

ASX barley wheat record spread

ASX wheat futures traded only 1pc lower during the week, though barley dealt downward in a price range of more than 6pc.

The ASX feed barley (UB) January 2020 contract settled on Wednesday, the week low, at $281.50/t compared with settlement at $303/t a week earlier and $316/t the week before. Barley volume traded was 30 lots and open interest fell to 2147 lots.

It was significant that barley ASX contract traded at $70/t differential to WM eastern wheat.

The eastern wheat (WM) January 2020 contract settled yesterday at $355/t, down $1.50/t since a week earlier, the week high $358.30/t and low $353/t.

It traded 2107 lots this week. Open interest fell to 12,594 lots.

“The dramatic move on that spread, was probably due to combines starting to roll in some parts,” Bell Potter Securities client adviser Bob White said.

While at some time the spread had been as narrow as $43/t, Mr White felt it had done most volume around $50-55/t.

“Outright the January barley prices peaked around $318/t just after mid-September at which point you might have expected open interest to also peak but it has been rising as prices have been falling.

“Hard to tell if it is speculative selling or the trade trying to lock in the higher prices. I would expect Jan barley to find buyers at $275/t though.

“Open interest peaked in Jan wheat at 13,830 positions on 10th October, not long after the second time the market traded at $370/t.

“A clear seasonal peak and open interest has fallen since but not dramatically. Speculators exiting it would seem.”

Cottonseed drags, lacks vim

For the first time in many weeks cottonseed quotes have stabilised, starved of both competitive commodity supply and willing demand.

“Cottonseed values are treading water, but seemed to have run their course now,” Woodside manager Hamish Steele-Park said.

“Afraid there’s not any liquidity old or new crop.

“It seems consumers are factoring in other options at these prices.

“The only demand is the grazier, in small quantities, spot loads, prices ex MIA 635-640/t, Macquarie 680/t, Moree 690/t and Namoi Valley 680/t delivery October 2019.”