Feedgrain Focus: Domestic shorts lift nearby wheat

Liz Wells and Henry Wells, 14/04/2020

A ripening crop of sorghum north of Goondiwindi. Photo: David Beare


TIGHTENING supplies have pushed up values for nearby wheat in the domestic market, while the continued run of exports to China is supporting barley values.

Following solid tranches of export business in barley and wheat written earlier this year, the gain in spot prices is discouraging fresh export and preserving stock for consumption at home.

“Australia’s pricing now looks to be putting its wheat at the end of the queue in Asia,” Commonwealth Bank director agri strategy Tobin Gorey said.

“The Australian grain market appears to be in no rush to export.”

Trade sources have told Grain Central the poultry sector was driving the wheat market, with the nearby wheat-barley spread now at $80-$90 per tonne, more than double the norm.

New-crop markets are little changed this week, with minimal activity now that growers in south-eastern Australia are busy either planting their early winter crops, or preparing to get started.

Northern lift

The whopping wheat-barley spread has bought the cheaper grain considerable demand, and nearly all feedlots and non-poultry mills are using barley only.

However, those that need wheat are having to follow the market up.

“Wheat is creeping higher,” Carpendale trading manager Andrew Jurgs said.

“It looks like there’s a little bit of tightness in the back end of this year.

“Despite wheat’s spread to barley, it keeps going up.”

On sorghum, the track and delivered markets are strongly bid, with the nearby Brisbane track market at $520/t, and the prompt delivered Downs market at $480-$485/t.

Southern shipping out

A cracking export pace in containers and bulk for wheat and barley ex southern ports is keeping any supply-side pressure away from up-country domestic markets.

This has been evidenced by Viterra’s announcement this week that it has out-turned 2.5 million tonnes (Mt) of grain since October, and loaded 1Mt at its Port Lincoln terminal alone since November.

“Exports for wheat and barley, especially wheat, until now, and boxed and bulk barley business in June-July are supporting that market,” GeoCommodities broker Brad Knight said.

A bulk vessel is loading export barley this week in Geelong, and indicates Victorian barley was bought itself some demand given its recent discount to South and Western Australian grain.

“WA grain is expensive, and it’s running out.”

Mr Knight said some domestic end-users were booking grain for slots from July onward, as well as nearby.

“That realisation that it’s not a liquid market seems to be hitting home.”

In southern NSW, the barley market has jumped by around $25/t in the past three weeks to $340/t delivered end user, and wheat is at more than $415/t.

“There’s just not a lot of around out here,” Temora trader Bill Preston said.

“A lot of people thought there’s a  lot of grain in Victoria, but there’s no way you can buy it for around here in this market,” he said.


This week Change from last week
BARLEY Downs nearby $404-$410 Steady
BARLEY Melbourne nearby 330-335 Steady
BARLEY Downs Jan 297-303 Steady
SORGHUM Downs Jun-July 435 Steady to $2 higher
WHEAT Downs nearby 500-502 Up $15
WHEAT Melbourne nearby 410-415 Up $5
WHEAT Downs/Melb Jan 345-350 Up $5

Table 1: Indicative grain prices in AUD per tonne

While some parts of south-eastern Australia are still in need of rain to look forward to an early plant into good moisture, most districts are well set up to get cracking on or before Anzac Day.

Registrations in the week to 9am today included: Coonabarabran 42mm; Dubbo AWS 72mm; Manildra 47mm; Moree 18mm; Narrabri 19mm; Tamworth 28mm; Trangie 65mm; Walgett 39mm; West Wyalong 41mm, and Young AWS 37mm.

Victoria has also had good but generally patchier falls over the week: Birchip 17mm; Charlton AWS 40mm; Donald 37mm; Kerang 12mm; Nhill and Warracknabeal 2mm, and Ouyen 13mm.

South Australia’s graingrowing areas have generally had 10-35mm in the past week, but little has fallen in WA and Queensland, and both states are looking for rain.

Dryness is curbing yield potential for the central Queensland sorghum crop, which continues to be strongly bid in track and depot markets.

Cottonseed patchy

Prices for current-season cottonseed have not followed grains up, according to Woodside Commodities manager Hamish Steele-Park.

“Liquidity is patchy for 2020 season cottonseed, and will remain so given such a small crop.“

Gin-spread values were still quoted around $590/t ex gin Gwydir and Macquarie valleys.

New-crop 2021 gin spread Gwydir Valley was quoted $325/t, Namoi Valley $320/t and delivered Darling Downs $360/t.

Traders said pricing conditions for cotton growers’ gross margins had fallen in a heap as international cotton lint values had been struck lower as a result of fibre demand reduced by COVID-19.

Not only were merchants out of the money on longs, but growers with unpriced bales they expect to harvest shortly have watched bale returns fall from around $600/bale to the high $400s.

Low prices globally could reduce northern-hemisphere cotton plantings next month, which may offer Australia a relative benefit in its cotton planting window in spring.

New-crop inverse widens

Current-crop wheat and barley ASX futures prices strengthened, reaching a peak on Tuesday more than 2 per cent up from one week ago.

The May 2020 east coast WM wheat contract high this week on Tuesday settled at $408/t and the barley contract at $315/t.  Last Thursday, they settled at $400/t and $307/t respectively.

New-crop prices have dipped over the week because prospects have been improved by rain which has brought optimism for planting conditions.

The January 2021 wheat contract week-high settlement on Tuesday was $344/t, $2/t below last Thursday, and barley settled at $279/t, $6/t below last Thursday.

December 2020 wheat $325/t put options traded at $20/t on Wednesday.





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