Lotfeeding

Feedgrain Focus: Mostly steady amid reduced demand

Liz and Henry Wells, July 3, 2020

A well advanced barley crop growing at Lake Cargelligo in central NSW. Photo: Andrew McFadyen

LIMITED selling from traders and growers is supporting prices in most markets, with prompt sorghum delivered Darling Downs and wheat delivered Melbourne the only quoted prices to post significant drops this week.

Northern and southern new-crop wheat markets are showing surprising strength based on domestic markets now trading at export parity.

This week Last week Change
Barley Downs July-August $345 $345 Steady
Barley Downs Jan $265 $265 Steady
Barley Melbourne July-August $265 $265 Steady
Barley Melbourne Jan $245 $245 Steady
Wheat Downs July-August $395-$397 $397 Lower
Wheat Downs Jan $302 $292 Higher
Wheat Melbourne August $330-$335 $340 Lower
Wheat Melbourne Jan $290 $285 Higher
Sorghum Downs July $323 $330 Lower
Sorghum Downs Mar-Apr $275-$280 $270 Higher

Table 1: Indicative delivered grain prices in AUD per tonne.

Contrasting conditions

Light rain in south-west Victoria and south-east South Australia, and patchy showers into southern New South Wales, have helped consolidate prospects for above-average crops in most parts of those three states.

ADM regional grain accumulation manager Michael Vaughan said Central Queensland (CQ) cereal crops were struggling with a lack of moisture which has cast uncertainty over production prospects.

“There is no grower forward selling,” Mr Vaughan said.

The CQ sorghum harvest is close to two-thirds complete, and Mr Vaughan said growers had been making sales as they delivered to depots.

“Quality has been variable in places, and we’re seeing SORG1 and SORG2 and the odd load of SORGX being delivered to the GrainCorp sites.

“Ex farm bids are probably $270-280/tonne for July-August movement at best, and parcels have been steadily trading.”

The CQ sorghum crop was planted later than ideal, and a dry finish, coupled with late rain, has made for a drawn-out harvest.

Reduced demand

Sources report reduced cattle-on-feed numbers, and poultry production which is yet to return to pre-COVID levels, have ratcheted down grain demand in the near term.

However, dwindling availability of interstate grain arriving by ship in Brisbane is reducing supply to meet demand, and wheat and barley have traded sideways in the past week.

“The supply issue could be turned on its head by another boat very quickly,” one source in the feedlot sector said.

With new-crop Western Downs barley likely to be available to feedlots as early as late September, up-country consumers look wedded to filling orders from trucks and trains travelling north inland, and grabbing what they can from the Brisbane free-on-truck (FOT) market.

“We’ve had 90 per cent of our grain on the Downs coming by ship for two years, and now we’re at the end, no-one bringing vessels around wants to be caught long in a falling market,” another source said.

Traders are now looking to new-crop in northern NSW to fill requirement from late October onwards, but their bids have prompted little engagement from growers who are hopeful export demand for high-quality grain could fetch a premium.

Riordan Grains general manager Mark Lewis said demand from the Downs was supporting prices in northern Victoria.

“Some locations in northern Victoria are sending barley up through NSW and into Queensland.

“Stocks further north are at a premium, but that’s not going to last forever.”

Growers more than traders are believed to be holding current-crop barley, and Mr Lewis said they had little interest in selling any new-crop.

“I think we’re priced well enough to get some export business, and Australian barley is working into different domestic markets.

“On new-crop wheat, there’s not much grower engagement either.

“I don’t think there’s a lot of downside.

“The dollar is firming, and the grower is fairly happy to watch and wait.”

One cargo of Australian barley has recently sailed for Thailand, and two cargoes are now loading for China into what the market believes are tariff-exempt conditions.

Australian exporters are thought to have minimal unpriced barley left to ship to the market, and execution of these cargoes has further tightened  the supply side of the domestic equation.

Cottonseed

Slow demand and lack of grower selling also characterised the cottonseed situation in the current and new-crop markets.

Cottonseed values were quoted this week at levels similar to last, when ginning-period sellers had offered cottonseed at $515/t FOT in southern NSW, $540/t FOT Namoi Valley and $550/t FOT for Gwydir Valley sites. Values in that range would pitch the delivered Darling Downs offer for July and August delivery around $580/t.

New-crop 2021 delivered Darling Downs cottonseed, slightly easier this week, was quoted for even-spread gin period through to December 2021 delivery at $350/t.

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