PRICES for nearby wheat and barley have fallen sharply in northern markets in the past week as deliveries accelerate, while the southern new-crop wheat market has lifted in line with firming world values.
Harvest is now under way in all states bar Victoria, where 10-30 millimetres of rain and more in places yesterday will help crops to pile on yield.
South Australia has received similar amounts, and this has slowed activity in its first week of harvest.
Daytime temperatures are now creeping above 30 degrees Celsius in Western Australia, northern New South Wales and Queensland, where harvest is gathering pace in ideal conditions.
Early harvested crops are hitting domestic feed markets and nearby export slots, but growers in and south of central NSW are loath to forward-sell wheat and barley as they remain concerned about the risk of downgrading if further rain falls.
They are also hopeful of further price rises if dry weather continues to plague the 2021 production outlook in parts of the Northern Hemisphere.
|Barley Downs Oct-Nov
|Barley Downs Jan
|Barley Melbourne Oct
|Barley Melbourne Jan
|Wheat Downs early Oct
|Wheat Downs Jan
|Wheat Melbourne Oct
|Wheat Melbourne Jan
|Sorghum Downs Oct
|Sorghum Downs Mar-Apr
Table 1: Indicative delivered grain prices in AUD per tonne.
Northern pace picks up
Northern barley and wheat harvest has accelerated this week on farms as far south as the Moree district, and much of the grain is going to feedlots either directly from farm or via depots.
Feedlots have been waiting for the current-crop inverse to collapse, and are now booking tonnage to cover themselves into next month when big volumes are likely to appear in the cash market.
Exporters are also busy accumulating for bulk wheat exports in a rising market, with Australian wheat landed into South East Asia now nominally priced a few US dollars per tonne below Russian wheat.
Emerald Grain managing director David Johnston said South-East Asian interest in Australian wheat had strengthened now that Russian wheat values had risen.
“There’s dryness in Russia, it’s dry in US Hard Red winter wheat areas, and it’s dry in WA, but it’s Russia that’s the big one,” Mr Johnston said.
“If they don’t get some rain on winter wheat areas, and if this is a global La Niña that affects the US and Argentina as well as Australia, this wheat market could have some legs.”
The southern Queensland harvest is showing barley yields of 2.5-3 tonnes per hectare, while best yields from early barley in northern NSW are around 4.5t/ha.
Wheat and barley yields are expected to climb once the harvest south of Narrabri gets going later this month.
Accumulation in NSW
Trade sources report NSW canola and wheat cargoes are being accumulated out of Port Kembla, and exporters are bidding APW wheat at more than AU$312/t, or more than $275/t for depots on the outer slopes.
Key Agri Services broker Matt Noonan at Wagga Wagga said domestic buyers had gone quiet during the rally of the past few weeks.
“They’re going hand to mouth, but if prices keep going up, they’re going to have to step in and buy a bit more,” Mr Noonan said.
“There aren’t too many arguments on the potential of this crop, but I don’t think there’s been a big rush to the door to price it until it’s in the bin.
“We’re seeing a rising market, and it’s not giving anyone much of a cause to do a heap of forward sales.”
Mr Noonan said exporters appeared to be preparing to pull parcels of grain out of well-placed rail sites.
“It’s definitely exporters and accumulators that are pushing multigrade prices on the wheat side.
“We’re going to be run by an export race.”
Victorian, southern SA and NSW growers have been getting the bulk of recent rain, and are undersold for this stage of the cropping season based on a combination of hopes for higher prices and fears about rain-related downgrading.
They are thought to be 20-30 per cent forward sold on wheat via multigrade contracts, and less on barley.
According to Lachstock Consulting latest barley production estimates released yesterday, the forecast for Australian barley production has dropped 250,000t to 10.15 million tonnes (Mt).
Lachstock’s estimate for WA has dropped 540,000t to 3.15Mt, while SA is up 200,000t to 2.7Mt, Victoria is up 70,000t to 2.3Mt, and NSW is up 20,000t to 1.82Mt.
It seems CBH Grain will supply two cargoes of WA December-shipment barley to the most recent Saudi tender.
Major SA bulk handler Viterra this week issued the first harvest report of the season, with CBH Group in WA and GrainCorp for eastern Australia expected to issue their initial 2020-21 harvest reports by early November.
Cottonseed picture changing
Participants in cottonseed trade are reporting current crop quotes drifting lower on extremely light volume, while next year’s crop ginned after Easter 2021 is showing little attract sellers to book the bids.
Current crop quotes delivered Darling Downs October/November even spread were around $480/t this week.
Woodside Commodities manager Hamish Steele-Park said October cottonseed had weakened to $430/t ex Gwydir Valley gins , and $420/t for Namoi Valley and Murrumbidgee Irrigation Area (MIA) sites.
New crop has seen little recent activity. While the gap between current and new crop has narrowed, price movement has been all in current crop getting cheaper as feedgrains have come down in price.
Quoted prices for new-crop cottonseed have not decreased.
Nominally delivered Darling Downs May to December even spread guide price this week was indicated at $355/t.
New crop cottonseed production has a chance of a significant turnaround from this year’s drought-reduced outcome.
Water storages continue to be depleted in the northern valleys and time is running out for that situation to improve ahead of cotton planting decisions made this month.
“However, the outlook for cotton production in southern NSW does remain a wildcard because there’s more water in the Riverina than there was a month ago,” Mr Steele Park said.
“Paddocks are still a bit wet there to plant early as they prefer to.”
The international price of cottonseed is also a factor.
US cottonseed sells readily into destination markets from October to January. Its price appears cheaper than Australia’s at the moment, but carry costs later in the US season would make it less attractive.
“Australian new-crop is broadly competitive versus US origin cottonseed into North Asia destinations for Australia’s post gin-period delivery slots mid-2021.”
At its recent company AGM, Namoi Cotton chair Tim Watson said: “Major storage volumes are still low in the north whereas in the south, volumes are up with encouraging water allocation announcements.
“Encouragingly growers are optimistic regarding their planting intentions.
“Current estimates put the 2021 Australian cotton crop between 2.1 million to 2.5 million bales which is in line with our previous forecast.
“This is encouraging for the upcoming season and ginning volumes.”
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