Lotfeeding

Feedgrain Focus: Prices drop sharply in limited trade

Liz Wells and Henry Wells, May 1, 2020

GrainCorp staff at sites including Burren Junction are checking tarps ahead of the 2020 harvest. Photo: GrainCorp

PRICES for wheat and barley in nearby and new-crop markets have dropped sharply this week to reflect subdued domestic demand and the stronger Australian dollar, as well as buoyant production prospects for New South Wales, South Australia and Victoria.

Growers in all three states are mostly well advanced on their winter-cropping programs, and plenty of area has been sown dry in Western Australia, where 5-15 millimetres of ideally timed rain is forecast for next week.

Central Queensland remains dry, and prospects for many of its sorghum crops are slipping every day without rain ahead of its harvest which will start in earnest in June.

On the Darling and Western Downs of southern Queensland, some growers are dry sowing wheat and barley and hoping for around 10mm of rain in coming days to germinate the crop.

This week Last week
Barley Downs nearby $380-$390 $395
Barley Downs Jan $285-$290 $295
Barley Melbourne nearby $305 $330
Barley Melbourne Jan $270-$275 $280-$285
Sorghum Downs Jun-July $425 $440
Wheat Downs July $475-$480 $493
Wheat Downs Jan $325 $340
Wheat Melbourne nearby $390-$395 $415
Wheat Melbourne Jan $315 $330

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

Rain, dollar soften bids

In recent days, many cropping districts of South Australia, Victoria and central and southern NSW have had 30-40mm, and more in places.

Agracom export manager and trader Brett Donoghue said markets had softened in the past week.

“Everything’s come off the boil.”

Mr Donoghue, who is based on the Liverpool Plains of northern NSW, said many of the region’s growers were already planting longer-season wheat on slopes country, and were ready to plant the rest on rain now falling.

“Some areas would like to see a bit more rain, but everything is fallowed and ready to go, and people are chomping at the bit to get their crops in.

“The potential for the NSW crop is just colossal.

“We’re in danger of going back to normal.

“Agronomists are telling growers to plant something to get groundcover, and that’s what they’re doing.”

Mr Donoghue said the nearby grain market in NSW was ill-defined.

“Wholesalers are scratching their heads about what consumers and supermarkets are doing after the COVID-19 buy-up.”

Trade sources said growers have booked some new-crop tonnage for wheat and barley in the past week.

“They’ve been more active on new-crop rather than old-crop with more rain coming.”

In Victoria, Riordan Grains general manager Mark Lewis said the market had softened.

“That’s been driven by a reasonable amount of grower selling.

“There’s a bit of pressure on demand from feedlots and on malting, and the firmer dollar has had an impact on where our values are for export.”

“The export pull on commodities has slowed, and what’s happening now is executing business that’s already been done.”

With dwindling supplies of unsold grain on hand, and patchy demand from an export market befuddled by COVID-19, it seems little bulk or boxed wheat and barley business is being written.

“It’s hard to get new business together.

“It looks like June to August will be pretty quiet.”

Supply tight in SA

In South Australia, Long Seed & Grain principal David Long said the state is having its best start to the cropping season in years, and growers have mostly now sold all their grain stocks, and made a start on new-crop sales.

“There’s not much grain left in growers’ hands, and there’s been a bit of forward selling.”

The tightened supply of SA wheat is supporting nearby values, with the Port Adelaide track market now at around $410/tonne for APW.

“There’s a fair export program that’s taken place, and about 700,000t of wheat has gone overseas or to east-coast consumers from SA, and that’s just to the end of February.

“Things could get tight in the back half of the year.”

Mr Long said the excellent start to the season meant some growers could be looking at wheat yields of 5-6t per hectare, which could well pressure new-crop values if growing conditions are kind.

North covered for now

Queensland markets are particularly quiet as the feedlot sector readjusts to subdued demand for export and domestic beef and a stronger dollar against the backdrop of strong feeder cattle and nearby grain prices.

“The market’s as dead as a doornail,” one feedlot source said.

“Most consumers thought they were 100-per-cent covered to the end of June, and it turns out they’re covered for July and August too.”

“That puts old-crop under a bit of pressure.”

Cotton drags

Cool, wet weather has further delayed cotton picking in the Murrumbidgee Irrigation Area.

“While a couple of gins are about to start in the Namoi Valley, not much cotton will be ginned until after mid-May in most valleys on account of cool temperatures and wet weather,” Woodside Commodities manager Hamish Steele-Park said.

“Good rain across NSW including 40mm in the Central West, and decent falls southern NSW have been great for dryland winter cropping, but it has again delayed cotton crop defoliation.”

“Conditions for picking are not great and yield potential of the cotton crop is dropping.

“I would think lint quality might also suffer.

The tone of prices current crop is weaker, and new crop 2021 unchanged. Traders said the spread between bid price and offer price would likely remain wide this year, feedlot margins uncertain and paddock demand practically halted for the moment.

2021 crop cottonseed delivered Downs was valued around $360/t.

US cotton lint prices recovered more than 10pc in April, but the currency effect limited the rise in Australian cotton bale prices to half that.

ASX new crop down 6pc

Australian currency appreciation against US dollar over 4pc in a week drove Australian dollar-denominated wheat prices lower. This was most apparent in new crop, where the January 2020 east coast (WM) 2020 wheat futures contract yesterday closed at $315/t.  Settlement price had been $18/t, about 6pc, higher settling at $333/t on the Wednesday prior.

Trade in all contracts was more active this week than last.  Wheat futures and options trade amounted to 2124 lots.  Barley futures traded 750 lots.

Barley January 2021 contracts also fell about 6pc, yesterday settling at $259.80/t.

Current season contracts were lower than a week ago by a smaller margin than new crop, the barley May contract settling $9.50/t lower and wheat by $14/t.

 

 

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