NORTHERN markets are grappling with quality issues in the wake of widespread rain and pressure from mice, while in the south, values have firmed on the back of limited grower selling and offshore strength.
This has been fired by the USDA’s initial estimate for US summer-crop planting, with corn, soybean and wheat futures all up sharply in overnight trading.
Following a fortnight of flood interruptions to roads and rail in northern New South Wales and pockets of southern Queensland, most major routes have now reopened.
That includes the Moree-Narrabri North line, which reopened on Monday night and is now feeding grain into the port of Newcastle via the Hunter Valley Network.
|This week||Last week||Change|
|Barley Downs April||$265||$267||Down|
|Barley Melbourne April||$258||$250||Up|
|Barley Melbourne January||$265||$250||Up|
|Sorghum Downs April||$305||$305||Steady|
|Wheat Downs April||$292||$295||Down|
|Wheat Melbourne April||$309||$295||Up|
|Wheat Melbourne January||$298||$300||Down|
Table 1: Indicative prices in AUD per tonne.
Trade sources report at least one receiver of grain for export out of Brisbane has refused some loads on quality grounds, which includes rodent droppings in wheat, and sprouting in sorghum.
While significant tonnages of sorghum had been harvested before last month’s rain, and more will come from the later crop, many crops that were ripe during the rain are being knocked out of the Sorghum 1 category by sprouting.
“April is going to be a bit of a struggle; there’s a lot of growers with sprouted grain,” one broker said.
“Plenty of Sorghum 1 has been sold for March-April delivery, and if it didn’t come off in the paddock before the rain, it mightn’t make the cut.”
“The question is: Where does that sprouted sorghum fit in the market.
“It’s got to come in at less than barley at $260-$265 delivered to buy itself some demand if it’s Sorghum 2.
“Noone’s interested in anything with more than 10-per-cent sprouting now.
The source said downgraded sorghum might have to fall to $30-$35/t under barley to buy itself some demand from the poultry sector and stockfeed mixes.
“Not a lot of it will go into feedlots because once it sprouts, its nutritional value isn’t as good.”
Once exporters’ S1 commitments are covered for April, the May market is expected to trade at up to $20/t less based for good-quality grain in ample supply.
“That late crop on the Downs and in Central Queensland is looking really good.”
Growers on the Downs have resumed harvesting after the rain, and some crops have escaped sprouting problems.
Late crops look good
At Narrabri, Priag principal Kevin Schwager said quality issues in sorghum were minimal, and on the Liverpool Plains, crops were at the ideal stage to get a yield boost from rain.
“The rain’s certainly taking the edge out of the barley and sorghum market, but there are a lot of positives.”
“Liverpool Plains sorghum is looking first class.”
While growers in the central west are having trouble with mice, most unsold grain in farmer hands on the north-west slopes and plains of NSW has either been warehoused, or is in sealed storages.
“Values we’re seeing now haven’t quite reached those levels of about this time last year, so growers aren’t that keen to sell.”
Meanwhile, grower attention is switching into the planting of new crop.
“We sit here at the start of April, and everyone’s pretty ecstatic after the rain.
“Canola planting will start in the next two weeks, and fabas after that, and then cereals.”
Armidale-based trader Wal Broun said the overall feeling in the grain market was one of softness.
“There’s a lot of anxiety among growers because of the mouse situation.
“They are wanting to unload wheat and barley that’s stored in sausage bags to get it away from the mice.”
Mr Broun said while the amount of sprouted sorghum coming to the market was not large, it was still weighing on price ideas.
He said sorghum delivered Newcastle and stockfeed wheat were trading at similar levels at around $290/t.
“In Brisbane, there’s still a premium for prompt-delivery sorghum because of the shipping deadlines.
“People are running behind on deliveries, and the sorghum harvest is late because of the rain, as well as mouse problems.
“It’s all a bit of a mess.”
Mr Broun said barley values had fallen $10-$15/t on the Downs in the past two or three weeks, around $15-$20/t into Newcastle, and more in the central west of NSW, where mice were hitting hard.
“Most consumers aren’t able to accommodate all the grain that’s being offered to them now.”
Mr Broun said Australia’s jam-packed shipping stem was preventing the Australian market from capitalising on any gains in global values in the short term.
“There’s a bit of a disconnect with the international market because the shipping slots aren’t available.
“Our wheat is still very cheap and out basis is the lowest it’s been for quite a while, but if fresh business turns up, the next slot it can book into is July-September.”
“That means consumers are seeing plenty of wheat, barley and sorghum being offered, but they don’t want to be paying the export price for it.”
Emerald Grain managing director David Johnson said the overnight kick in futures has been supportive of southern prices following an easing in values over the past week or two.
“The market’s grappling with the global inverse and demand for barley, but we’ve got a global feedgrain story now.
“The US corn area the USDA came out with is lower than anticipated, there are problems with Brazil’s safrinha crop.
“There’s no room for error, and wheat’s just following along.”