PRICES for feedgrain for delivery in coming weeks have risen by $5-$40 per tonne to reflect the lateness of harvest and the shorts created as wet weather persists across much of New South Wales.
The rally has come despite a softening in offshore markets this week, with ABARES’ upward revision to estimates for the national wheat and barley crops a contributor.
Many consumers with animals to feed are now weighing up the possibility of swapping some or all of the feed barley in their rations to downgraded wheat.
It could easily account for at least half the NSW wheat crop, forecast by ABARES at 12.2 million tonnes (Mt).
However, few will make the move prior to mid-January, when most of the NSW crop should be harvested, and the extent of export demand for wheat with low test weights and/or some sprouting becomes evident.
|Barley Downs||$305 up $17||$300 up $12 Jan|
|SFW wheat Downs||$330 up $20||$325 up $5 Jan|
|Sorghum Downs||$330 down $10||$305 down $7 Mar|
|Barley Melbourne||$335 up $15||$325 up $5 Jan|
|ASW wheat Melbourne||$410 up $2||$415 up $40 Jan|
Table 1: Indicative delivered prices in Australian dollars per tonne.
North bears brunt
While Queensland’s harvest was near completion before last month’s rain set in, a big early wheat export program has tightened available supplies, and feedgrain users are looking to NSW for barley and downgraded wheat.
“There’s stronger demand into Queensland for SFW because there’s less downgraded wheat available there, so places close to the border like Moree are $20 higher than in the central west (of NSW), where there’s a lot of SFW around,” one trader said.
Plenty of new-crop grain harvested before the rain is sitting on farm, but most cannot be accessed because of rain-related road closures which spread from the Darling Downs of southern Queensland to the Lachlan Valley in central NSW.
Old-crop carryout and the capability of selected bulk-handling sites to load trains in the rain have been the saviour of exporters with vessels to load, and flour millers.
It appears to be domestic feedgrain users and the traders supplying them have been caught short by the paucity of sound-quality grain available this week.
It has blown out the spread between APW and SFW to around $120/t, and SFW is now available for around the same price as feed barley.
Integrated Animal Production nutritionist Rob Lawrence said feedlots and others are weighing up the pros and cons of using weather-damaged wheat and barley in their rations.
He said they may have to factor it in if downgrading is as widespread as many expect.
“We might not have a choice, but you’d want to avoid more than 30pc shot or sprouted in wheat or barley.”
Wheat is being downgraded on its falling number, which it a proxy for the amount of sprouting, and test weight.
SFW1 has a minimum test weight of 70 kilograms per hectolitre, 8kg/hl above the FED1 cut-off, and neither have a minimum falling number.
Mr Lawrence said the problem lies in its variability for those looking to develop stable formulations, and the risk of toxins in grain with some mould that can depress feed intake in animals, and sometimes illness.
“One load could be fine, one could be terrible.”
Barley quality unknown
The quality outlook for barley harvested post rain is also of concern, as most growers prioritised the harvest of bread wheat and canola ahead of the wet weather because of their higher value relative to barley.
Mr Lawrence said widespread downgrading of barley to specs below F2 would force further recalculation of ration inputs.
“They’ll have to create a F3 for barley.
“We won’t be able to work out what’s going on for a while yet.”
One Queensland-based trader agreed.
“Nobody will turn a wheel for a week or more in northern NSW, or get into unharvested crops in Queensland,” he said.
Totals for the week to 0900 today in Queensland include: Dalby 112 millimetres; Felton 145mm; Jondaryan 38mm, and Macalister 116mm.
Falls in NSW were patchier, and include: Coonamble 101mm; Condobolin 55mm; Gunnedah 62mm; Narrabri 33mm, and West Wyalong 35mm.
Another trader said downgraded wheat is being used by the poultry sector, but barley remains the grain of choice for feedlots.
“People want to lock up what barley they can before they have to deal with wheat.”
South short on grain
The harvest in Victoria, southern NSW and most of South Australia is running up to four weeks behind schedule, meaning some growers are just starting harvest at a time when they have usually finished.
With the export market still strong, up-country consumers are having trouble getting the supply chain to bring grain to them.
“Getting ASW wheat and feed barley into the Goulburn Valley is difficult for that reason,” one trader said.
South Australia and Victoria have had a mostly fine week, and harvest progress looks set to continue with only patchy showers forecast into next week.
Traders said some good-quality grain is being delivered in Victoria and parts of southern NSW, and this will allow short positions to be covered.
Deliveries from the eastern Australian grain harvest appear to be less than one third of what they were at this time last year.
In last year’s harvest to November 30 2020, GrainCorp had received 6.3Mt of grain in NSW, compared with 2.6Mt in this year’s harvest to November 29 2021.
In Victoria, the difference is more pronounced, with 346,820t in the GrainCorp bins as of Monday, compared with 1.5Mt as of November 30 last year.
“The delay in harvest has caught people on the short side,” Saputo Dairy Australia trader Tim Rhook said.
“The fact that we’ve seen this huge rainfall event has caused the market to capitulate.”
Growers in some districts are being bid more than $400/t for wheat on farm from domestic stockfeed millers, but rain interruptions have them loath to commit to nearby sales.
“The grower’s mind-set hasn’t had sentiment to sell.”
This means consumers in Victoria who are normally sourcing new-crop grain out of southern NSW at this time of year are having to find what they can closer to home.
This is putting some Victorian malting barley and milling wheat into feed homes.
“The domestic market has been short feed and if they can’t access grain out of NSW, they’re being forced to buy higher quality in Victoria in some cases.”
Mr Rhook’s feeling is that feed barley will stay in rations once the Victorian harvest gets going in earnest, provided southern NSW gets drier and not wetter, and SFW does not proliferate.
Encouraging signs on quality are coming from early wheat in the Mallee in South Australia and Victoria, with mostly APW seen in the market thus far.