Feedgrain Focus: Trade thin in easing market

Liz Wells, 29/08/2022

Wheat crops like this one are powering along in Victoria’s Wimmera region. Photo: Ryan Milgate

MARKETS for feed wheat, barley and sorghum have softened this week to prices that most growers are not prepared to take, while consumers have ratcheted back their buying in the hope of further falls.

Overshadowing the market is the groaning supply chain, particularly into Brisbane, Newcastle and Port Kembla, which is redirecting some tonnages, bought with export in mind, into the domestic market.

Prompt Aug 18 New-crop Aug 18
Barley Downs $380 $385 $350 $375
SFW wheat Downs $395 $400 $385 $398
Sorghum Downs $345 $350 $330 $332
Barley Melbourne $360 $368 $363 $365
ASW Melbourne $400 $420 $405 $412
SFW Melbourne $380 $400 nq nq

Table 1: Indicative prices in Australian dollars per tonne.

In the week to 9am today, rainfall was mostly light in Western Australia’s grain-growing regions, and in northern NSW, with a mostly dry week in Queensland.

South Australia, Victoria and southern and central NSW had more substantial falls.

In Victoria, registrations included: Dimboola 20mm; Nhill 16mm; Rupanyup 21mm; Woomelang 19mm.

In South Australia, registrations included: Clare 30mm; Cleve 25mm; Crystal Brook 13mm; Jamestown 34mm; Kadina 14mm; Kimba 16mm; Lameroo 15mm; Maitland 26mm; Pinnaroo 6mm.

Falls in NSW were patchier, and included: Parkes 27mm; Quirindi 4mm; Temora 13mm; Trangie 13mm; Wee Waa 2mm; West Wyalong 8mm; Young 24mm.

North loses interest in wheat

Smithfield Cattle Co Brett Carsburg said while quality of barley and wheat from the upcoming harvest in southern Queensland and northern NSW is unknown, volume is assured.

While the Northern Hemisphere crop is not without its issues, namely dryness in parts of the US, drought in Europe, and the war in Ukraine, some big tonnages are starting to hit the market.

“We’ve been drifting $5/t plus a week, even though futures have traction with what’s happening in the US and Europe.

“There’s a big crop coming at us,” Mr Carsburg said.

Some feedlots are preparing to reduce or remove wheat from their rations.

This is normal in the summer months, when barley is generally preferred by those feeding for 130 days or less to reduce metabolic heat.

“Some feedlots want to stay on barley…but all of us will rejig our rations for summer.”

This has reduced demand for SFW wheat already, as has the feedlot sector’s wariness about the possibility of the forecast wet summer.

“It could be a struggle to get cattle out of paddocks, and processors might slow down as we head into Christmas.”

“The cattle industry is being very very cautious due to this uncertainty.”

Feedlots and poultry operations are loath to overbuy while the domestic market is softening, and with supply chain issues already impacting prices from central NSW to southern Queensland.

“There’s a possibility that our domestic market will trade at a discount to export parity during harvest.”

Delta Ag broker Tom Vanzella said August was traditionally a quiet month as consumers waited to gauge the size and quality of Northern Hemisphere production, and growers looked to get a handle on their new-crop potential.

This has put the handbrake on grower selling, and sources generally say bids and offers are a long way apart.

“Our growers are being cautious,” Mr Vanzella said.

“Most made reasonable sales a month or so ago, and the season hasn’t changed; it’s still wet.”

Mr Vanzella said multigrade contracts for new crop were showing a big discount for SFW based on floating spreads, and this was further deterring growers from booking tonnes at current values.

“At $130-$140/t under APW, that’s not fair value for feed wheat.”

Mr Vanzella said protein levels were of concern for those growers who have been unable to top-dress wheat with urea because of ongoing wet conditions.

“Fertiliser programs aren’t 100 per cent of what they could be.

“There’s a lot more going into grower marketing decisions than just price; there’s also grade risk.”

NSW has plenty of wheat crops, mostly early sown ones, which have high yield and good protein prospects, but many more in northern NSW will be lucky to make Australian Hard segregations if wet conditions prevail.

“Consumer buying is slow, and it could be to their detriment if export fires up on barley.”

“That’s what happened during harvest last year.”

Consumers sit out in south

Despite wet conditions on the plains and outer slopes of southern and central NSW, Peter’s Commodities trader Peter Gerhardy said most crops were looking good with spring around the corner.

“Anything on undulating country is fine to magnificent; anything on the flat is waterlogged,” Mr Gerhardy said.

“Canola is okay, but a lot of cereals have very wet feet.”

Mr Gerhardy said yields for winter crops have potential to be above average, and consumers were feeling “very comfortable” based on that, as well as grower carry-out.

“The consumer is laying very very low; it’s hard to get sales on for Sep-Oct, and it’s hard to find a barley bid for Melbourne or the Goulburn Valley.”

Export of wheat and barley, plus pulses and canola, is still cranking out of Victorian ports, and Port Kembla in NSW, and is mostly covered by the trade.

“Exporters can’t get tonnes out of the country quick enough; the domestic consumer knows that.”

“There’s still a fair bit of grain on farm, and it’s a bitter pill for growers to swallow that prices are where they are.”

He said the on-farm price for wheat has fallen by around $25/t in the past three weeks.

Mr Gerhardy said some slopes growers were expecting 5-6t per hectare wheat crops, and were feeding them in the hope of achieving protein premiums, which are likely to be an exception.

“I can’t see a protein year for wheat at all; it’ll be as fat as marbles.”

The Victorian Mallee and possibly Wimmera could be providing the protein this year, provided spring is not too wet.

“On new crop, the grower perspective is they are pretty reluctant to sell.

“If we had two or three weeks of sunshine and the crop buzzed along, it might be different.”

Sorghum, cottonseed thin

Trade in the red grain has contracted mostly to poultry and piggery consumers, and to the container market, as the bulk-export program slows.

Planting of new-crop sorghum will start in coming weeks, and the crop is expected to be a big one as growers in an expanded area stretching south into central NSW make use of country that became too wet to plant to winter crops in June-July.

Ginning of cotton appears is expected to continue into November in some valleys, and market talk is that two cottonseed cargoes ex Brisbane are booked to go to California before the year is out.

Woodside Commodities broker Hamish Steele-Park said current-crop cottonseed values were mostly flat at $350/t delivered Downs, and $295-$300/t ex Moree gin for Sep-Oct.

The southern NSW cottonseed market is trading at $380/t ex gin, while Macquarie Valley sites are at around $300/t Sep-Oct.

Demand for cottonseed in containers for export destinations such as China is quieter than recent months, but is still evident. DCT this week was quoted nearby month at A$535/t.

Trade in seed from next year’s ginning is not yet active.

“Sellers are looking for values similar to current crop, but buyers’ ideas are somewhat lower,” Mr Steele-Park said.


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