Feed grain update: Uncertainty reigns over future direction

Luke Walker, Robinson Grain Trading, Toowoomba , 05/12/2014
Luke Walker

Luke Walker

GRAIN markets on the East Coast of Australia are unpredictable at the moment, with plenty of volatility and uncertainty in feed markets as growers and grain buyers argue over which way this market is likely to trade in coming months.

From the growers prospective they are holding grain on-farm, but with lower yields at harvest than expected, and plenty of competition from grain traders and lotfeeders alike, they don’t feel pressured to sell into a rising market while there are plenty of buyers competing for their grain.

Additionally, talk that we may be moving into an El Nino pattern has growers concerned of new crop prospects with delayed or reduced planting of sorghum and other summer crops.

Consumers, on the other hand, currently have big appetites to buy grain as the demand for grain fed cattle intensifies. However, the risk of being long grain at the current high price levels with forecast rain on the way is making buyers more hesitant to lock-in their future requirements and focusing more on grain supply only out to January.

Buyers are also aware wheat is trading in the delivered Downs market for January at around $328/tonne landed, while if you were selling low protein wheat into the export container market you would be getting an equivalent of about $295/t delivered Downs.

This highlights that we are well above export parity in the north.

ABARES has come out this week with wheat production in Australia at 23.22Mmt, down from the September estimate of 24.23Mmt.

Domestically, we only consume about 9 million tonnes. So do we need to connect with export markets and prices grind lower? Or do growers hold stock and watch the prices potentially firm on dryer weather?

It has worked thus far, although growers will want to eventually shift their grain and generate cash flow. So the consumers may win this battle in the end… but there has to be decent rain first.

So, batten down the hatches, get ready for more volatility, as this battle for feedgrains intensifies between farmers, local consumers, and exporters. While the main trump-card in there is the weather, don’t forget about the volatility of the Australian Dollar and the grain futures complex too….

Yep…. we have a lot to weigh-up.


Market snapshot

On the market front, SFW1 Wheat delivered Downs for January $328 and Barley F1 January $316. New crop Sorghum March April 2015 is under some pressure with rain forecast and trading at $295 delivered Downs. That’s back at least $10 this week.

Cotton seed delivered Downs for gin spread 2015 trading $438 landed.  Wheat delivered Liverpool plains is trading at $305 and barley $282, but again buyers are watching weather forecasts keeping hands in pockets. Central west NSW feed grade wheat is well sort after with Millers and Traders on the hunt paying up to secure wheat and barley.  Riverina area delivered feedlots is very quiet. Wheat would be about $275 and $265 for barley landed.

Goulbourn Valley wheat is trading at $290 landed and barley $275, although local Dairy’s and Stock feed Millers are sitting out waiting for markets to soften and only buying hand to mouth too.

  • Prices quoted in this column are of an indicative nature only to illustrate trends and do not represent a definitive buy or sell price at a given point in time. For specific prices for your region contact the author at luke@robinsongrain.com.au or (07) 4659 0755 or twitter @lukergtgrain


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