Markets

Feed grain markets caught up in sell off

Luke Walker, Robinson Grains, 10/08/2011

Luke Walker, Robinson Grains

Australian grain markets have been caught up in a sell off on the back of failing confidence in the stability of the US and global economies.

CBOT corn and wheat futures were both lower in the last week with the large hedge funds cashing wheat and corn positions and buying gold and US dollars.

Australian grain growers have been protected as the $A has also had a massive sell off of over 10c. This should stimulate export business of Australian grain, in particular in the southern states, as their current season is in good shape and there is also ample old crop to carry into new crop harvest.

Domestic grain buyers are still trying to comprehend the moves and grasp what is likely to occur ahead in the short term – a swift recovery or more carnage on the markets.

There are still large volumes of feed wheat being held in on-farm storage in southern Australia. Growers are likely to hold those supplies as a hedge against drought while waiting on rains and new crop prices.

With so much volatility in commodity markets, domestic grain buyers have some tough decisions to make in the next two months before harvest. They can buy their new crop cover now and not have to worry about dry weather affecting crops, or wait for harvest and the possibility of cheaper feed wheat due to a large crop.

Feed wheat remains the most sought after feed grain with buyers chasing the higher protein and test weight that wheat can offer in-feed rations. Feed wheat traded this week at $252/t delivered Downs; $232/t delivered Liverpool Plains and $217/t delivered Bendigo. Demand has waned somewhat because forward grain contracts that lot feeders have purchased have been pushed out by the fewer numbers of cattle on feed, meaning grain will last longer.

Sorghum has been trading $218/t delivered Downs for August and $238/t delivered Brisbane, with growers holding out for higher prices on the back of weather concerns. Cotton seed has traded $255/t delivered Downs, although more export interest this week in packing seed with the weaker $A could see this market sneak up.

F1 barley is difficult to source in Queensland, although lower quality barley is still on farm and making its way up from southern NSW.

Attention will shift toward new crop supplies and pricing over the next week with interest in barley and milling grade wheat, although a lot could change in a week or a night. 

 

  • 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.

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