CONCERNS about a wet harvest in eastern Australia and deteriorating yield prospects in the west have reduced grower and trade selling of new-crop wheat and barley to a crawl.
As the current-crop market enters its dying days, values are still bouncing around to indicate some short covering from dwindling stocks.
The patchy outlook for yields in crops close to the New South Wales-Queensland border is also having an impact.
The Bureau of Meteorology (BOM) this week declared a La Niña event is active in the Pacific Ocean.
La Niña typically delivers above-average spring rainfall to eastern Australia, and while crops in south-eastern Australia continue to get useful showers, Western Australian crops have been jagging only a few millimetres at best.
Lachstock’s monthly supply-and-demand report released today has cut the national estimate for the 2020-21 wheat by 125,000 tonnes to 28.08 million tonnes (Mt).
Queensland on 1.43Mt, South Australia on 4.85Mt and Victoria on 3.4Mt are unchanged, while the NSW estimate is up 980,000t to 10.4Mt, not enough to compensate for a 1.1Mt cut in WA to 7.99Mt.
The rally in US and European values overnight has added to the firmer tone.
|Barley Downs early Oct
|Barley Downs Jan
|Barley Melbourne Oct
|Barley Melbourne Jan
|Wheat Downs early Oct
|Wheat Downs Jan
|Wheat Melbourne Oct
|Wheat Melbourne Jan
|Sorghum Downs Oct
|Sorghum Downs Mar-Apr
Table 1: Indicative delivered grain prices in AUD per tonne.
Slow in north
Early winter crops are being harvested in small amounts in far northern NSW and southern Queensland.
Trade sources report they have already been priced, and are being stored on farm or delivered to consumers or accumulators.
“Nothing’s going into the system,” one trader said.
AgVantage Commodities broker Steve Dalton at Narrabri said dry conditions in WA and the Black Sea, and in NSW north of Moree, were all supportive of prices, with the Newcastle and Brisbane wheat track market holding at around $295-$305/t.
“A lot of crop north of Moree will be average at best, and most will be below average,” Mr Dalton said.
Conversely, yield prospects for crops from the Coonamble district south to Victoria appear to be improving as showers continue to assist with grain fill.
Trade sources have told Grain Central they estimate only 10-20 per cent of wheat has been forward sold in northern NSW, while growers in central and southern NSW have booked up to 30pc, mostly on multigrade contracts.
“Basically, the grower has gone to ground.
“If they wanted to sell, they’ve already done it.
“Nearby, I see a lot of inquiry and not a lot of stock left, but new-crop grain is very very close.”
Mr Dalton said the dip in the Australian dollar last week, coupled with strength in US corn which has dragged wheat along with it, has been supportive of new-crop values.
“The market’s been reasonably resilient.”
Competition from export
Wheat and barley from Narrabri to the Queensland border is benefitting from competition from the north and south, as is often the case.
“There’s a pull from domestic consumers in Queensland, and domestic and export business wanting to pull it south.
“The further south you go, the more work Queensland’s going to have to do to bring it up.”
Basis, or the premium for Australian wheat over Chicago December futures, is up a few dollars on where it was earlier this month, but still remains historically low at under $20/t free on board (FOB).
“Looking at those values for FOB into Indonesia for wheat, or Saudi for barley, we’re about $10/t over export parity on both.”
The nearby and new-crop sorghum market remains a nominal one, with very little physical stock left in growing regions, and growers unwilling to advance sales of new-crop from the current low level until Queensland and the border region gets some soaking rain.
“It’s not raining enough to put any more crop in the ground.”
In southern NSW, Preston Grain principal Bill Preston at Temora said some new-crop barley was being booked into depots at just under $200/t, but new-crop wheat was very quiet.
“There’s still a bit of old-season stuff trading to piggeries and feedlots before we get to harvest.”
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