Feedgrain Focus: Market jumps on local dry, US strength

Henry and Liz Wells, May 23, 2019

Parts of Western Australia’s grainbelt are in need of further rain to establish winter crops. Photo: Quenten Knight, Agronomy Focus

PRICES for current and new-crop feedgrain have jumped in the past week in response to continuing dry conditions over parts of the Australian grainbelt, and strength in United States futures caused by rain delays to corn planting and some quality concerns for wheat.

Traders said wheat and barley for prompt delivery to southern Queensland’s Downs market were trading at around $405 per tonne, up from $380-$385/t last week, and new-crop was $370-$375/t, also up $20/t on last week.

Newcastle prompt delivered sorghum is trading at around $385/t, up from $365-$370/t last week, and delivered Downs prompt sorghum was trading at close to $340/t, up $5-$10/t.

Dry conditions have held up timely planting and germination of the winter crop in most parts of the Western Australian grainbelt, and growers in many parts of central and northern New South Wales and southern Queensland are in need of rain to finish or consolidate planting.

While most crops in South Australia, Victoria and southern NSW and Central Queensland have been planted, Liverpool Plains-based Agracom trader Brett Donoghue said the dry conditions were of concern.

“The market’s certainly popped on new and old crop, with the noise about corn planting problems in the US spilled over to a degree to our local market,” he said.

“The basis on new and old-crop wheat is firming, which tells me the market is concerned about the dryness we’re seeing here, even though in the longer term, the global balance sheet is very bearish.

“It’s dry in WA, and ongoing dryness in parts of the east coast is making people nervous.

“There are more buyers and sellers on any given day, but if we do get a general rain, the market’s vulnerable to a sell-off.”

Boat wheat needed

Manildra Group’s purchase of a cargo of high-protein Canadian wheat appears to have had no negative price impact on markets.

Trade sources have said the 57,000t shipment, now on its way to Port Kembla from Vancouver, was likely to be followed by at least three others of similar size to fill the company’s requirements before high-protein NSW wheat became available.

Max Grains director and trader Jack Fahy said boat grain coming from Western Australia via Brisbane also looked likely to continue for some months.

“I’m pleasantly surprised that wheat is still flowing,” he said.

“It feels like it’s working.

“Everyone’s had to reverse their supply chain, but it’s been easier than trying to get grain out of southern NSW and Victoria like we were last year.”

ASX turns north

ASX eastern wheat January 2020 futures traded $25/t firmer over the past week, ending a month-long, $45/t, decline which had begun mid-April when still there was hope of a conventional season break.  Open interest last week rose by almost 1000 lots from 7760 to 8464 lots. Activity was greatest on 16 May, when 856 lots of new crop Jan wheat traded, 46 barley and 100 red crop wheat.

The January 2020 wheat settlement price on 22 May was $330/t; on 15 May was $305/t.

The January 2020 barley settlement price on 22 May was $280/t; on 15 May was $261.50/t.



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