Feedgrain Focus: New-crop prospects colour cash markets

Henry and Liz Wells, May 16, 2019

Grower Jonathan Dyer makes progress with seeding at Kaniva in Victoria’s Wimmera district.

THE divergence in planting progress across eastern Australia is affecting cash markets, with well-advanced areas like those in Victoria showing some softness, and drier areas in summer-cropping regions showing firmness in parts of the market.

Behind the firmness are indications that China is interested in buying Australian sorghum out of Central Queensland, and will be shying away from US grain due to the latest developments in the China-US trade war.

Riordan Grain Services trading manager Mark Lewis said current-crop cash prices were trending down.

“In Victoria, it’s as good a break as we’ve seen for a while, a lot of ground has been dry sown, and it’s early enough in the season for the ground to still be nice and warm,” he said.

Mr Lewis said indications were that more wheat than barley was being planted, with prompt delivery to Melbourne now trading at around $350 per tonne for wheat.

“Wheat’s come down a long way; it got to somewhere near $440/t not so long ago.”

New-crop wheat delivered Melbourne has been trading at around $300/t.

“Based on the weather, it’ll be a bit of a grind lower for wheat and barley for a while, and we’re seeing bits and pieces of grower selling at these prices.”

North needs rain

In northern New South Wales and southern Queensland, some wheat and barley is being sown, but rain is needed soon to bolster prospects for timely planting and average yields.

Delta Grain Marketing broker Tom Vanzella said the lift in sorghum prices looked like a correction to the market’s reaction to rain in early May.

“The sorghum market reacted to the rain two weeks ago, and now we could be seeing a readjustment.

“The outlook for northern NSW is generally not good, and the NSW sorghum crop is tiny.

“Throw in some Chinese whispers, and that could explain the firming market for sorghum.”

Harvesting of sorghum in northern NSW is almost over, and much of the seed has made its way into poultry and feedmill rations across NSW.

In Central Queensland, some sorghum is being harvested, and good rain last month prompted later-sown crops to put out secondary tillers.

Mr Vanzella said growers would wait for those to develop and fill before harvesting.

“For the late crop, it could be the back end of June before it comes off.

“The sorghum harvest in CQ will be a long drawn-out process this year.”

Earlier this week, the prompt Newcastle track sorghum was trading in the $360s/t, with the highest bid and offer at $365/t and $380/t respectively, while the delivered Newcastle market has been trading at $365-$370/t.

“Until that rain event, the Newcastle sorghum market was holding a premium over Central Queensland and Brisbane.”

Downs volatility

Traders have reported volatility in sorghum in the early part of this week in delivered Darling Downs prices, with sorghum leading the move to lower feedgrain prices.

Prompt sorghum prices rose $15/t early this week on chatter of possible export trade, but later gave up around $10/t of the gain.

From a price low of around $320/t delivered Downs last week, sorghum has traded as high as $335/t.

Barley and wheat markets were illiquid and virtually static, with prices quoted for both in the $380s/t delivered Downs.

Cottonseed has also been reported illiquid in the delivered markets, and the weight has continued to be on the offer side.

The cheapest cottonseed available ex-gin MIA in southern NSW is priced at around $420/t, while the dearest ex-gin seed was reported to be offered from southern Queensland sites at around $550/t prompt to graziers.

“Cottonseed continues to have a softer tone, particularly in the south,” Woodside Commodities manager Hamish Steele-Park said.

“There’s not a lot of activity.

“The MIA seed is the cheapest at around $420, but there’s no export activity to speak of.”

Macquarie Valley sites nominally were offered at $480/t, while sites in the Gwydir and Namoi valleys were offered at $510/t.

“Moree values have come back from the 540s.”

Limited grazier demand

Dry conditions have left little paddock feed is many parts of the northern tablelands, but traders say most graziers have covered their supplementary feed requirements in readiness for a dry winter.

“That market’s pretty much priced out,” Mr Vanzella said.

“We’d normally be seeing traders connecting growers with graziers at this time of year in that market, but a lot of it the grain is coming from the free-on-truck Brisbane and Newcastle markets because there’s not much local grain around.”

Manildra effect

The news that Manildra is importing 57,000 tonnes of high-protein Canadian wheat for use at its Shoalhaven Starches plant is not believed to have had any impact on prices for feedgrain, which are generally in the mid to low-protein range.

However, it has shown the grain industry that companies do not need to supply the Federal Government with any information relating to the availability or pricing of domestic grain in relation to comparable grades available offshore.

That means more import permits could be granted.

“The reason Manildra has done this is to show us they can,” one trader said.

Many in the trade said they understood Manildra’s motivation for sourcing one huge parcel of grain from Canada.

While the ex-Vancouver wheat may not appear cheaper on paper than what is available domestically, it offers a consistency of quality which has not been available to millers locally.

This is because NSW end-users have spent the past 18 months or more sourcing high-protein Queensland, Victoria, South Australia and southern NSW wheat from growers and traders in lots as small as a B-double truckload of 38 tonnes.

“You can see why they’d go to a one-stop shop and get a boat-load from Canada.”




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