Domestic

Feedgrain Focus: Rain drops new-crop, nearby mostly stronger

Liz Wells, April 2, 2020

Planting dual-purpose wheat this week at Invergordon in northern Victoria. Photo: Luke Felmingham

NEW-CROP values for wheat and barley have eased this week on rain which is improving prospects by the day for a big winter-cereal planting in eastern Australia, while price movements in nearby markets have been mixed.

In southern Australia, export demand continues to jack up prices for wheat and barley.

In northern markets, values are factoring in the bullish possibility of sorghum exports against the bearish reality of falling numbers of cattle on feed.

 Delivered market

This week Change from last week
  WHEAT Melbourne nearby $400-$410 Up $10
  BARLEY Melbourne nearby $325-$340 Up $10-$20
  WHEAT Darling Downs nearby $485 Up $5
  BARLEY Darling Downs nearby $410-$415 Flat to $5 down
  SORGHUM Darling Downs Jun-July $430-$435 Up $5-$10

Table 1: Indicative grain prices in AUD per tonne.

Wheat wanted in north

According to trade sources, China has booked one or two bulk vessels of central Queensland (CQ) sorghum for June-July shipment.

If correct, this would tighten the supply of grain in Queensland considerably prior to new-crop wheat becoming available in Queensland and northern New South Wales in October.

In the prompt market, barley arriving from interstate appears to be plentiful now that feedlot demand has waned with the improved season, but wheat is in strong demand from the poultry and pig sectors.

Stewart Grain trader Robert Quinn said plenty of feed in paddocks in northern NSW meant many smaller feedlots had greatly reduced their numbers now grazing was available.

“Small feedlots haven’t stopped operating, but they’ve certainly slowed down,” he said.

“Customers that were covered for three months are now covered for six months.

“Drought feeders have washed out their contracts, and custom feeders have dropped back their numbers.”

Larger feedlots in southern Queensland have continued to operate at or near capacity, and are pulling grain from the Brisbane free-on-truck market.

Transshipped barley, including the maiden load from T-Ports in South Australia, is available, but wheat supplies are tight.

New-crop gains momentum

The central and northern NSW market continues to be serviced by rail and road deliveries from Victoria and South Australia.

“Most people are now going to focus on new-crop, and not many zones want huge amounts of rain.”

One source said the price strength of wheat was likely to keep it out of feedlot rations until new-crop slots opened.

“Barley has all the demand,” the source said.

“Normally you’d put barley’s value at 92-94 per cent of wheat’s, but it’s been 82-86pc.

“It’s not hard to figure out what to buy.”

In the week to 9am today, rainfall registrations in NSW include 46 millimetres at Condobolin 39mm at Mungindi, 25mm at Narrabri, and 45mm at Temora.

Victorian falls for the week include 34mm at Cobram, 18mm at Donald, 29mm at St Arnaud and 41mm at Ouyen and Woomelang.

The rain has kick-started planting of canola and winter wheat varieties, and further falls are forecast for coming days in parts of NSW.

However, at least 25mm of rain is needed in southern Queensland to join up topsoil and subsoil moisture.

Southern strength

Continued buying from China and others for second-quarter shipment out of southern Australian ports including Geelong has fuelled further price rises in the current-crop market.

Getting ready for planting this month at West Kendenup in WA. Photo: Anthony Hall, Wildcard Trailers

Trades on Clear Grain Exchange (CGX) this week put the WA nearby free-in-store market at $415-$425/t for wheat in Kwinana, and $295-$305/t for barley in Esperance.

In the nearby delivered Port Adelaide market, wheat has traded at $397-$400, and barley at $294-$295/t.

“We’re seeing good buyer demand and sellers willing to meet the market in WA, SA and Victoria,” CGX national manager business development Tom Guthrie said.

“This is likely the result of ongoing export sales being made out of WA, SA and Victoria, as well as strong domestic demand in the eastern states.”

Melbourne’s delivered January market for wheat is trading this week at $340-$350/t, down from a high of $360/t last month, while barley at $290-$295/t is down from $310/t seen last month.

“New-crop prices are starting to fall with the firmer dollar and rain through NSW and Victoria,” Wilken Group trading manager Andrew Kelso said.

“They’re comparable to the Downs, and that’s telling us the story about how much grain is going to be grown in NSW.”

In the new-crop delivered Downs market, barley has traded this week at $300/t.

ASX hot nearby, new-crop cools

ASX wheat and barley futures reflecting the pressures in the cash market as new season planting prospects continued optimistic while buyers sought security in nearby cover to take some risk off their books.

Current-crop wheat futures, the May 2020 contract, continued its price rise to $400/t at Wednesday’s settlement, up from $395/t a week earlier and up $40/t compared with its $360/t settlement on 17 March.

Barley lifted only $3.50/t and $14.50/t compared with the two prior weeks, settling on Wednesday at $307/t.

The new-crop January 2021 contracts for wheat and barley turned tail on the strong rises of the previous week as rain in NSW buoyed confidence in planting prospects.

January 2021 east-coast WM wheat futures on Wednesday settled at $346/t, $16.50/t down from a week earlier, while January 2021 barley futures on Wednesday settled at $285/t, $25/t down on the week.

Participants saw value in trading wheat options last Friday and yesterday, when 305 December 2020 $330/t put options traded in the $18.50-$19.50/t range.

Cottonseed delay

Cottonseed markets presently are a mix of delayed timing and scarce supply as deliveries of old crop, harvested in 2019 or possibly earlier, transition to current crop being harvested over the next several months.

While Central Queensland picking and ginning got underway in good time this year and was able to freight newly ginned seed southward, slower maturity in southern Queensland and most of NSW means the changeover from old crop to current crop consumption is yet to happen.

“Old crop seed is getting rationed by high price and only finding its way into small inelastic demand buyers,” Woodside Commodities manager Hamish Steele-Park said.

Buyers with more flexibility though are bidding current crop value for any old crop seed.

“Rain et cetera will make this cotton crop late and picking around northern NSW won’t happen till late April and ginning will start a couple of weeks later than normal.”

Gin period markets May onwards were quoted around $600/t ex Gwydir Valley sites, $590/t ex Namoi Valley and Macquarie Valley.

The 2021 season remains divided by contrasting water storage volumes, high in the north and low elsewhere.  Notional cottonseed values were quoted around $325/t ex Gwydir Valley and $315/t Namoi Valley, gin spread 2021.

“Queensland is looking good for next year, but a lot of rain over next six months is still required to fill storages across NSW.”

 

 

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