WHEAT and barley values now have recovered most of their losses which had been brought about by profit-taking last week in response to rain in parts of Western and South Australia, Queensland and northern New South Wales and weaker futures markets.
Rain up to Sunday saw prices briefly drop from per tonne value in the $450s to the $430s, but prices have rebounded in the past 24 hours.
However, temperatures which got down to -6 degrees Celsius in parts of southeastern Australia this week have ignited production concerns tied to stem frosting on its late and fragile cereal crop, and this has been a major supporter of prices. The frost, combined with volatility in offshore markets and exchange rates has shut the window of opportunity for cheaper shipped grain purchases by eastern states consumers.
“In the most recent spike in purchases, the WA grower was a seller because of conditions in the west. It made replacement cost to the east coast cheaper which softened east coast values here a bit,” Agracom director Brett Donohue said.
“These replacement values are a moving target.
“Newcastle and Brisbane had dropped to about $435/t free on truck last week and early this week then yesterday, on the back of the frost scare and international talk of Russia possibly imposing a ban on wheat exports, markets lit up.”
“ASX had been as low as $385/t on Monday. This morning it was bid $403/t and offered $415/t.”
AgFarm account manager for southern NSW, Nathan Michael, said people with livestock to feed were still buying hay and some grain, as paddock feed was yet to get going.
“Three days’ out from the forecast rain, we were expecting 5-10 millimetres of rain in Wagga, and it didn’t come to anything,” Mr Michael said.
“Next month, people will be making the call as to whether they should take crops through to harvest or bale them.”
“There are some good canola crops around, but some crops don’t have much biomass at all.”
“Southern NSW still has potential to produce a good crop, but root systems are very, very small, and the crop is susceptible to frost damage and hot weather.”
Barley values continue to be well ahead of wheat in southern NSW, and the grain has traded at $440 per tonne delivered end-user.
Some parcels are being offered at $460/t or more, as traders with positions to square off, and growers with barley left to sell wait for dry conditions to push prices higher.
The Riverina market is trading at $410-$415/t for prompt delivery SFW wheat.
“In theory, the market is back $10 from a week or two ago, when consumers were biting the bullet and booking coverage for September and October.”
Mr Michael said bids had eased now that weather fronts which had potential to bring some rain were popping up in forecasts.
In Victoria, wheat is trading ex-farm in the Mallee and Wimmera at $380-$390/t.
“The market’s strong and choppy as we come into spring,” one trader said.
“There’s still supply out there, and the grain in northern Victoria is making its way into NSW if you pay enough for it, while grain from southern areas is going to millers and other end-users and not getting out of the state.”
“I think end-users have reasonable coverage, but the next five weeks will tell a story.”
Frosts and a lack of subsoil moisture are also tempering prospects in the Mallee and much of the Wimmera, but its crops are generally seen as having average yields.
The paddock stockfeed market, supported by buoyant prices for prime lambs, has continued to buy lentils at $400/t ex farm Wimmera as a cheaper option to barley and wheat.
Delta Agribusiness broker Brad McKinnon said growers were not interested in selling new-crop wheat or barley, with production prospects still hanging in the balance.
“Here around Harden crops would have another week or two to benefit from rain, but further out on the slopes in areas like Ardlethan, some crops are starting to turn.”
“Once they get a good rain, growers might have more confidence to forward sell.”
Broun and Co principal, Wally Broun, said the market had disengaged earlier in the week as the bid side dropped away, and offers failed to follow.
“Prices had risen so quickly; that’s always an indication that when it does drop it goes down in the same fashion,” Mr Broun said.
Barley was not as freely offered, and still reflected a premium over wheat of about $10/t in northern markets.
New-crop sorghum saw some trade activity over the week, but not from growers.
“There is still no significant soil moisture profile for summer crop.”
The Brisbane track sorghum market has been quoted $370-375/t for March-April 2019 delivery.
Demand for drought feed in southern Queensland and the NSW border areas has reduced drastically in the past 10 days in response to forecast rain, which delivered 50mm and more of rain to some districts.
“The panic has gone out of the market.
“Cottonseed availability has become okay again now in the last week or so, which has changed the scenario.”
Cottonseed was thought to be supplying up to 70 per cent of drought demand, and when its availability fell away, producers were switching into grains and pulses.
“Cottonseed this week has been $50, 60, 70/t below the peak,
Field peas and lupins have replaced faba beans as a protein source for paddock-fed animals.
Field peas have traded at around $600/t delivered this month to northern NSW from Western and South Australia and Victoria, while angustifolius lupins are mostly coming from South Australia, Victoria and the Riverina.
More wheat for Newcastle
Two cargoes of wheat totaling more than 70,000 tonnes loaded at the West Australian port of Esperance will supply the ex-Newcastle market in coming weeks, with the Kohinoor already on its way, and the Marianna currently loading.
Unloading of wheat and barley from the Luchow has continued this week at the port of Newcastle, and all cargoes will help to cap prices in the Hunter Valley and adjacent regions.
Imports of grain from South and Western Australia are expected to keep chugging into Brisbane, Newcastle and possibly Port Kembla for up to 12 months to provide a grains lifeline to consumers in NSW and Queensland.