Feedgrain Focus: Wheat strengthens on limited grower selling

Liz Wells, October 15, 2020

Harvesting barley this week at Garah, just south of the NSW-Queensland border. Photo: CHS Broadbent

STEADY buying from feedlots for barley and export demand for wheat are supporting prices for cereals following a rain-affected week of harvesting in Queensland and far northern New South Wales.

In southern markets, the prevailing La Niña weather event and firming prices for new-crop wheat have growers in no hurry to forward sell, and some tightness has crept into the old-crop market.

On the logistics front, trains taking wheat and possibly barley to Newcastle for bulk export are expected to start rolling by the first week in November. Southern NSW grain will be railed to Port Kembla from mid-November.

Aggressive up-country pricing indicates some containerised wheat and possibly a few hatches of bulk could be shipped from Brisbane before the end of December.

This week Last week Change
Barley Downs Oct-Nov $245 $250 Down
Barley Downs Jan $258 $255 Up
Barley Melbourne Oct $260 $250 Up
Barley Melbourne Jan $245 $250 Down
Wheat Downs Nov $295 $300 Down
Wheat Downs Jan $303 $300 Up
Wheat Melbourne Oct $340 $325 Up
Wheat Melbourne Jan $315 $310 Up
Sorghum Downs Oct $335 $320 Up
Sorghum Downs Mar-Apr $300 $305 Down

Table 1: Indicative delivered grain prices in AUD per tonne.

Northern competition

Patchy and fast-moving storms over Queensland and the NSW border region in the past week have dumped up to 60 millimetres on ready-to-harvest crops, with no damage to yield or quality reported.

Largest registrations in the week to 9am today include Emerald on 36mm, Krui Plains 32mm, Moree 12mm, Springsure 40mm, and Wandoan 18mm, but most centres got much less or nothing.

At Dalby on the Darling Downs, Horizon Commodities senior trader Aaron Jones said harvest was resuming after the rain, and the quality of grain delivered was high.

“Everything we’re seeing is high protein and good quality,” Mr Jones said.

“For wheat, that’s H2 up to APH1.

“Most growers are selling their barley and keeping their wheat.”

Feedlots traditionally consume all the barley grown on the Downs, and growers have either pre-sold their barley to local feedlots, or are selling it to them straight off the header.

Feedlots are seen as 80-100 per cent covered on grain into early January at reduced capacity in the face of a limited number of feeder cattle available at high prices.

Traders with an eye to export appear to be paying at least $10/t over the domestic market for wheat, which in part reflects premiums for protein of up to 14pc.

Logistics problems in Sydney continue to make exporting grain out of Port Botany in the near term an expensive and risk-laden proposition.

Brisbane therefore appears to be the most attractive exit point for containerised grain for packers in and north of Dubbo in NSW into next month, when the container squeeze is expected to abate.

On sorghum, new-crop values have eased a little on the recent rain, which will allow some growers to advance planting in the ideal window.

Farmer selling slows

Light rain in the past week in Victoria and South Australia’s south-east has been welcomed by growers, and irrigators in Victoria and parts of southern NSW have this week been given a slight increase in their water allocations.

This means irrigated wheat and barley crops might get a third and final watering to extend their growing season and boost yield.

Kelly Grains chief executive officer Matt Kelly said this, coupled with concerns about what La Niña may bring, had slowed grower selling.

“We haven’t seen a lot of grower selling for the past four to six weeks.

“I think there’s some concern about storm damage, whether that’s flooding or hail.”

Mr Kelly said the improving yield outlook for many growers in southern regions had them historically undersold on new-crop grain.

“There was quite a bit of forward selling a few months ago at higher prices, and growers that thought they were 20pc sold then might be 10pc sold now because the crop’s getting bigger.

“There seems to be not a lot of wheat available, and any delay in the harvest will affect prices.”

Mr Kelly said dryland barley from northern Victoria would kick off the state’s harvest within a fortnight or so if conditions were warm and dry.

In NSW, harvest pace has continued to accelerate in the Moree and Mungindi regions, where some crops are yielding up to 6t per hectare.



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