The Loch Maree delivers a load of South Australian barley to Brisbane.

A 23,000-tonne cargo of South Australian barley is being discharged into trucks on a Brisbane wharf this week and trade sources say the grain will be absorbed by a malthouse on the Brisbane River, and feedlots on the Darling Downs west of the port city.

The vessel, the Loch Maree, sailed from Viterra’s Port Adelaide facility, and docked in Brisbane late last week.

“That grain would have been booked in August and September, when people thought high-quality milling wheat was going to be coming off in Queensland, and the market wasn’t expecting weather-damaged grain that’s turned up,” one trader said.

Another source agreed, saying Queensland was then paying a high enough premium over south-eastern Australian feedgrain markets to justify getting it to Brisbane by ship instead of road.

“The spread from south to north was more attractive on barley than wheat, so that’s why it would have worked.”

While barley normally trades at a $15-$20/t discount to wheat, a challenging growing season for southern Queensland and the north west plains of NSW has curbed supply of barley into malting and feed markets.

This has boosted barley values, and decreased its discount to wheat.

“It’s about $6/t apart now, which is as close as you’ll ever see barley to wheat.”

A shockingly dry July, August and September, which included successive frosts and then very hot weather, has been hard on the wheat crops of southern Queensland and northern NSW, and even harder on its barley.

To compound yield and quality issues, up to 200 millimetres of rain fell on the winter cereals in early maturing areas at the point of harvest.

The malting industry traditionally draws barley from the inner Darling Downs and north west slopes of NSW, and while crops in these areas are still maturing, many are likely to have suffered some quality damage due to recent rains.

Road freight factor

One trade source said discounted freight rates were likely to help the barley now being unloaded in Brisbane make its way into feedlots on the Darling Downs.

“You’d normally be looking at $20-22/t to get grain from Brisbane to the Downs, but there might be a few silly prices of $18/t out there; things are pretty quiet in transport at the moment.”

Grain Central first reported the possibility of grain being shipped from southern Australian ports into Brisbane in August, when road freight for grain from Victorian and southern NSW storages into southern Queensland was nudging $100/t.

Strategy for shortfall

Domestic end-users and traders have in previous years shipped grain from southern Australian ports to Brisbane when tough seasons and inelastic local demand have called for greater tonnage than could be accessed by road in NSW and Queensland.

While the Loch Maree is believed to be the first cargo of southern Australian grain to land in Brisbane this year, it may not be the last.

Recent rains in Queensland have allowed widespread planting of a sorghum crop which will be harvested in February and March, but traders and consumers will be watching its development in the hope that yields are at least average, and can shore up domestic supplies which were run down when an excessively hot and dry summer depleted production from the crop harvest earlier this year.

Further cargoes possible

One source said some consumers “took the plunge” into booking sea-freighted grain in late September to cover 10 to 20 per cent of what they needed to take them into January.

“As the month of September unfolded and no useful rain had come, the consumer had to begin to protect themselves to take some risk out of the balance sheet.

“If you were a Queensland domestic consumer…you had to eliminate some of the risk off your table.”

Sources have said wheat cargoes may follow the barley vessel.

“My feeling is there will be something happening on importing wheat; the price spread between Darling Downs and Brisbane wheat has come in recently.”

On Friday, ASW wheat values for January delivery were quoted at $333/t Brisbane versus the Downs market at $322-$326/t.