Eastern exports garrotted as domestic feedgrains grapple with outlook

Henry Wells, January 23, 2018

GRAIN exports from NSW and Queensland have slowed to a trickle as the east coast domestic market comes to terms with rising feedgrain demand and shrinking supply, factors which are unlikely to abate before late 2018.

Major handler GrainCorp’s January-to-June shipping stem tells part of the story; it has no cereal cargoes out of NSW ports or Brisbane booked for export.

Low winter-crop yields in Queensland and the northern half of NSW have largely confined available eastern states’ export surpluses to Victorian port zones, where GrainCorp terminals’ cereals bookings include only 90,000 tonnes of barley and 345,000t of wheat between now and June.

This compares starkly with schedules at this time last year, when fresh port-and-logistics investments Australia-wide helped catapult more than 2 million tonnes (Mt) a month of cereals into export.

Sorghum’s burning

While feed consumers’ wheat prices have remained steady, barley and sorghum prices have taken off.

Industry sources have said high numbers of cattle on feed, and growers snubbing current bids in the belief that deteriorating conditions for pastures and summer crops can only drive up prices for their stored grain, have fuelled the rise in delivered markets.

New crop sorghum this week had traded A$280/t delivered Darling Downs, having risen $10/t in a week.

“Sorghum’s burning up, with no rain in January to speak of,” igrain general manager strategy and development, Duncan Whittle said.

“Newcastle sorghum is at a premium over Brisbane, which is something I’ve never seen before, and Darling Downs barley is at a premium over wheat.”

“The perception is the hot weather has taken the top out of the crop,“ commodity services provider Farmarco, principal, Rob Imray, said.

“Sorghum is moving, there’s no doubt about that, but wheat values somewhere in the $320s delivered Downs really have not moved materially this past couple of months,” Mr Imray said.

Barley in demand

“Barley delivered Downs February has been trading in the high $320s, a few dollars over wheat.”

Mr Whittle said barley prices had dropped as low as $100-$120/t on-farm prior to winter-crop planting last year.

“With big numbers of cattle on feed, the stars have really aligned for barley; the market’s telling us barley’s what’s needed.”

Mr Imray said it would seem there was not enough barley available in the Queensland and northern NSW market to satisfy demand, and markets had and were adjusting accordingly.

“Not only does barley have to be drawn from the south, but also the market is pricing it in such a way that just the minimum requirement of barley will be used in rations and the rest will be supplied by other grains.”

 Victoria out-delivers NSW

GrainCorp yesterday issued its last weekly harvest report for the season. It adds a further dimension to the feedgrain picture.

GrainCorp receivals in NSW stand at 2.08Mt, well below Victorian receivals of 2.94Mt.

This compares with the last week of its bumper 2016/17 harvest intake figures, when NSW GrainCorp receivals totalled 6.57Mt and Victoria 3.74Mt.

In Queensland, GrainCorp current crop receivals total 557,250t, compared with 1.79Mt at this time last year.

Wheat the mainstay

Livestock feed in eastern Australia accounts for perhaps 250,000t per week of grain.

Wheat, as always, is the mainstay grain, for poultry, cattle, dairy and pig feeders.

Trades sources said risk-averse major domestic end users early on had taken cover beyond the Christmas-New Year shutdown period.

As wet harvest weather emerged they remained wary of using badly weather-damaged or out of specification grain, which could present risks to animals’ performance or health.

Grain vessel shipments from Western Australia and South Australia rarely make their way to eastern states’ feed markets.  New season exports from South Australia and Western Australia are under way at pace.


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