Markets

Feedgrain Focus: American dry, lower dollar lift bids

Liz Wells, July 22, 2021

Sorghum is being harvested in dry conditions and delivered to depots in Central Queensland like GrainCorp’s Mt McLaren to round off the 2021 harvest of the red grain. Photo: Ross Faint

A WEAKENING Australian dollar and more hot and dry weather for North America’s northern wheat regions have lifted export bids for nearby and new-crop grain this week.

Domestic buyers have no choice but to follow the market up as they book their last parcels before new-crop hits the market.

On the production front, much of southern Australia’s grainbelt has had 10-50 millimetres of rain in the past week.

While some crops are getting waterlogged, most are in excellent stead as the end of winter nears, but boggy conditions have made accessing grain stored on-farm difficult, and delayed the spreading of urea on winter cereals.

Nearby New-crop
Barley Downs $295 steady $275 Jan up $5
Wheat Downs $332 up $7 $303 Jan up $5
Sorghum Downs $300 down $10 $270 March up $10
Barley Melbourne $268 down $2 $270 Jan up $10
Wheat Melbourne $335 up $13 $335 Jan up $10

Table 1: Indicative delivered prices in Australian dollars per tonne.

Damp south, drier north

Rainfall in the week to 9am today has been limited in Queensland and far northern New South Wales.

In Central Queensland (CQ) the dry weather has allowed the sorghum harvest to advance at pace, and in southern Queensland and northern NSW, it has seen some local roads reopen to truck traffic for the first time in weeks.

This has allowed consumers to bring in truckloads of grain they have been waiting to access, and has taken the heat out of the barley market in particular for nearby slots.

“Feedlots are covering bits and pieces up to October, and waiting for the harvest slots to appear because they’re hoping prices will be cheaper then,” a source on the Downs said.

Barley delivered Downs consumer October-November is trading in limited volume at $280/tonne plus, and even less is changing hands in the January-plus-carry market.

“For January forward, we’re not getting a lot of traction.”

CQ sorghum is filtering into the domestic market, mostly to the poultry and pig sectors. Cover for a 40,000t cargo due to load in Mackay next week is supporting values.

Melaluka trading director Mick Fitzgerald said the weaker currency and the ongoing troubles of the Prairie and Great Plains crops in Canada and the US were lifting the market for new-crop wheat.

“Barley’s pretty flat, but old-crop and new-crop wheat is stronger.”

This latest drop in basis means Australian wheat is still competitive in the export market, and some accumulation for cargoes is still taking place past the point where the trade expected it would have died away now that Northern Hemisphere crops are hitting the bins.

Mr Fitzgerald said another round of buying from domestic consumers could be expected before new-crop grain hit the southern market.

He said this would be in part be supplied by growers selling down their on-farm stocks as they booked backloads of fertiliser to spread on their crops.

“The grower hasn’t engaged much with their old-crop stock, and now that most of the state’s had rain, they’ll be trying to get trucks out to pick up fertiliser.”

The trade is also seen as a buyer in the near-term of new-crop wheat.

“It would pay for them to own it, given what’s happening in the States and Canada.”

Protein questions emerge

If the season continues in its current vein, southern and northern regions may well battle to achieve average protein levels in wheat.

Some big falls will prevent growers from spreading urea on thriving crops for the rest of this month at least.

Among the highest registrations in the week to today included Temora with 30mm, The Rock with 45mm and Young with 53mm in southern NSW.

In Victoria, Edenhope with 30mm and Ultima with 21mm were among the wettest places, and in South Australia, Auburn recorded 48mmm, Cummins 45mm, Jamestown 43mm and Minlaton 59mm.

In Western Australia, Binnu on 46mm, Dalwallinu with 31mm,  Narrogin with 46mm and Three Springs with 45mm had some of the highest registrations.

AgVantage Commodities director Steve Dalton at Narrabri said on-farm access remained an issue in north-west NSW as some roads are still too boggy to use following earlier rains.

“Barley seems a bit quieter on the bid side,” Mr Dalton said.

“One issue that remains is that growers have sold grain on contract and buyers can’t pick it up because of the weather,

“Sorghum is fairly steady, and there’s still a lot of wet sorghum out there.”

Mr Dalton said export accumulation was still taking place for nearby slots, with APH wheat trading at around $355/t delivered Brisbane port.

“What most buyers are telling me is that it’s fairly quiet.”

Most interest appears to be focussed on higher-protein wheat.

“APH1 is well sought after, and that’s a play with the fact that protein is increasing in value.

“There is a bit of talk starting to build around that.

“With the yields and the season last year, areas of back to back wheat, and fertiliser prices (up) where they are, at this stage I’m expecting protein to be lower.”

Mr Dalton said a hot and dry finish for the crop could reverse that, but a continuation of showery weather was likely to see a higher-than-normal proportion of APW and H2 wheat coming out of north-west NSW this harvest.

“When you put into the mix what’s happening in the Minneapolis spring wheat market, I would have thought that would be conducive to bigger protein spreads.”

Mr Dalton said firmness was flowing through to the whole Australian wheat market.

“The rally in futures and the decreasing dollar helps the farmer get a higher price, and it’s good for basis too.”

 

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