CROPS cut for hay would appear to have taken the extreme heat out of high grain prices in Australia’s droughty inland feed markets this week.
While September rain certainly allowed spring grass to feed livestock short term, baled crop hay is the game changer giving feed security to livestock over the summer months.
“The cut hay supply has clearly taken out a lot of the drought feed demand and that quells the demand for grain,” Melbourne-based broker ACCB director Andy Cunliffe said.
Quest Commodities Gunnedah-based managing director Jayne Barker said much of inland NSW till recently had been supplied with hay from SA.
“Until recently trucks were also still carting wheat and barley here from Victoria and southern NSW, but now most of the grain is either coming out of Newcastle or from growers who had been holding old crop stock.”
However, the significant market move this week occurred in barley, where inland NSW saw a sudden and sharp reduction in buyers’ interest for November feed barley.
“Barley values have fallen in a heap all of a sudden.”
From peak prices around $515/t mid-September delivered Tamworth area, barley values dropped last week to below $500/t and this week the bids had collapsed to $446/t. The turnaround had affected both current crop stock being held as well as new crop.
“Wheat from Newcastle port was landing here last week in the low $480s/t and barley the same. This week wheat has been about the same level, and barley I would say discounted at least $20/t,” Ms Barker said.
She said the earlier high prices had caused thin enquiry for barley anyway, many users having switched to feeding wheat because it had represented better value in the ration.
Lower price, quiet demand may be short lived
While nearby demand for barley had been hard to secure, Ms Barker felt that more interest would emerge for January delivery, partly because users had taken cover through to some time in January, but also because some had a ration preference for barley rather than wheat.
“I’d be expecting to see some users want to switch back into barley in January.
“Some like to use more barley in proportion to wheat in January because of the heat factor.
The sorghum market in the north had also seen severe price movements this week which also may prove short-lived.
ACCB’s Andy Cunliffe said the price discount of sorghum under wheat was nearly $90/t for a brief moment at the end of last week.
“We did see a drop last Friday for a moment when the sorghum market was sold down and track Brisbane sorghum dipped as low as $356/t,” Mr Cunliffe said.
“I think the wheat/sorghum spread got close to $90/t which would have stimulated buying demand in Queensland.
This week however sorghum prices recovered because notwithstanding excellent rains on the western Darling Downs, the situation in NSW is poor and the forecast weather outlook took a turn for the worse.
“Sorghum plantings in parts of Queensland have a great start, but it’s not uniform right the way across,” Mr Cunliffe said.
“The NSW Liverpool Plains to Moree areas are not actively planting. I know there’s time yet, but the weather forecast is not looking good.
“The 3-month outlook the BOM released on October 25 had a strong chance on an El Nino forming during the summer.
“Growers pulled up on selling new crop sorghum. They’d sold the percentage they were willing to commit, which might be 20 to 30 pc, and decided to sit back for the moment and see how things unfold.
November harvest markets wait and see
A similar theme is occurring in Victoria. While many growers have either fed-off, abandoned or cut crops for hay across swathes of Victoria’s grain supply regions, those who have committed to keep their paddocks to harvest are playing their options carefully.
Particularly following frost events, growers won’t know their quality and market until the crop is virtually in the bin.
“The engine room of Victorian cropping is through the Mallee and Wimmera regions, and the GIAV crop tour results last week reported uncertainty.
“The trade is waiting to see what the grower does. Do they engage at these prices?
“The growers have the quality card up their sleeve. Until it’s harvested they don’t quite know what quality they will have.”
“Quality will determine what the grower will do vis-à-vis selling.”
The Friday afternoon track Brisbane sorghum track market had recovered to low-to-mid $370s per tonne March April.
Barley world demand also remains a moveable feast; the Saudi Arabian Grains Organisation (SAGO) overnight announced a tender to buy 1Mt feed barley this weekend. All eyes in the barley market will be on this, while wheat traders also will also anticipate a follow up tender for Saudi wheat.