FEED wheat and barley has traded mostly steady to firmer in the past week as export demand and solid buying from the poultry and pork sectors underpin prices.
With widespread rain across south-eastern Australia last week pausing harvest, limited sales off the header have also allowed prices to hold instead of sinking under supply-side pressure, with ASW in Victoria the exception.
Wheat quality appears to have held up remarkably well to the rain, with relatively few loads failing the falling numbers test to date, and test weights dropping a few kilograms per hectolitre, but not enough to force downgrades.
However, 5-50mm is forecast to fall by the end of next week on unharvested crops in Vic and New South Wales, and more in South Australia.
Growers are therefore pulling out all stops to get wheat in the bin this week and avoid an escalating risk of widespread downgrading.
|ASW wheat Downs
Table 1: Indicative prices in Australian dollars per tonne.
North goes quiet
Demand from the feedlot sector has fallen away as most operations find themselves fully covered, or close to it, for the coming quarter.
As feeder steer prices rally and summer pasture builds up following recent rain, feedlots are being careful not to extend their long position on grain coverage at current rates.
“Recent rain in the cattle industry has put a bearish tone into the feedlot sector,” Smithfield Cattle Co commodity buyer Brett Carsburg said.
Mr Carsburg said volume bought by the north’s feed sector was expected to diminish in the near term amid a lack of incentives to increase coverage.
“I’m not getting anything offered cheap from the south, and I see barley holding firm.”
“There’s no reason for feedlots to be aggressive buyers.”
Since it removed tariffs on Australian barley in August, China’s position as the volume buyer of Australian barley has consolidated, and diverted barley from South Australia and Western Australia previously coming into the Qld and northern NSW feed market via Brisbane.
“The majority of barley is way down south, and it’s not cheap to get it here.”
“I see barley prices being quite stable.”
Qld growers and the market are watching the path of Severe Tropical Cyclone Jasper, which is expected to near or cross the Qld coast by late next week.
If it brings big rain to Central Qld, it will buoy production of sorghum ahead of the planting window opening next month.
This in turn could see poultry and pork producers opt for the red grain come April-May, and ratchet back their competition for feed-grade and ASW wheat from the south.
South harvesting at pace
Growers in Vic, SA and southern NSW are frantically harvesting and storing or delivering grain ahead of rain which is forecast to set in from tomorrow, and could well see a reasonable proportion of grain still in the head fail tests for falling numbers and/or minimum weight.
At Young on the south-west slops of NSW, Grain Focus principal Michael Jones said harvest was under way again after last week’s rain.
“Miraculously, quality since the rain has been fine,” Mr Jones said.
So far, reports are few of wheat failing the 300-second falling numbers test which measures sprouting, and determines whether wheat can go into ASW or better segregations.
“Those ones that are failing are only just failing at around 280-290.”
On the outer slopes, many growers are finishing harvest, and some wrapped up before the rain.
Since the rain, bulk handlers have opened segregations for off-spec grades at some sites, and growers with a load on are keen to deliver it if it fails the falling numbers test.
“Because of that, domestic consumers are filling up.”
Mr Jones said growers on the inner slopes have four or five days of harvest ahead of them to complete their programs, and some sites are full up on selected segregations.
Export interest in ASW is underpinning current values, and Mr Jones said the spread between ASW and protein wheat has blown out further after the rain.
As an indication, best cash bids at GrainCorp’s Temora sub-terminal were sitting this morning at around $465/t for APH2, $400/t for H2, $373/t for APW and $343/t ASW, while AGP1 with some tolerance for sprouting is $320/t.
At $145, the spread between AGP1 and APH2 is more than double what can be expected in a normal season, and indicates container packers and flour millers have some shorts to fill ahead of the Christmas-New Year break.
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