HARVEST is off to a fitful start in some regions south of Central Queensland (CQ) this week, and even this small amount of new-crop grain has softened the prompt northern market for SFW wheat.
While the sun is out over parts of the northern region today, the forecast for up to 50 millimetres of rain in the coming week over eastern and South Australia means shorts are in the market to cover on barley in the north and SFW in the south.
Trade sources report grain is moving, albeit by the longer-than-normal route in some cases, amid flood-related road and rail closures in New South Wales and Victoria.
The extent and duration of flooding in some districts means some area losses and widespread downgrading is inevitable.
Consumers are therefore waiting for harvest to start in earnest in the hope that it will depress rates for feed-grade wheat before they go big on new-crop coverage.
|Prompt||Oct 20||Jan-Feb||Oct 20|
|SFW wheat Downs||$425||$430||NQ||$415|
Table 1: Indicative prices in Australian dollars per tonne.
North inches forward on harvest
Prompt barley values have risen by up to $25/t in the past week as some consumers scramble to cover short positions exacerbated by the already late harvest and further rain.
A ratcheting back in numbers of cattle on feed at some sites is decreasing demand for grain, and new-crop wheat and barley out of CQ has helped to arrest the price rally.
Domestic flour millers are in the market for CQ wheat of minimum 11 per cent protein, which is expected to be in critically short supply in NSW this year because of the sodden growing season.
The stockfeed market is bidding actively in all regions, with export interest remaining limited until harvest gets going in earnest and out-turn can be assured.
Smithfield Cattle Company commodity buyer Brett Carsburg said some consumers had been “very proactive pre rain”.
It fulfilled expectations held by many of making a difficult logistics situation worse.
In the week to 9am today, some Queensland crops either on the point of harvest or nominally up to two weeks away from the header had further unwelcome rain.
Registrations include: Capella 44m; Clermont 66mm; Dalby 37mm; Emerald 7mm, Jondaryan 28mm; Springsure 38mm; Surat 41mm; Miles 82mm, and Roma 30mm.
In NSW, rainfall recorded for the week was patchy, and included: Coonamble 15mm; Condobolin 52mm; Moree 134mm; Narrabri 82mm; Mungindi 47mm; Walgett 34mm, and West Wyalong 72mm.
“We’ve been struggling for three months to get grain out of farms,” Mr Carsburg said.
“The majority of consumers are running a short book into new crop from old crop.”
After last week’s rain, western Downs feedlotters are now accessing some CQ new-crop grain, and harvest activity is expected to ramp up over the weekend.
“At the start of the week it was like Armageddon; now with a bit of sunshine around, some people are hoping to start harvesting on Saturday”.
Even if grain is above the maximum receivable moisture level, Mr Carsburg said growers on the NSW-Queensland border and western Downs as well as CQ will harvest what they can to dry down ahead of delivery.
“This weekend, I reckon you’ll see more headers chip away, and the market might ease a bit on Monday.
“New-crop will be driven by consumers, and they will be sitting waiting for the test at the grain stand.
“If there’s widespread SFW and below, we would expect it to bottleneck at sites, and the market to soften.”
In the cottonseed market, Woodside Commodities manager Hamish Steele-Park said values have gapped sharply higher on a lack of offers.
“That’s been amplified by wet weather and flooding, and some gins shutting down for a week due to flooding,” Mr Steele-Park said.
Cottonseed ex northern and central NSW gins is trading at around $420/t for November but liquidity is very low, and new-crop for April onward next year is quoted at $340/t ex Gwydir and Namoi valley gins.
Agronomists and growers report some advance on sorghum and cotton planting where country is dry enough to support machinery.
In northern NSW, the rail lines linking Wee Waa to Walgett and its spur line from Merrywinebone to Burren Junction is closed due to flood-gate installations, with reopening at this stage expected November 2.
South covering ahead of delayed harvest
Floods have caused evacuations and road closures centred in the Murray Valley, but grain is still moving across the NSW-Victorian border.
Victorian consumers and their customers can generally access grain and finished feed, sometimes via the long way round because of flood closures.
Wilken Grain trader Andrew Kelso said the Victorian market was not expecting new-crop grain to appear before mid to late November, and the wet growing season means feedgrain will be in plentiful supply.
“From a stockfeeders’ point of view, there’ll be plenty of feed barley and SFW and ASW about.”
Trade sources say the issue is timing, and this has flattened the spread between lower grades.
“Sellers are hard to find, and people are needing grain for November.
“Wheat’s wheat; people need wheat.”
Mr Kelso said SFW looks like being the grain of choice again this year, and the market’s willingness to pay for it showed in the narrow spread between SFW and ASW.
“The stockfeed industry all used SFW last year.
“Discounts on grower spreads are wide; the market’s not as wide.”
Grower selling remains minimal based on their concerns about what grades they will harvest and when, especially in the light of recent heavy rainfall in many Victorian growing regions.
“Everyone’s reluctant to forward commit until they know what their losses are.”
Pearsons Group trader David Munnis said the delayed harvest had created some pent-up demand.
“There are lots of buyers and not too many sellers.
“We’re in a bit of a holding pattern at present.”
Mr Munnis said Pearsons Group trucks normally travel from Swan Hill to Melbourne via Kerang, but flooding has forced a reroute.
“It’s a daily exercise to find out what’s open and what’s not, but grain is getting through.”
Rex James Stockfeeds commodity manager Tim Hogarth said the delayed harvest had some consumers trying to cover an extra couple of weeks.
“In Nathalia, we’d normally see new-crop barley coming in around Melbourne Cup Day; we’ll be lucky to see it by the third or fourth week of November this year.”
At Young, Grain Focus broker principal Michael Jones said the market was quiet and firm.
“Buyers want to buy, and growers are sitting on their hands,” Mr Jones said.
“While the market’s solid, there’s no incentive to sell.”
He said finding a dry day to out-turn grain from on-farm storages amid the ongoing rain was a challenge.
“If growers do get a dry day, they can think of other things to do than load trucks.”
He said harvest on the south-west slopes, like everywhere, was running late.
“We should be harvesting in two weeks but we won’t be.”
In Victoria, many locations received more than 50mm in the week to today, but some locations in the southern Mallee and northern Wimmera escaped the rain.
Victorian registrations include: Dimboola 50mm; Horsham 56mm; Nhill 43mm; Sea Lake 53mm, and St Arnaud 38mm.
Heavier falls extended into the South Australian Mid North, Murray-Mallee, and South East, and included: Alawoona 66mm; Auburn 68mm; Bordertown 30mm; Clare 77mm; Jamestown 44mm; Lameroo 45mm, and Pinnaroo 43mm.
However, most other SA locations had 10mm or less, and are on track to produce Australia’s best 2022-23 milling wheat this season if rain stays away between here and harvest.