Markets

Feedgrain Focus: Nearby up, weather drives new-crop

Liz Wells, May 20, 2021

Seeder on the move this week near Warren, NSW

FURTHER rallies in the nearby market are being seen this week as growers focus on planting rather than selling grain, while the new-crop market has softened in the north and firmed in the south to reflect divergent weather.

With the east-coast export task still in full flight, trade sources say trucks have not become any easier to book for domestic deliveries, and road-freight rates continue to firm.

On the demand side, the poultry and pig sector is buying sorghum with a degree of sprouting caused by recent rain, and beef feedlots have ratcheted back their buying due to reduced numbers of cattle on feed.

Nearby New-crop January
Barley Downs $300 up $3 $280 down $5
Wheat Downs $332 up $7 $315 down $15
Sorghum Downs $320 steady $285 March-April
Barley Melbourne $280 up $5 $285 up $20
Wheat Melbourne $340 steady $335 up $5

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

Dry in south

Victoria, South Australia and south-western New South Wales are the dry parts of the Australian grainbelt, but with 5-15 millimetres forecast for next week, they look set to advance or finish planting.

“With rain now on the forecast for Vic in the next five to seven days, we might see some more movement of grain out of growers’ hands,” one trader said.

In southern markets, trade sources report that grower interest in selling wheat and barley has been minimal for weeks because they have been tied up with fertilising, spraying and seeding.

“It feels like the export focus is going to continue into July and maybe August.

“After that, the delivered Melbourne market is where we might see some action from September onward.”

However, dry conditions are of concern, and livestock in north-west Victoria is looking for either supplementary feed or agistment on greener pastures.

This is buoying hopes for a rally in barley and wheat prices at sites on the inland edge of the southern grainbelt.

While the NSW Central West Slopes and Plains district planting is virtually complete in good moisture, heading in a westerly direction the country gets progressively drier through the Riverina and westwards along the Murray River into South Australia.

Driving across the Hay Plain on return from a southern NSW client visit this week Pinion Advisory grain marketing team leader Chris Heinjus told Grain Central about variation in farmers’ circumstances between the Central West and the SA/Vic/NSW border districts.

“Canola is out of the ground and appears to be planted into good moisture Wyalong eastwards.

“South into the Riverina machinery working paddocks is raising dust.

The dry conditions extend west through Mildura into South Australia and down into the mallee country.

“This year in southern Australia it’s dry in the areas we’d normally expect to get frontal rain.

“I’d say 90pc of South Australia is dry or very dry. Most of SA and the country through to Balranald has pretty much no moisture underneath it.

“It now requires quite a bit of moisture to wet up.

Mice

Crop stubble and seed blast from headers were suited to breeding mice. Growers’ control methods had to adapt.

“It’s very situational and comes down to what was the prior crop in the ground.

“There are increased mice numbers in South Australia, but I see that mostly as manageable with baiting.

In NSW there’s evidence of growers clearing crop residues by burning which will be partly to control food sources and cover for mice populations.

Other than the old crop issues of the management of stored grain, the presence of mice is affecting growers new crop planting decisions.

“The key for growers is to get the crop out of the ground.

“Planting seed into dry ground is a food source for mice, feeding as they burrow along furrows picking up seed.

SA stock snug

Sheer volume of 2020 winter grain harvest in western and eastern Australia pushed as much grain to export as logistics would allow.

South Australia’s export pathway was strong relative to the size of the crop, compared with NSW/Vic, so the effect of export shipments on residual stock in SA was greater than in neighbouring eastern states.

Lower stock is having a bearing on growers’ attitude to further current crop sales.

“I think the SandD on old crop in South Australia is not really tight, but it’s snug, particularly on feedgrains.

“We’ve got a reasonable lick of old crop priced up now.

“There’s still a big export program underway, the domestic flour millers would be quite well covered and it’s the stockfeed millers that appear to have left open some opportunity to buy grain in the back half.

Notwithstanding the season hasn’t yet given an ideal break in southern areas, the NSW crop prospects on stored moisture and the buffer of stock remaining in WA and in NSW would likely insulate prices from escalating in 2021.

There is still some risk of poor crop establishment in the south.

Delta Grain Marketing general manager Mick Parry said a considerable tonnage of barley had been warehoused in southern NSW and still needed to be sold. Growers were not likely to let any of it go before a soaking rain fell to germinate dry sown crops.

“The danger here is that you get a small rain event, and germination isn’t good,” Mr Parry said.

“I think we’re not that far from getting a weather market.

North juggles harvest, planting

Prices for wheat and barley have risen in the nearby northern market as growers juggle a late and problematic summer-crop harvest while planting their winter crop.

“All the grower is trying to do is get rid of off-grade sorghum and focus on winter-crop planting,” one trade source said.

A significant amount of Sorghum X, which caters for 10-20 per cent sprouted grain, has been created by recent rain in southern Queensland and northern NSW.

“That’s going into poultry and piggeries at maybe $220-$225/tonne on farm.”

The rain has set up growers in southern Queensland and northern NSW for an ideal and widespread planting of wheat and barley into a mostly full soil-moisture profile, and this has put pressure on new-crop values.

While plenty of good-quality sorghum is now being harvested, its moisture is too high to allow delivery straight into export channels.

“The problem is drying it down; growers can do it, but they’re busy trying to get their mungbeans and their sorghum and their cotton off, and plant wheat and barley and chickpeas.”

“If they’re harvesting sorghum, they’re keen to sell it and shift it, and they’re selling bits and pieces of old-crop barley and wheat,” Robinson Grain trader Anthony Furse said.

“There’s not much interest from them in selling new crop.

“They’re saying: ‘Don’t mess with my mind while I’m getting this crop in the ground’.”

Mr Furse said feedlots were buying in modest amounts for June-July, but were not looking at sorghum.

“Sorghum is too expensive for a feedlot full stop.”

Mr Furse said the ongoing shortage of trucks was still limiting the tonnage domestic consumers were prepared to chase in the nearby market.

“Triples are available, but there’s a shortage of B-doubles, and trucks are tight right down into South Australia.

Mr Parry agreed, and said some growers were reluctant to sell any more grain prior to June 30.

“We have a number of growers who don’t want to sell in this financial year, wet weather has hampered some deliveries, and road freight has become increasingly difficult to get because of the massive export program.

Mr Parry said barley’s discount to wheat was narrowing, and the export market for sorghum had it at a premium to even high-grade milling wheat.

“Barley is the go-to for the domestic feeder.”

Cottonseed range-bound

“At the same time as ginning has commenced in the Riverina region and the Macquarie Valley, export interest has gone quiet with DCT bid A$440/t and offered $450/t,” Woodside Commodities manager Hamish Steele-Park said.

“Cottonseed this week was softer but values remain range bound.

“Australian seed still cheaper than US seed into destination markets.”

Darling Downs delivery June and July was quoted about $385/t.

 

 

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