WHEAT and barley prices have fallen by up to $22 per tonne in the past week as domestic values factor in the softer global market, and sell-side pressure is seen for the first time since sowing started in April.
On the logistics side, trade sources report trucks are a fraction easier to get, and while wet conditions are slowing grain movements in some districts, growers who have finished planting their winter crop now have time to deliver a load or two.
This has eased the squeeze on deliveries which has caused spikes in the Brisbane and Port Adelaide zones especially in recent weeks.
|SFW wheat Downs||$495||$505|
|ASW wheat Melbourne||$475||$493|
|SFW wheat Melbourne||$468||$490|
Table 1: Indicative delivered prices in Australian dollars per tonne.
North takes off-spec
Top-grade feedgrain remains difficult to source in the northern market, where consumers are buying downgraded sorghum and barley as well as SFW wheat.
Traders report F2 and F3 barley has been selling in reasonable volume, with growers happy to offload lower-spec grain now that global markets appear to be trending down.
While conditions in many paddocks in the north too soggy for sowing of winter crops and harvest of summer ones, rainfall has mostly been 10 millimetres or under and patchy in the past week.
“In the past week to 10 days, there’s been an increase in old-crop selling, and for payment in next financial year,” Knight Commodities broker Gerard Doherty said.
Sorghum 1 has sold steady to higher in the past week to buck the weaker trend, and Mr Doherty said widespread downgrading of the crop left to harvest could well be a contributor.
“Sorghum’s holding, and it doesn’t look like we’re making any more Sorghum 1 after all this wet weather.”
New-crop multigrade wheat contracts for Dec-Jan delivery Brisbane are now sitting at around $500/t for APW, down from $520-$530/t at the peak, and attracting some grower interest.
In the nearby market, the rain-induced delay to cotton picking in southern Queensland and northern NSW appears to have switched some trucks back into grain for the next few weeks.
“Cotton’s backed off with the weather, and it feels like in the past couple of week, there are more trucks available; it’s easier to get wheels.”
Delta Ag broker Tom Vanzella said consumers were buying downgraded barley and sorghum provided they hit testweight specs.
“The consumer has been reluctant to look at it, but BAR3 is getting snapped up,” Mr Vanzella said.
Trade sources report F3 barley delivered Downs this week has traded at around $435/t.
“There’s a reasonable amount of grower selling, and they’re looking at international factors.”
Leading those is the possibility that Ukrainian grain in volume may be able to get to some export customers.
“There are also a few more trucks moving.”
Mr Vanzella said while international values were weakening, domestic demand and logistics appear unlikely to let prices fall too far.
“The old-crop market is running its own course.
“Overall, the east-coast feed market should remain relatively firm for old-crop wheat, barley and sorghum, especially if a wet, cold winter increases energy needs.”
South falls as growers reset
While growers in northern NSW and southern Queensland have only been able to plant about 20 per cent of intended winter crop area because of excessive and unseasonal rain, most growers in other parts of Australia have finished planting.
Parts of central and southern NSW have had up to 35mm of rain in the past week, which is slowing up movements of grain off farm, and may prompt the need for resowing.
However, Victorian and South Australian crops are generally all in, and benefiting from rain of the past week.
“Growers are pretty well done with planting…and the market coming off has sparked their attention,” GeoCommodities broker Brad Knight said.
“With consumers, we might see them step up a bit more; they don’t want to miss buying at $40-$50 below where the peak was.”
That could include coverage of some pent-up demand.
“I don’t think there was a lot of business done at the peak of the market.”
Export markets remain extremely strong for wheat, barley and canola.
“The domestic customer realises that if they don’t pay up for it, it will go on a boat.”
Another trader said the southern feedgrain market was finding further support because growers with the ability to take a load or to were choosing pulses over cereals to sell in the nearby.
“There are not buyers there every week for faba beans and lentils, so that’s what they’ll concentrate on if the bids are there.”
“Growers will have time to sell now, and some might be thinking we have seen the top of the market.”
Rail access to NSW ports continues to run at below capacity for bulk grain, with the Narrabri-Moree line closed over winter to allow upgrades for Inland Rail, and the Moss Vale-Unanderra line out of action following rain damage until September.
Grain Central: Get our free news straight to your inbox – Click here