Feedgrain Focus: Prices ease as volume thins

Liz Wells, February 25, 2021

Some farms in the Mungindi region had more than 50 millimetres overnight, while others had little to no rain. Photo: Mick Humphries

DOMESTIC feedgrain prices have softened in the past week to reflect limited near-term demand from consumers.

Some now have coverage extending into early June, and on the supply side, growers are now busy delivering grain to port and up-country bulk-handling sites so they can backload with fertiliser in readiness for winter-crop planting.

Conflicting ideas about how much sorghum will be produced from the current harvest is limiting downside in the northern market.

Sorghum yields in northern New South Wales and southern Queensland vary widely, and have growers and traders careful not to overcommit for fear of having to wash out if production comes in at the low end of market expectations.

This week Last week Change
Barley Downs Mar $280 $282 Down
Barley Melbourne Mar $257 $260 Down
Wheat Downs Mar $312 $315 Down
Wheat Melbourne Mar $310 $312 Down
Sorghum Downs Mar-Apr $330 $295 Up

Table 1: Indicative prices in AUD per tonne.

Sorghum yields variable

Activity in the northern market has been limited in the past week, with the tail end of the Chinese New Year tempering buying interest.

Trade sources report this has switched from a bulk delivered Brisbane basis to delivered packer, which indicates a full or part cargo of sorghum may have been accumulated, and the market is refocusing on packing containers for China.

In the delivered Darling Downs market, sorghum continues to trade at a considerable premium to wheat, but is still being included in selected poultry and pig rations at the minimum inclusion rate of around 10 per cent.

Traders report the highest sorghum yields on the central Downs are coming in at 7-8t per hectare, and the lowest ones are less than half that.

Considerable yield variation exists between farms and even paddocks within farms from Moree north.

In cottonseed, the old-crop market has fallen by up to $100/t in the past fortnight, and is now trading at $460/t ex Downs gin.

The drop is part of the inverse collapsing ahead of new-crop, which will become available by early May and is now trading at around $395/t gin spread.

Isolated storms and showers continue to fall across summer-cropping regions, and while they are delaying sorghum desiccation and harvest in some areas, growers are glad to see the rain.

It is falling in time to save some their final cotton irrigation, and helping to bolster subsoil moisture in the lead-up to the planting of winter crops.

Dollar strength felt

At Narrabri, AgVantage broker Steve Dalton said the wheat and barley markets had continued to trade largely sideways, and with the two grains at close to their traditional spread.

“Sorghum is the outlier,” he said.

It continues to trade at values above those for Prime Hard milling wheat, which reflects solid export demand from China.

Mr Dalton said the cereal market was fairly quiet at present.

“Wheat’s trading in a narrow range, no matter what futures do and foreign exchange does.

“Our dollar is a fair headwind at the moment.”

In southern NSW, Key Agri Services broker Matt Noonan said execution for the massive export program continued to dominate market focus.

“Wheat is steady to maybe $1-$2/t off the highs we’ve seen lately, and barley has come off ever so slightly.

“That could be the Aussie dollar.”

Mr Noonan said grain from southern and central NSW was moving by road and rail in great volume to Geelong, Melbourne, Port Kembla and Newcastle, and growers were picking up backloads of fertiliser, lime and gypsum ahead of winter-crop sowing.

“There’s plenty of movement.

“There’s more moving by road than we thought.

“We hoped there would be a lot of heavy lifting being done by trains, which it is, but due to the size of the crop, trucks can be hard to get.

“Growers are trying to get their grain moved prior to sowing, and they’ve got some spraying going on.”

Eastern ports near capacity

GrainCorp’s FY21 earnings guidance was released last week, and it included an insight into GrainCorp’s receivals and exports for 2020-21. The company’s ports have exported 1.7Mt of grain since October.

“Our combined intake across harvest has totalled 13.8 million tonnes (Mt) of receivals year-to-date, eclipsing the 12.9Mt of receivals at the same stage during the last bumper harvest in 2016-17,” GrainCorp managing director and CEO Robert Spurway said

“Our focus now turns to the first major export program in years, with 1.7Mt shipped out since October 2020, and our port bookings nearing capacity through to September 2021.”



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