Feedgrain Focus: Prices fall on China concerns, harvest

Liz Wells November 5, 2020

Unloading grain at Moree over the weekend. Photo: CHS Broadbent

PRICES for wheat and barley have fallen by up to $35 per tonne this week as growers accelerate their sales of grain off the header, and amid concerns that China will close its door on further purchases of new-crop Australian wheat.

China has already suspended barley imports from two Australian grain exporters, CBH Grain and Emerald Grain, and many within the trade believe it is only a matter of time before China declares a problem with Australian wheat.

Sources estimate China may have bought up to 25 per cent of new-crop wheat exports already booked, and are hopeful that it takes delivery of at least this grain.

Further volume sales of new-crop wheat to China in the current trading environment seem unlikely, but going on China’s actions on barley which has been shipped since tariffs were introduced in May, defaults are not expected.

Exporters are confident Australian wheat and barley are priced competitively in the global market, while domestic consumers appear to have backed off their buying in the hope that prices soften further as harvest accelerates.

This week Last week Change
Barley Downs Nov $258 $265 Down
Barley Downs Jan $255 $265 Down
Barley Melbourne Nov $250 $265 Down
Barley Melbourne Jan $245 $255 Down
Wheat Downs Nov $305 $340 Down
Wheat Downs Jan $305 $320 Down
Wheat Melbourne Nov $350 $355 Down
Wheat Melbourne Jan $305 $327 Down
Sorghum Downs Nov $350 $355 Down
Sorghum Downs Mar-Apr $310 $320 Down

Table 1: Indicative delivered grain prices in AUD per tonne.

Softer since Monday

News that China had suspended barley imports from Emerald Grain hit the market on Monday, and Victoria’s Melbourne Cup public holiday on Tuesday, plus harvest progress in all states including Victoria have been bearish for prices.

While Australian barley prices have been factoring in the impact of China’s absence for months, wheat prices have proved vulnerable to the latest ructions in Australia-China relationship.

“The market has definitely softened over the course of the week for sure,” Carpendale Commodities trading manager Andrew Jurgs said.

“Barley has shown a bit more resilience than wheat.

“Wheat at the moment is definitely coming under pressure.

“We’re in a situation where the bearish fundamentals are weighing heavily on the market.”

Harvest resumes

Harvest in southern Queensland and northern New South Wales has built up to a cracking pace after last week’s rain delays, and trucks are carting grain to container packers, warehouses, railheads and end users.

However, most grain is being stored on farm in silos, grain bags, bunkers and pits as growers prove loath to put supply-side pressure on prices.

They also need to make the most of available trucks amid the harvest transport squeeze, and keep trucks on short cycles.

Key Agri Forbes-based broker Warren Lander said bids were hard to find, and growers were not keen to sell wheat or barley in volume in a falling market.

This is in contrast to last week, when domestic flour millers, container packers and export accumulators were all bidding strongly for the limited amount of available grain in the rain-affected spot market.

“In 2016, if they held on to barley they could have got $130 a tonne for at harvest, it was worth $250 six months later; pits are going in everywhere,” Mr Lander said.

Despite this harvest being the first sizeable one after three years of drought for many central NSW growers, Mr Lander said banks did not appear to be pressuring growers to sell all of their grain at harvest.

“If the grower can show there’s an asset on-farm…they will play the market as much as anybody.”

Mr Lander said the container market was putting up its hand for oats and lupins as well as wheat.

“The dark horse amongst all of this is the container trade.”

Protein premiums evaporate

Stockfeed wheat (SFW) has emerged as a segregation this week, and is trading at around $240-$245/t ex farm central NSW, with APW at $255-$260.

At Narrabri in northern NSW, bids for Australian Prime Hard (APH) wheat have dropped massively this week to roughly $265-$270/t, compared with trades occurring last week at $332/t.

“The market’s now comfortable with the amount of coverage it has on protein,” AgVantage Commodities principal Steve Dalton at Narrabri said.

Some wheat which has copped heavy and successive rain at maturity has been downgraded from APH to SFW, but most wheat being delivered has been making milling grades.

“There has been some downgrading, and we’re seeing some low falling numbers which are taking wheat from APH to SFW.”

“There’s a little bit of shot and sprung, but it’s a reasonably small amount.”

“Now we’re waiting on results from early harvest on the Liverpool Plains, where crops are later.”

Mr Dalton said growers were selling plenty of grain for cash, and holding even more in this big-yielding year.

Harvest in southern Queensland is expected to slow or finish for most large-scale growers next week.

In the 24 hours to 9am today, scattered rain fell on the central and south-west slopes and plains of NSW, and some districts received only a few millimetres, not enough to delay harvest or affect quality.

Higher registrations include: Condobolin 10-40mm; Cootamundra 33mm; Cowra 41mm; Parkes 54mm; Peak Hill 15mm;  Temora 16mm, and Young 69mm.

On the slopes, this will provide a yield boost to later crops, and will strip some protein and create some isolated quality issues in some districts.

In the Coonamble district, harvest is estimated to be around 30pc complete, and the Goondiwindi-Mungindi region on the NSW-Queensland border is in the second half of its harvest.

In north-western NSW and on the central plains, harvest activity is switching from barley to wheat, and early cereals are being harvested as far south as Hillston and Euabalong in the Lachlan Valley.

Early cereals are also being harvested in north-west Victoria, and receivals into Viterra’s South Australian system doubled in the week to Sunday.




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