Markets

Feedgrain Focus: Prices firm as rain prompts choppy trade

Liz Wells, November 18, 2021

Growers and contractors are keen to beat the rain forecast to follow recent falls, and getting bogged has been a common occurrence this week across NSW. Photo: Alex Goesch, Barmedman

PRICES for wheat and barley have firmed in the past week to reflect harvest interruptions and thin grower selling of off-spec wheat.

Consumers are booking barley and SFW wheat as their preference as growers in New South Wales try to get a run on harvest before showers forecast for the entire eastern and South Australian grainbelt arrive.

Quality of grain being harvested in NSW is hugely variable, with sites taking in anything from APH2 to SFW1 and GP1, and testing for falling numbers now widespread.

Accumulation for nearby exports in NSW and South Australia appears likely to be relying on carry-out rather than new-crop, and spikes in the market created by short covering from consumers and exporters are expected the next rain is substantial and widespread.

Nearby Deferred
Barley Downs $286 up $8 $288 up $6 Jan
ASW wheat Downs $348 up $3 $340 steady Jan
SFW wheat Downs $315 down $5 $320 down $5 Jan
Sorghum Downs $330 up $10 $310 up $10 Mar
Barley Melbourne $310 up $8 $300 up $5 Jan
ASW wheat Melbourne $400 up $25 $385 up $20 Jan

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

Rain impacts north

Testing for falling numbers, an indication of rain-induced sprouting, started at many bulk-handling sites across the northern half of NSW this week.

GrainCorp general manager of domestic commercial Sean Barker said it was pleasing to see that most wheat entering the GrainCorp system was still making milling grades.

“The falling number machines can give growers some confidence in maintaining their milling grade bids,” Mr Barker said.

Feedlots are continuing to buy all the barley they can from growers in northern NSW and southern Queensland and from the trade to keep it in the ration until January or beyond.

“Guys that are feeding barley want to stay on it, and the market for it has gone up by probably $10 in the past 10 days,” one trader said.

While carry-out grain remains in some private and bulk-handler storages, the impact of rain has been to befuddle the market’s expectations on the quality and timing of grain coming its way.

Knight Commodities Goondiwindi-based broker Gerard Doherty said the rally in the barley market has been surprising, considering that deliveries into downgraded wheat segregations are swelling now that harvest has resumed.

“There’s more and more of it coming on line, and growers are taking the opinion that if it gets too cheap, they just won’t sell it,” Mr Doherty said.

Supplies of unpriced barley harvested recently in southern Queensland and northern NSW are getting tight.

“All that’s come and gone off the header already, and barley is $10 firmer than 10 days ago, which is surprising because of all the feed wheat the market is expecting.”

If SFW finds a volume export market as a straight segregation, or blended with higher grades, the domestic market will likely stick with barley where it can.

The market for SFW has softened by a few dollars this week, while the spread between Australian Prime Hard and ASW has now blown out to around $75 as a function of the wet weather.

“There’s a wide variability out there on grades, and those markets need a bit more time to develop.”

“The domestic market’s probably just hoping to fill in a few holes in the meantime.”

“It’s getting to a point that if people need stuff by Christmas, they need to buy it now, especially with more wet weather coming through.”

Mr Doherty said growers with higher-protein wheat are selling it now that depot prices are above $400/t, and appear ready to wait to sell lower grades.

“There’s a lot of indecision by growers as to the best rope to pull.”

South prioritises lentils, canola

Patchy rain across southern NSW in the past week has stopped harvest in some districts, but will be good for later crops in others.

Coupled with unseasonably cool weather, the late harvest is getting later, and growers are looking to harvest lentils and canola as a priority because they are the higher-value crops.

Melaluka Trading director Michael Fitzgerald said a week of fine weather after this forecast run of showers would see the Victorian cereal harvest gather pace.

“Wheat’s not happening yet, but a week of fine weather and it will be ready.”

Mr Fitzgerald said rain has prompted some regrowth in barley which has not been sprayed out, and traces of black tip are appearing in some crops as a result of recent rain.

“There’s a $30/t plus spread for malt over feed barley, so a lot of growers haven’t sprayed their barley because they want to get that.

“Some will pull the pin now and spray because every rain now will make it harder to get malting.”

This will push more barley into the feed segregation, but pressure on prices is not expected until the Victorian harvest ramps up.

If forecasts are correct, that will be at least one week away.

Inverse raises stakes in cottonseed

The inverse for nearby cottonseed over new-crop for delivery March 2022 onwards has now blown out to $180/t, and appears to be raising the stakes for users of cottonseed, weighing on their decisions about inclusion rates.

“Feedlots seem to be reducing ration component due to the high prices…as prices approach $530/t November-December delivered Darling Downs,” Woodside Commodities manager Hamish Steele-Park said.

“Cottonseed prices remain firm current crop, with export and domestic demand underpinning values and limited stocks available.

“New-crop values remain more range-bound at about $335-340/t delivered Downs.

“New-crop seed prices remain competitive into feed rations versus other grains/meals and also are competitive into export.”

Mr Steele-Park said 2022 cotton will be a big crop to move and, while growers are well committed on forward sales of the lint proportion of their production, they still have not committed to selling much cottonseed.

Far distant though the prospect for 2023 cotton may seem, confidence would be rising for plantings this time next year as rain this spring has recharged soil water in places including the Lachlan River valley presently flooding much of Australia’s southernmost summer-crop country.

 

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