PRICES for feedgrain fell by up to $20 per tonne in the past week under supply-side pressure from New South Wales growers keen to quit their discounted wheat.
Prices for APW1 and higher grades have fallen further, to reflect the big yields and high quality of the Victorian harvest. The benchmark ASX January eastern wheat contract has fallen around $60/t since late November.
Market talk is that reasonable test weights and protein in much of NSW’s rain-affected wheat means it is having no trouble finding demand from South-east Asian customers and possibly China too, and domestic consumers are willing buyers at current levels.
|Barley Downs||$297 down $8||$290 down $15|
|SFW wheat Downs||$322 down $6||$310 down $18|
|Sorghum Downs||$340 down $10||$310 down $20|
|Barley Melbourne||$300 down $20||$305 down $10|
|ASW wheat Melbourne||$390 down $22||$395 down $20|
|SFW wheat Melbourne||$345 down $20||$335 down $17|
Table 1: Indicative delivered prices in Australian dollars per tonne.
SFW in demand in north
Traders report feedlot buying of SFW wheat has stepped up in the past week or so, with JBS being among those with bids in the marketplace that indicate rations will include a blend of barley and SFW wheat throughout much of 2022.
Highly sprouted wheat is not suitable for steam rolling as occurs at most feedlots, but is pricing into poultry and pig rations when it can be hammer-milled.
Low falling numbers indicate the amount of sprouting in grain, and this alone has been widely responsible for downgrading NSW wheat – possibly up to 6 million tonnes of it – from the ASW, APW, Hard and Prime Hard milling grades to SFW and GP.
Test weights and protein in SFW has come in better than expected for many growers, and well above the minimum 70 kilograms per hectolitre.
In some cases, it is at more than 76kg/hl, the cut-off for ASW and APW, and protein in many samples is above 10pc.
“What we’re seeing is some traders washing out APW they’d booked to go into South-east Asia and replacing it with SFW,” one Queensland-based trader said.
“We’ve got a lot of it around and we’re well priced.”
Markets are talking about rain-related quality problems with some of China’s own corn crop, and Australian SFW is seen as being highly competitive with Black Sea and Russian feed wheat into China.
“This is the cheapest quality feed wheat in the world,” one trader said.
Agracom export manager Brett Donoghue said milling wheat has taken a bigger tumble relative to feed grades in the past week.
“Milling wheat’s been slaughtered; there’s better quality in Vic than the market was expecting.”
He said growers were juggling the need to store various segregations from the wet harvest on farm ahead of a big sorghum crop now in the ground, and they were not necessarily keen to meet the market on rain-affected wheat.
“Certainly there’ll be demand from South-east Asia…and I’m hearing China is going to buy Aussie feed wheat,” Mr Donoghue said.
“With the export demand, it’s well priced to clear, and domestically, there’s going to be uptake.
“It’s not all doom and gloom.”
South makes progress
Peter’s Commodities trader Peter Gerhardy said the southern NSW harvest is progressing well, despite the occasional shower and boggy conditions in paddocks slowing most growers here and there.
“We’re getting 3 or 4 millimetres around the place, and growers will get held up for a day or half a day,” Mr Gerhardy said.
He said the whole market has softened.
“SFW has probably come off $15 for the week, and also the milling grades are coming back to join them.”
“There’s quality in Victoria, and west of the Newell Highway in southern NSW, but east of it, probably 80 per cent of the grain is SFW.”
He said there have been a few pleasant surprises for growers in areas like Junee, where some are harvesting H2 wheat.
“The test weights in the south are holding up reasonably well at 80-81kg for some growers, but it’s SFW because of the falling numbers.”
Mr Gerhardy said the domestic consumer and the trade were buying, but short covering appeared to have gone to ground for now.
“Because of the delayed harvest there were some highly inflated prices getting around.”
He said while the NSW and Victorian harvest is expected to make good progress under clear skies in the coming week, some outturn issues tied to logistics and the need to fumigate could bring the shorts back to the market.
“With the later harvest going into January, the bulk handlers won’t be prepared to outturn in January.
“We could see bits and pieces of shorts into the New Year.”
The NSW harvest is running around three weeks behind where it would normally be because of recent rain on top of the gentle growing season.
“The harvest south of Wagga wouldn’t be 50pc done, and normally we’d be getting near the end.”
Demand for barley appears to be subdued.
“Buyers for barley are starting to fall away and are going to sit back and see what the spread does.”
Nearby cottonseed was quoted at $540/t delivered Darling Downs for odd loads.
“Tight stocks and some domestic buying interest is keeping seed values robust for spot months, but volume trading is low,” Woodside Commodities manager Hamish Steele-Park said.
“Most consumers just are trying to get over the line by buying hand-to-mouth before cheaper new crop becomes available next year.
“New crop 2022 cottonseed was a little firmer over past week or two on container export interest.
“It remains competitive into destination markets, plus works into feed rations domestically.
New-crop delivered Darling Downs was quoted around $350/t delivery May to Aug 2022.
Mr Steele-Park said the impact of recent flooding on price appeared minimal because the outlook for the crop size next year remains large, irrespective of whether the damage would cause losses of, say, 200,000 bales or 400,000 bales.
“Export demand will be the determining factor on cottonseed price direction this coming season.”
The next Feedgrain Focus will be published on Thursday January 13, 2022 after Grain Central returns from its Christmas-New Year shutdown.
We wish all our valued readers and sources a Merry Christmas, a Happy New Year, and a well-earned break.
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