Feedgrain Focus:  Prices soften on dollar, thin demand

Liz Wells October 21, 2021

GrainCorp has added 90,000t of bunker storage at its Moree site ahead of the north-west NSW harvest which will start in earnest by next week, weather permitting. Photo: GrainCorp

HARVEST pressure and a drop-off in demand from exporters and consumers have allowed prices to drop in the north, while the southern market has traded sideways as consumers ratchet back their buying ahead of harvest.

The firming Australian dollar has tempered spot bids for export coverage, and domestic consumers continue to hold out for downgraded or low-protein wheat.

However, some mild and showery weather as well as storms in parts of NSW is slowing the ripening of an already late crop, and an increase in bids and volume can be expected from the domestic consumer if the pattern continues for another week or two.

Nearby January 2022
Barley Downs $280 down $2 $295 down $5
Wheat Downs $335 down $33 $335 down $15
Sorghum Downs $305 down $3 $290 steady
Barley Melbourne $290 steady $300 steady
Wheat Melbourne $365 steady $365 up $5

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

North harvests around storms

Queensland growers have made good progress with harvest in the past week, and new-crop barley is pouring into feedlots and feedmills, while most of the wheat coming off is heading straight to export.

Storms and some hail slowed harvest for a day or two earlier this week, but impacted crops have been concentrated into a few small pockets on the Downs.

Rain Ag commodity broker Scott Merson said many wheat crops are yielding a healthy 3-4 tonnes per hectare and some growers, who were fearful of low protein or weather damage and forward sold on feed or ASW specs, are looking to wash out and capitalise on their high-quality grain.

Mr Merson said buying interest from consumers has ebbed following some coverage on short positions in recent weeks.

“They’re waiting to see what happens with harvest now that we’re on the verge of getting into wheat in northern NSW.”

Queensland proteins, yield and quality overall has been better than expected by growers and the trade.

“Queensland is having a cracker on quality…and a lot of growers haven’t taken off any wheat below 12.5 per cent protein.

“On barley, yields in general are as good as or better than anyone was anticipating; we’re seeing a lot of 5t/ha with good test weights.”

Rainfall registrations in NSW for the week to 0900 today include: Coonamble 8mm; Narrabri 3mm; Temora 14mm and West Wyalong 12mm.

Some growers in NSW and Queensland are planting sorghum in fallowed paddocks dotted between their winter crops.

Slow in south

Key Agri Services account manager Matt Noonan at Wagga Wagga said expectations for a lower-protein NSW crop are building as mild and showery weather continues.

“The majority of the NSW harvest is going to be a week to two weeks later than normal in terms of a starting date.

“That’s playing with the nearby market; consumers and buyers thought it would be on their doorstep by now.”

Mr Noonan said export was still putting its hand up for new-crop wheat.

“The crop make-up is going to be lower in protein than last year, but if it holds at ASW or better, it won’t be a problem.

“If we get a lot of SFW-type wheat, that might be a different story.”

Mr Noonan said the firming Australian dollar was countering the impact of overseas markets as they tick higher.

“The rising dollar hasn’t allowed the market to pass that on here.”

Growers in northern NSW have started harvesting barley, canola and faba beans, and the wheat harvest is expected to kick into gear next week, weather permitting.

Mr Noonan and other sources have said the NSW supply chain could well come under additional pressure if the weather doesn’t heat up soon.

“A lot of wheat on the north-west plains is a week or 10 days away, and that’s pretty late already.

“If this is how slow it is coming in up north, we could have the whole thing happening at once across NSW.”

Wheat growers in central and southern NSW are fairly sure they won’t get the pleasant protein surprise that growers in Queensland have, and Mr Noonan said a number of them earlier forward sold some SFW or ASW-type wheat.

“If they sell straight SFW or ASW, it’s a better price than on a multigrade. “

“Prices haven’t budged too much, so growers feel they don’t need to get on the front foot and sell before the market drops.”

“In the past two weeks, grower selling has slowed down.

Bulk handlers, including GrainCorp which has just added an additional 90,000t of bunker storage at Moree, appear ready to handle a big crop. The trade is aware that a shortage of road transport would be the most likely result of a compressed NSW harvest.

The gentle spring weather to date is ideal for pasture growth, and demand for stockfeed for ruminants appears to have dropped away in the near term.

It means feeder cattle can spend longer in the paddock, and dairy and sheep demand has dropped off, with the expectation of another whopper faba bean crop making feedmills feel comfortable even if summer turns out to be hot and dry.

Cottonseed shunts higher

Higher late-season prices are nothing new in the cottonseed game, and this year is playing out a familiar deck of cards.

“Current crop cottonseed values continue to shunt higher,” Woodside Commodities manager Hamish Steele-Park said.

“Offers are thin on the ground in all valleys, and demand for container export is still evident.

“Australian cottonseed in the export market is now getting very expensive compared with US cottonseed.

“Current-crop Australian is about US$80/t more expensive than US origin on a CNF basis for shipment say November-December 2021.”

Current-crop sellers on the Darling Downs are reported to be asking more than A$450/t for nearby delivery, at least $5/t higher than a week ago.

“New-crop values are a little firmer and likely are getting some wind assistance from the current crop.

“The price inverse between current-crop and new-crop seed has widened.”

New-crop offers are quoted at about $340/t delivered Darling Downs during the 2022 gin spread delivery period.



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