Markets

Feedgrain Focus:  Rain, offshore dip soften prices

Liz Wells, October 14, 2021

Barley crops like this at Daybreak Cropping’s Orana Farms at Weethalle are getting close to the end of their growing period. Photo: John Deegan

THE slide in offshore corn and, lower-protein, wheat values coupled with patchy rain across much of the Australian grainbelt, has seen values soften in the past week.

Harvest pressure has come to bear on the northern barley market, while the eastern-states wheat market is factoring in the expectation of a below-average protein profile.

Early crops of wheat are being harvested in Queensland, and barley on both sides of the New South Wales-Queensland border are high yielding and good quality.

This has domestic consumers sticking with barley where they can, and buying hand to mouth in the expectation that lower-protein and possibly weather-damaged wheat will be offered competitively in coming weeks.

 

Nearby New-crop
Barley Downs $282 down $6 $300 down $3
Wheat Downs $368 down $7 $350 steady
Sorghum Downs $308 steady $290 up $10
Barley Melbourne $290 down $5 $300 down $5
Wheat Melbourne $365 down $5 $360 down $5

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

Northern barley sales increase

Despite the storms rolling across southern Queensland and northern NSW, barley harvesting is continuing at pace, as some districts have had little to no rain in the past week.

Higher registrations north of the NSW border in the week to 0900 today include: Dalby 59mm; Jondaryan 14mm; Macalister 14mm, and Roma 18mm.

Throughout NSW, falls have been just as patchy, and include: Coonamble 25mm; Moree 10mm; Narrabri 30mm; Walgett 18mm; West Wyalong 11mm, and Young 25mm.

In NSW, only farms within roughly 100km of the Queensland  border have started harvesting, and the biggest crops so far are yielding more than 6 tonnes per hectare.

Smithfield Cattle Company commodity buyer Brett Carsburg said growers have been active sellers of barley prior to the rain.

“Post rain, we should see more sellers,” Mr Carsburg said.

“I think south-east Queensland yields are better than they expected, and they’ve got wheat to be harvested and they need space for it.”

Trade sources including Mr Carsburg expect the run on grower selling of barley to be short-lived, but to pressure prices further.

“I’d say barley has another $5-$10 drop in it in the short term.”

Downs growers are believed to have done little to no forward selling of their barley, largely  because of concerns about lodging and storm damage, and are expected to keep meeting the market for the next few weeks.

However, once the southern Queensland and northern NSW wheat harvest starts to push out some volume, growers are expected to limit their offerings, and trucks will become harder to book for prompt loads.

Mr Carsburg said local barley values could well trend up over December and January.

“That’s when export demand might be kicking in; I see the barley-to-wheat spread widening now, but I expect early next year it will tighten up.

“Trucks at the moment are not a problem because not much of the crop has started to come off in NSW.

“That will change in the next three weeks when the trucks start to chase the headers south.”

Also, NSW has generally had a softer growing season than Queensland, and its harvest is expected to throw up more ASW-class wheat as it creeps south and east, with domestic consumers champing at the bit to see offers appear.

Feedlots are ratcheting back their inductions of cattle in response to the recent rain, but that is also expected to be short lived.

“Cattle have slowed coming into the feedlot.”

One trade source said Queensland and northern NSW growers were likely to be careful marketers of their wheat, and would hold off for any premiums paid for higher grades.

“I think what growers are wanting to do is get their barley out of the road, and get their wheat into different markets.

Cottonseed rallies

Cottonseed current crop values have surged over the past few weeks on lack of offers and continued demand for imports into China, according to Woodside Commodities manager Hamish Steele-Park.

“Export demand continues over Melbourne and Brisbane during October and November,” Mr Steele-Park said.

“Current-crop stocks may be a bit tighter than initially thought on China business.”

Conditions this year turned positive for the cotton 2022 crop outlook amid favourable moisture and stored-water conditions during spring for crops being planted at present.

“I would expect the cotton crop to get bigger for next year with the recent rain and the high price of lint driving a larger dryland planted area.

Cottonseed prices delivered Darling Downs were quoted around $445/t October-November, and a price inverse of $110-$100/t exists, to reflect the big crop coming, for deliveries during the 2022 gin period starting late April 2022.

Southern season slow

Rain in the past week has been light and very patchy over most of Victoria, South Australia and south-west NSW growing areas but welcomed in the areas where it fell.

Riordan Grains manager Mark Lewis said Victorian crops were mostly able to benefit from these late rains.

“It looks like we’re getting a soft and mild finish, and it’s going to be a late harvest,” Mr Lewis said.

As with NSW, the Victorian crop is shaping up to be one of more modest proteins because urea has been prohibitively expensive, and Wimmera and Western Districts wheat crops continue to set themselves up for big yields.

“Protein is the one thing that everyone’s watching.”

“The domestic guys are quite underpurchased; it looks like they’re going hand to mouth.”

Meanwhile, elevator margins continue to be attractive for exporters, and bids from accumulators looking to put together cargoes are providing some heady competition for domestic consumers.

“I think they’re a little bit stung by the firmer pricing around the world.

“None of them are really coming in.”

Southern growers are continuing to focus on lentils and canola as their generators of cash sales through November and December, but traders are booking a modest amount of forward business with growers on cereals.

“Growers are relatively undersold on their cereals, and maybe there’s a school of thought that with the higher input costs, the crops owe them a bit more.”

 

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