RAIN across eastern Australia in the past week has blown out the pricing spread between wheat grades and created some shorts in the domestic and export market.
This has pushed up bids in the southern wheat market in particular because carryover stocks have run down to the wire, and sizeable quantities of new-crop are yet to hit the bins.
More rain is forecast for cropping areas in eastern states until the weekend, and once that clears, grain will be readily available, and is likely to put supply-side pressure on feed grades.
|$278 up $8
|$282 down $3 Jan
|ASW wheat Downs
|$345 up $5
|$340 steady Jan
|$320 up $5
|$300 steady Mar
|$302 up $27
|$295 up $10 Jan
|ASW wheat Melbourne
|$375 up $52
|$365 up $35 Jan
Table 1: Indicative delivered prices in Australian dollars per tonne.
More rain is forecast for all Queensland and NSW cropping areas in the coming week, and looks likely to catch those districts which have dodged the showers and storms thus far.
Registrations in the week to 0900 today on the NSW outer slopes and plains include: Coonamble 43mm; Condobolin 33mm; Moree 70mm; Mungindi 88mm; Narrabri 85mm; Temora 30mm, and Walgett 19mm.
In Queensland, some areas which have finished harvest received more than 50mm in the past week, ideal for sorghum crops already in the ground.
Some unharvested crops on the Darling Downs got a soaking, with Dalby receiving 82mm, Jondaryan 50mm and Macalister 123mm.
The upshot has been the emergence of bids for stockfeed wheat (SFW) at around $20-$30 per tonne below ASW.
SFW is a preferred buy for those milling feed for cattle, pig and poultry, and Darwalla Milling feeds manager Gary Heidenreich said he was keen to include some downgraded wheat in the mix.
“We’ve been using barley for the past three years, and we’ve been using wheat too,” Mr Heidenreich said.
“We are anxiously awaiting some downgraded wheat to include in our mix.”
Weather permitting, wheat and barley are pouring into southern Queensland’s up-country storages, and wheat continues to sell direct to Brisbane’s export terminals as the new-crop shipping program ramps up.
It is also making its way direct to consumers in southern Queensland.
Mr Heidenreich said road transport was not yet in short supply, sometimes the case as harvest rolls south.
“That’s always the fear that trucks will follow the harvest south, so the strategy is to stock up for November to January until they get easier to come by.”
One trade source said spreads between APW and APH as the top-grade bread wheat have widened considerably in the past two weeks, from as little as $5/t to north of $50/t to reflect the impact of rain.
“That’s simply because the trade has got boats to load in Brisbane.
“I’ve been surprised at how low the protein premium has been, and that’s because there are still plenty of sellers with old-crop out there to feed to the boats loading in Newcastle and Brisbane.”
However, this latest rain front has slowed the supply chain by limiting the ability of trucks, trains and boats to load at all hours, and created some shorts.
These are expected to be short lived, with skies forecast to clear by Sunday.
In terms of quality, the source said rain as its stands should only drop wheat proteins by one grade from last year’s exceptionally good results.
Consumers are seen as happy to blend some downgraded wheat with high-quality grain that has come from Queensland’s Western Downs and early areas on the NSW border.
“You always plan to get yourself to mid-November using Queensland grain, and then buy the cheapest you can until we get to the end of harvest.”
Alliance Grains principal Luke Walker said rain has hit some crops hard, but is far from causing a mass downgrading at this stage.
“There’s a fair bit of stress out there for growers for Dalby east and south and down into northern NSW that still have a lot of harvest to go,” Mr Walker said.
“I don’t think there’s a lot of ASW out there yet; it’s probably H2 or better, and if growers have got protein, they’re going to sit on it.”
“I think a big percentage of what’s been harvested has been sold.”
Protein firms in south
GeoCommodities broker Brad Knight said the southern market had firmed for milling grades of wheat, but stayed put for lower-protein segregations.
“Consumers aren’t active in the market from January onwards yet, but they’re active in the spot market for November-December, and they’re not getting a lot of grower selling,” Mr Knight said.
“Barley is around in the prompt market, but wheat’s a different story.”
He said the jump in values for higher grades reflected the market shaping up on the cusp of the Victorian wheat harvest.
With a fair idea about yield and quality coming, Mr Knight said the trade has now transitioned from posting multigrade bids to showing prices to growers based on segregations.
“In the trade, you can start to show your best bids when the grower’s got it to sell.”
Parts of Victoria and South Australia have had mostly light rain, if any, in the past week, and Mr Knight said growers appeared to be prioritising the harvest of lentils over barley ahead of forecast rain to start their harvest.
“In a fair chunk of the Mallee, the rain has helped pulse yields more than barley ones.
“You’d say yields of pulses are usually half what cereals, but it might be better than that this year, and they want to get into their pulses to protect the income from their higher-value crop.”
Planting rain arrived late in most parts of the Victorian and South Australian Mallee, and crops therefore went into the ground later than normal.
Rain boosts cotton prospect
As if anticipating rain arriving in eastern Australia, USDA stepped ahead of local industry in projecting Australia’s 2022 cotton crop at 5.3 million bales in the World Agricultural Supply and Demand Estimates report published November 9; locals have numbers in their sights in the range 5-5.2 million.
According to Woodside Commodities manager Hamish Steele-Park, late spring rain means more dryland crops could be planted.
“Wet and cool spring-summer conditions may be not so good for yield prospects of irrigated crops,” Mr Steele-Park said.
Cottonseed spreads are widening as asking prices nearby continue to lift and new crop prices drift, with little trade occurring in either.
The price guide for cottonseed delivery in November and December is about $515/t delivered Darling Downs.
“The price inverse between current crop and new crop has widened this week; call the new-crop delivered Downs price $335/t May to August 2022 and $340/t May to Dec 2022.”