A SLOWDOWN in demand for nearby wheat and barley export slots coupled with an upswing in growers selling has seen prices for wheat and barley drop by around $5 per tonne in the past week.
In the north, only a dollar or two has been lost in the prompt market for white grain, but sorghum has bucked the trend.
Short covering into Brisbane for export has lifted the sorghum port price to an abnormally high premium over the delivered Downs market, and both are being fuelled by production that looks like its shrinking as the patchy growing season draws to a close.
|Barley Downs Mar
|Barley Melbourne Mar
|Wheat Downs Mar
|Wheat Melbourne Mar
|Sorghum Downs Mar-Apr
Table 1: Indicative prices in AUD per tonne.
Sorghum’s premium to wheat on the Downs has priced it out of most consumer rations, and domestic demand for the red grain has fallen to minimum levels.
Barley’s attractive pricing compared with wheat and sorghum continues to make it the preferred grain for feedlots, and a chunk of poultry demand also.
Trade sources report barley delivered Downs is being priced from as far away as Condobolin in central New South Wales.
“Once you get into the Riverina, you hit that drawing arc into Melbourne and Geelong, so grain from that far south doesn’t work on to the Downs,” one trader said.
“On road freight, $60/t is the cut-off point.”
Consumers in southern Queensland are believed to have already bought just about all the local barley harvested last year.
Sorghum delivered Brisbane is trading at more than $365/t, $15-$20/t over where it calculates based on the Downs market.
“The crop’s trying to finish now, and some of it is struggling moisture-wise.
“There’s mice on top of that as well.”
The sorghum harvest is under way on the Downs and on the north-west plains of NSW, and a number of Downs crops are showing the effects of a season with patchy rain.
“Yields would be down 35-40 per cent on average, and growers that haven’t had good rain during the growing season are getting a little nervous that they’ve oversold.”
Yield risk would encourage growers to pause further sales until paddocks are harvesting. Exporters would prefer to keep accumulating for container and bulk sales to China, though February’s appreciation of the Australian dollar has hampered their bidding capacity in sorghum.
Queensland is the only state with ports that are not booked solid until June with grain exports, and sources have said for some weeks that traders are looking to book slots out of Brisbane to export wheat originating from northern NSW.
“If there was another $5-$8/t in the delivered Brisbane market, it would work to get wheat from as far away as Narrabri.
“As for sorghum, it’s trading on its own; its price has no correlation to anything.”
South finds rhythm
In Victoria and the southern Riverina, growers have started to take grain to port and backload with fertiliser for the upcoming winter-crop plant.
“There’s a lot of fertiliser going out now,” GeoCommodities broker Brad Knight said.
“Growers are fearful of supplies running out, and prices are up significantly.”
While some grain has been sold by growers recently, plenty of truckloads were booked earlier on, and those as well as traders’ transports and rail are comfortably pushing grain to the ports of Melbourne, Geelong and Portland.
“Up-country execution is going as well as can expected.”
Mr Knight said prices for delivered wheat and barley are plus or minus $5/t, depending on destination.
“It depends on when and where you’re going; freight is tight.”
One trader said the USDA’s World Agricultural Supply and Demand Estimates report this week was “a bit of a fizzer” for the Australian market, and agreed that freight was tight.
“It’s difficult to get containers and trucks.”