Markets

Feedgrain Focus: Transport squeeze lifts prices

Liz Wells, April 15, 2021

GrainCorp loads a 40-wagon train with grain for export at Deniliquin in southern NSW as part of the massive rail and road freight task to shift NSW’s bumper crop. Photo: Billy Lawes, GrainCorp

THE transport sector’s focus on getting grain to export has seen prices in the nearby domestic market rally by up to $7 per tonne this week as consumers struggle to book trucks to deliver to their mills.

From the Darling Downs of Queensland to southern Victoria, trade sources report domestic prices have kicked on local logistics rather than global drivers.

They say eastern Australia’s trucks and trains are cycling flat out into ports to fill vessels with wheat, barley, canola and sorghum.

This has coincided with a further contraction in grower interest in selling now that seeding of the winter crop has gathered pace.

This week Change
Barley Downs April-May $268 Up $3
Barley Melbourne April-May $255 Up $5
Barley Melbourne January $255 Steady
Sorghum Downs April-May $303 Up $3
Wheat Downs April-May $295 Up $5
Wheat Melbourne April-May $312 Up $7
Wheat Melbourne January $302 Up $7

Table 1: Indicative prices in AUD per tonne.

Short-term problem

Interruptions to rail services in New South Wales have increased the call on road freight in the near term, and trucks are also busy backloading with fertiliser and soil ameliorants ahead of winter-crop planting which will take place into June.

One trader in southern NSW said the demand for backloading was likely to abate by early May.

“If trucks aren’t having to wait to load with fertiliser or lime or gypsum after they’ve tipped grain, they should be able to get in an extra two or three loads a week,” the trader said.

“That will make a difference.

“At the moment, everyone’s trucks are pretty well booked out.”

In the northern market, the scheduled closure of the Moree-Bellata rail line has pushed additional tonnage on to road.

The northern half of the Narrabri North-Moree line from Penny’s Road closed on Saturday, and is scheduled to reopen on October 31 after the line has been upgraded to fit Inland Rail specifications.

The impact on road freight is that additional trucks are cycling between Moree and Newcastle.

In southern Queensland, recent rain has caused some sprouting and quality issues for sorghum. Extensive testing of grain and some diversion of downgraded loads has slowed truck turnaround times.

However, the later-planted sorghum crop is close to harvest, and is expected to bring an ample supply of good-quality grain to the domestic and export market to fill existing contracts.

“This later sorghum crop will have largely escaped any weather damage that got the earlier stuff, and there are some very good yields coming out there,” one trader said.

The truck squeeze has forced northern feedlots to lift their bids by a few dollars to cover near-term needs.

“The feedlots have mainly been running hand to mouth because they know there’s plenty of grain out there.

“It’s just a bit hard to get at the moment.”

Southern wheat in demand

Wilken Group trader Andrew Kelso said this week’s market has strengthened, and wheat is in greater demand than barley.

“Everyone is chasing prompt grain, and wheat’s certainly a bit stronger in the April-May shipping positions,

“That’s coinciding with growers being busy planting and not selling too much, and no trucks being available.”

“In barley, there isn’t quite the enthusiasm we’re seeing for wheat.”

Sources say traders with export commitments have booked trucks to supplement rail capacity, and with the container market also relying on road, domestic consumers are struggling to get a look-in.

“It’s the poor old domestic consumers that uses road only that’s finding it hard to book deliveries.”

Cottonseed eases

Cottonseed values have continued to drift lower in the past week as rain boosts yield prospects ahead of the impending cotton harvest.

Woodside Commodities managing director Hamish Steele-Park said widespread rain in northern NSW is expected to delay the start of picking and ginning.

Cottonseed ex Moree is now quoted at $335/t 2021 gin spread, with Namoi Valley seed $10/t lower.

In southern NSW, the Riverina market is at $355/t ex gin.

“This is strong relative to the north and is supported by container demand at around $440/t DCT,” Mr Steele-Park said.

“We are still export competitive into destination markets, and US$20-30/t cheaper than US seed into Korea etc, but container freight and execution is a challenge.”

Expectations for next year’s Australian cotton crop are now sitting at around 4 million bales or more.

“Some seed offers are appearing for next year, but there is a lack of buyers.”

 

 

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