Feedgrain Focus: Wet weather hits market confidence

Emma Alsop July 7, 2022

Wet paddocks near the Bogan River southwest of Narromine in New South Wales. Photo: Mick Harris

WHEAT, barley and sorghum prices have continued to fall with wet weather conditions in southern Queensland and New South Wales adding to the already cemented market hesitancy across the board.

The uncertainty around new crop prospects has reduced the number of growers in the market, especially in the areas worst hit by the recent rainfall.

Old crop movements have also been constrained by the weather, with wet farms affecting the ability to execute grains contracts.

The continuing influence of global conditions – most significantly with the rising local fuel prices – has kept demand at a minimum.

Generally, consumers also appear to have short term coverage and are waiting before making movements for new crop.

Today Jun 30
Barley Downs $425 $440
SFW wheat Downs $420 $445
Sorghum Downs $355 $370
Barley Melbourne $390 $425
ASW wheat Melb $425 $455
SFW wheat Melb $420 $450

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

Rain hinders northern movements

Rainfall has again hit growing regions in southern Queensland and northern New South Wales over the past week.

Whilst these districts have escaped the huge totals of coastal NSW, the falls have added to the already sodden ground and the cool, cloudy conditions.

The eastern Darling Downs districts recorded the highest totals with 46 millimetres falling in Warwick over the past seven days, Toowoomba recorded 42mm and Dalby saw 35mm over this period.

Some central west NSW districts recorded double this over the same timeframe, with Wellington receiving 90mm, Manildra 70mm and Forbes 44mm.

Although other north-west NSW regions didn’t see this high figures, most cropping areas saw some rainfall which prevented the movement of trucks in and out of paddocks and any late planting activities.

Stewart Grain’s Robert Quinn based at Inverell said the wet conditions has prevented growers from selling quantities of old crop.

“It is still hard to pick up grain just because of the wet weather,” Mr Quinn said.

“This is probably what is stopping people from selling a lot, and it’s just about their ability to execute the grain contracts.”

He said there was very little activity in buying or selling due to the lack of confidence in the market which was bolstered by the ongoing wet weather.

“There have been a few consumers buying the break and getting more coverage on new crops.

“It is nothing substantial though, and we are still seeing very limited forward sales from growers.

“Growers are still concerned about crop prospects and prices have come of $50, so they are a little bit hesitant to sell.”

Questions over new crop size

Goondiwindi broker, Gerard Doherty from Knight Commodities said all sides of the market are “sitting on their hands” to see how the weather conditions and global factors will impact pricing.

He said in the NSW-Queensland border region and parts of the Western Downs, growers saw major gains with planting over the past three weeks, but this was not replicated in other parts of the Downs.

“We have had a good three weeks as far as planting goes and a lot of growers have made some in-roads,” Mr Doherty said.

“The window has definitely closed for a lot of fellas now, some might still push on.

“Most blokes I have spoken to this week are at the point that they are about to give it away, particularly those who had 30-40mm in the last week, like Dalby growers.

“It’s hard to know how much we have lost…it’s just too early to tell.”

He said the difference in situations between growers will influence confidence in selling new crop.

“The guys who have had good opportunities with getting their new crop in the ground, they might be getting more in a frame of mind of forward-selling.

“But, with the market the way it is, they will be be hesitant to make any moves until it stabilises or bounces back a bit.”

South sees little consumer demand

Quiet markets conditions have been replicated in the southern cropping regions, despite some parts of NSW missing the recent rainfall.

Peter’s Commodities trader Peter Gerhardy said many consumers bought up over the past month or so and are staying out of the market.

“Consumers have got a fair amount of cover on and I think the consumers will sit it out,” Mr Gerhardy said.

“We might see a bit of a flurry on just before harvest which could bring back prices.”

Key Agri broker Matt Noonan said this trend could continue into next month.

“Domestic homes are well covered for July and possibly chunks of August, so they are not in a mad rush to have it on their doorstep right now,” Mr Noonan said.

He said there is also little movement from sellers for new or old crop, with both sides highly risk adverse in the current conditions.

Mr Noonan said domestic markets are taking note of the hesitancy globally and are awaiting more information on northern hemisphere supply and buying movements.

“You are seeing a waiting game from the exporters, and to a lesser extent the domestic guys are following suit by wanting to see how the overseas factors play in over the next little while.

“Everyone is a bit nervous and doesn’t want to get on the wrong side of the market.”

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