RAIN in the past week in New South Wales and Victoria has sparked concerns about widespread downgrading of wheat and barley.
Some farms have had a maximum 10mm since Friday and have escaped the downgrade risk so far, but plenty have had 50-100mm, and sprouting in their wheat and staining and black tip in barley now looks likely.
Downgrading has further shortened availability of milling wheat, and domestic consumers generally are sitting out of the market on adequate coverage.
On the plus side, rain has improved prospects for the summer crops of cotton, sorghum and maize, and replenished subsoil moisture for next year’s winter crop.
Trade sources report liquidity has dried up as the market waits for the quality picture to develop.
“The grain trade will be paralysed for a period of time until people assess what has really happened,” one trader said.
“The normal story is that remaining higher grades will get overbid and feed grades will be under bid initially, and then they will settle back somewhat.”
|ASW wheat Downs
Table 1: Indicative prices in Australian dollars per tonne.
North grateful for rain
Storms and showers have delivered some hefty totals to Queensland and NSW cropping districts, and the prompt northern feedgrain market has dropped $5-$10/t.
All up, the rain is of huge benefit to summer crops already in the ground, or about to be planted.
Registrations in the week to 9am today in Central Qld include: Clermont 193mm; Emerald 86mm, and Springsure 33mm.
In southern Qld, registrations include: Dalby 21mm; Macalister 33mm; Miles 57mm, and Roma 36mm.
Harvest is all but over in Qld and on the central and north-west plains and outer slopes of NSW, where registrations for the week include: Coonamble 66mm; Narrabri 67mm; Trundle 116mm, and Walgett 82mm.
On the Liverpool Plains of northern NSW, Gunnedah received 42mm for the week, and wheat on the point of harvest will be lucky to escape downgrading.
Trade sources report falling numbers machines are expected to test every post-rain load coming into sites from here on in.
Sources estimate nearly all of the barley and more than 80 percent of the wheat in the northern half of NSW was harvested ahead of the rain.
On the northern tablelands of NSW, Stewarts Grain trader Robert Quinn said demand from domestic consumers has dwindled for Dec-Jan delivery as the Downs market continues its trend of dropping $5-$10/t per week on reduced spot demand.
“There’s no more drought feeding,” Mr Quinn said.
This is a marked turnaround from early November, before the rain started, when graziers and opportunity feedlotters were in the market to cover their feed needs for what looked like being a dry summer.
Numbers of cattle in medium and large feedlots remain high, but inductions from here on in are expected to come in straight off pasture now that paddock feed is regenerating after the rain.
“Feedlots aren’t buying, and it’s difficult to find homes for grain into January.”
“Generally speaking, if you wanted to move a parcel of grain from on farm, it would be from February; there are homes further out.”
The northern region is not expected to generate a sizeable export surplus of grain from the current harvest due to the relatively small size of its wheat and barley crop this year.
Trade sources say that is showing up in the market through bids from bulk handlers for ASW-type wheat which have fallen by $50/t or more since the start of harvest.
“Bids in the system have come off a lot,” one trade source said.
While solid export demand exists for ASW-type wheat, it will be supplied out of southern ports, where supply chains are shorter and competition from the domestic stockfeed market is less.
South wears downgrading risk
On the outer slopes and plains of southern NSW and in north-west Victoria, unharvested wheat and barley is at severe risk of downgrading after the rain.
While more than half the total barley is thought to have been harvested, a maximum 30pc of wheat is off in Vic and southern NSW.
NSW registrations for the week include: Ardlethan 45mm; Cootamundra 87mm; Parkes and Wagga Wagga 91mm, and West Wyalong 79mm.
In Vic, Mallee registrations for the week include: Beulah 47mm; Birchip 33mm; Ouyen 32mm; Sea Lake 50mm, and Ultima 116mm.
Rain in the Wimmera was more general, and registrations include: Dimboola 45mm; Horsham 70mm; Nhill 94mm, and Rupanyup 44mm.
Some wheat crops in the Wimmera and Western District of Vic, and in the south-eastern corner of the NSW wheat belt, are still too green to harvest, and may well escape widespread downgrading.
Ahead of the rain, harvest was finished or close to it as far south as the outer south-west slopes of NSW, where some growers have had most of their wheat make the H2 milling grade.
At Wagga, Key Agri broker Matt Noonan said the Port Kembla zone, which includes the south-west slopes, was expected to have the best wheat-protein profile in NSW and Vic.
“The biggest portion of higher protein is in the Port Kembla zone,” Mr Noonan said.
Its wheat crops mostly had enough rain to make use of applied nitrogen, and many western Riverina and outer central and south-west slopes wheat and barley crops were harvested ahead of the rain.
“On barley, a fair chunk’s been harvested, and most wheat west of the Newell Highway is done or somewhat done.”
South of Wagga, most growers were only just starting on wheat before the rain, and Mr Noonan said those greener crops might withstand the rain.
“Test weights have been quite good, and it will take a heap of rain to make them shot and sprung.
“I don’t think we’ll know much until Saturday or Sunday, when people can get going again.”
H2 wheat bids have firmed by around $10/t on the rain, and only export shorts are thought to be buying it this week.
“ASW’s up too; it’s a lack of liquidity.”
Trade sources report ASW is accounting for around 70-75pc of harvest wheat receivals, roughly double the norm.
On barley, around two-thirds of deliveries are making malting specs, around double the average.
Malting deliveries have been so high that some bulk sites hit capacity for malting segregations ahead of the rain.
Growers are selling their lower-spec grain off the header, and are generally speculating that China and the Downs feed market on barley, and export generally on wheat, will be paying more for quality parcels in coming months.
Also in Wagga, Peters Commodities trader Peter Gerhardy said rainfall has been “hugely variable”, with up to 200mm in some places, and 10mm or less in others.
“There are a few trade wet-weather shorts, but they’ll fade away over the next few days.”
The NSW canola harvest is close to over, and Mr Gerhardy said most growers have sold canola off the header for cash flow.
“When it comes to wheat, if the grower’s got APW or better they may sit on it, and cash ASW and inferior grades.”
Grain Central: Get our free news straight to your inbox – Click here