Australian Update
Feedgrain Focus: Prices soften despite concerns in south
Source: Written by Liz Wells for Grain Central
Prices for wheat and barley have generally softened in line with the global move, despite a dry and unusually warm few days in the south which is fueling concerns about a moisture deficit going into spring.
In contrast, rain over parts of Queensland and northern New South Wales has further consolidated prospects for above-average yields.
In all regions, canola and pulses are shaping up as better options than wheat and barley for growers to forward sell, and consumers of feedgrains are generally seen as well covered into next month.
Northern rain ideal
Patchy falls in the past week have come at the ideal time, particularly for Central Qld crops, to pump up yield potential in the already rosy Qld-northern NSW season.
Goondiwindi-based broker Gerard Doherty, Knight Commodities, said recent rain has made the good crop in the ground look even better.
“It’s absolutely incredible; we can’t hide it,” Mr Doherty said.
Unsold stocks of wheat and barley appear to be getting low as grower confidence in new-crop volume builds.
“As rains kept coming through, growers have decided it’s time to make some room, and they’re selling wheat and barley.”
Mr Doherty said barley has become hard to place, with consumers “pretty subdued” on adequate near-term coverage.
“We’re still finding bids via trade.”
Mr Doherty said chickpea prices at around $1040/t delivered Downs have captured the grower’s new-crop attention, and cereals still on farm are being sold at what the trade is offering, despite softening values.
“Growers are just meeting the market.”
Mild and showery weather has growers thinking the grain-fill period will be a long one, and the bulk of the western Downs and NSW-Qld border area will therefore hit the bins in late October.
“With the rain we’ve had… we might see pockets harvested in early in October, but the bulk will be at the end of October.
“If we don’t get really hot weather, and the season stays soft, it could take a while, and we could see a squeeze develop in late September and early October.”
On new-crop, Mr Doherty said activity has been “very quiet”.
“Current values aren’t really that exciting for growers, and with weather risks for next two to three months, most guys aren’t that keen to forward sell.
“If we saw the market kick $15-$20, that might change.”
Mr Doherty said chickpeas have shaped up as the cash crop from the upcoming harvest, and growers were liking and booking forward prices.
Warm week in south
Peters Commodities Wagga Wagga-based trader Peter Gerhardy said mixed farmers in the south were weighing up options based on a strengthened lamb market and uninspiring grain prices.
“New-crop wheat at sub-$300 on farm is a bitter pill for the grower to swallow,” Mr Gerhardy said.
However, he said concerns about the season were more pressing than dissatisfaction with prices being offered.
“We’ve got a green drought.
“Growers are taking stock off crops now and they’ll start handfeeding.
“There’ll be no pasture hay at all, and there might be some cereals cut for hay based on the fact that the price of hay could be greater than grain.”
In much of the southern Riverina without irrigation, western Victoria, and eastern South Australia, crops are late lacking reserves of subsoil moisture.
With many of these areas recording daytime temperatures above 20 degrees Celsius this week, Mr Gerhardy said concerns about a short spring are building.
“We shouldn’t be getting 20-degree days in the middle of August.
“If we have a bobtail spring, we could be in a world of pain.”
“The crops down here are very late, and…we’re coming into an intriguing season.
“We could see exceptionally wet conditions in the north and exceptionally dry ones in the south.”
Mr Gerhardy said consumers were yet to blink about how tough the season could turn.
“They’re holding a very strong poker face; I’d say they’ve got some cover on.”
Likewise, growers with either lentils or canola or both to forward sell are focused on these markets with a more buoyant outlook than cereals at present.
“The lamb market’s had a really rally, and growers are thinking about that too.”
“If the grain market falls a lot, lambs might be where they decide to put their grain.”
Wheat and barley stocks are still believed to be quite high, both on farm and in warehousing, ahead of new crop.