Australia: China news adds to northern price slide

Unconfirmed news that China is halting imports of barley and sorghum has fed into the stockfeed market as new-crop barley gets closer, and sorghum planting starts.

In the southern market, precarious conditions for the new crop have seen barley prices bounce, while prompt wheat values have followed the global market lower.

In the north, grain will be plentiful but freight will be tight as trucks shun cereals to shuttle chickpeas from farms to depots or export terminals.

This realisation is pushing some northern consumers to make a move on their November coverage.

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

An article published by Bloomberg overnight says China has asked its traders to ratchet back their grain imports to counter weaker-than-expected demand and bolster local prices.

The article says barley and sorghum shipments that have been booked are not affected, and new measures are likely to impact arrivals from November, and into the first quarter of 2025.

The go-slow by China does not appear to be directed at Australia, and is expected to impact other exporters including the US.

On the plus side for Australia, sorghum stocks are very low, and barley volumes have also waned ahead of new-crop feed becoming available to ship in December.

If China is out of the barley market early next year, and wheat prices remain low, canola is likely to have a larger-than-normal share of new-crop slots from southern Australia’s ports.

China is Australia’s biggest sorghum market by far, and the yet-to-be-verified news could well deter growers in southern Queensland from starting or advancing their abnormally early planting of the red grain after good rain.

Earliest barley crops are starting to run to head, as are some wheat crops in Central Queensland, where harvest is expected to start late next month.

Coming days in Qld’s growing areas, and into New South Wales, are forecast to bring temperatures of more than 30 degrees Celsius, with 36-37 degrees forecast for Roma from tomorrow until Sunday.

These temperatures are well above average, and will get some crops turning weeks ahead of the normal time.

The China news appears to be having little impact on the northern market, largely because all barley grown in Qld and northern NSW is consumed domestically.

“Logistics is going to be the challenge,” one trader said, referring to the tie-up of trucks on chickpeas from October to January.

“It’ll be freight that pushes prices up; we’ve seen that movie before.”

AgForce grains president and Downs grower Brendan Taylor said growers with chickpeas will be selling them first into a hungry export market, and will hang on to their cereals in the hope of better prices.

“The wheat and barley markets are essentially in freefall,” Mr Taylor said prior to the China news.

“We’re looking at sub $300/t on-farm already, and bids for new-crop are around $270.”

AgVantage Commodities broker Brendon Warnockconcurs, saying low cereal prices will see growers sell chickpeas as their cash crop at harvest, and not before, as they want to be sure about when they can deliver, and quality.

With new-crop prices slipping below $300/t on farm, Mr Warnock said the yield advantage will not offset low prices.

“Most growers are saying with costs where they are…these current prices are below the cost of production, so it is a pretty serious situation,” Mr Warnock said.

While waterlogging in some patches of the northern region has clipped yield potential, the vast majority of crops are looking at above-average to bumper yields.

Much of south-eastern Australia has had some rain in recent weeks, but windy and warm weather, and limited subsoil moisture in some districts, means most crops need a good drink to get them ready for spring.

“We haven’t seen a mixed season like this for a number of years; it’s highly variable,” GeoCommodities broker Brad Knight said.

“Our client base has more optimism than a month ago; canola’s cabbaging up, and cereals are bulking up.”

However, plenty of crops in Victoria and South Australia are well behind where they would normally be at this time of year, and are expected to return below-average yields.

“An average crop is the best we’ll see out of Vic and SA.”

As August draws to a close, trade sources report a reasonable amount of forward selling has been done by some growers, and from the trade, as the realisation hits home of a softer world market based on mostly good crops in the Northern Hemisphere.

Talk of cash croppers cutting some of their cereals for hay is starting to creep north into central NSW, where yield prospects are well above average.

Some Vic cash croppers, particularly in the Wimmera, where crops generally have more biomass, could also do a few rounds for hay.

“We’ve got some clients talking about hay that aren’t traditional hay growers; they’ve got weed issues, and they haven’t been able to get on top of ryegrass.”

Any cereal hay from crops grown with the intention of going through to grain are likely to go into replenishing on-farm stocks in Vic’s Western District, or SA’s South East, as well as feeding sheep over spring and summer.

While recent rain and patches of warm weather have sparked some good pasture growth, frost or heat without further rain could see this flush of feed wither.

Therefore, growers in central NSW who are seeing on-farm bids as low as $240/t for new-crop wheat might decide to drop some of their crop for hay.

Southern consumers are currently chipping away at their November coverage, with the idea that the chickpea task could tighten local freight if enough southern trucks head north to work the harvest.

Tags: Australia, China, barley, wheat, crop, imports, Market, sorghum