Australia: North oversupplied, south desperate for rain

Traded volume has dwindled to a trickle in the south as earlier crops run out of time to receive yield-preserving rain.

In the north, barley harvesting is gathering pace, and prompt homes are quickly filling as the new crop year clicks in.

Yield prospects remain above average for many Queensland and northern New South Wales wheat and barley crops amid lacklustre demand for early-season exports.

Temperatures are forecast to exceed 30 degrees Celsius over much of the eastern and South Australian grainbelt early next week, which will increase moisture stress on filling crops.

	Prompt Sep 25	Prompt Oct 2	Jan Sep 25	Jan Oct 2
Downs barley	$325	$300	$305	$304
Downs SFW	$325	$335	$325	$325
Downs sorghum	$335	$333	Mar-Apr $310	$312
Mel barley	$315	$320	$310	$305
Mel ASW	$342	$348	$322	$325

Table 1: Indicative prices in Australian dollars per tonne

Central Qld’s maximum temperatures are forecast to exceed 30 degrees every day in the coming week, and 35 degrees on some, which will accelerate the ripening of wheat and chickpea crops, and harvest activity.

Hot and dry weather is also expected in Qld’s Maranoa and western Downs, as well as northern NSW, where early barley crops will be harvested in the next week or two.

Following some volume forward sales in recent weeks from growers with big carry-out, nearby domestic demand for barley is limited.

“It’s hard to find homes for barley now,” one trade source said.

Word is that barley’s discount to wheat is seen as too narrow to encourage feedlots to switch to barley to feed over the summer months, as is the usual practice.

“We have barley in long-fed rations, but the price differential is… telling me to maximise wheat and have less barley. “

Barley is currently around 94 percent the price of wheat, above the lotfeeders’ rule of thumb to shift to full inclusion when it is around 91-92pc the price of wheat.

Some growers are cutting barley for silage and getting 10-12t/ha and up to 15t/ha in places for sale to feedlots at around $85-$90/t, while oaten hay is trading at around $375/t, roughly $75/t below where it was this time last year.

The depressed chickpea market is yet to make cereals shape up as the cash sale of choice for northern growers, and growers in the north and south are either planning to store on farm, or warehouse for free until June 30 with bulk-handlers.

In South Australia’s Mid North, AW Vater & Co principal trader Kim Vater said crops are  “going backwards” ahead of forecast hot and windy weather.

“Around home, crops looked fantastic five weeks ago; now leaves are browning, and I reckon there’ll be a bit of hay cut soon if it doesn’t rain,” Mr Vater said.

“There’s no subsoil moisture, but there is some biomass.”

Mr Vater said the question now was how many paddocks to cut for hay to replenish reserves depleted after last year’s drought.

“This year, we have some biomass; this time last year, we didn’t have anything to cut for hay.”

Feedmills in the Adelaide region are bidding around $310/t for wheat and $290/t for barley, and in no rush to buy with reasonable crops expected in SA’s South East, and into the Victorian Wimmera.

“No-one’s buying at the moment.

“That market’s stagnant, but if we get an inch of rain, it will soften things.”

“There’s no doubt crops are going backwards,” Mr Gerhardy said.

“Decisions are being made now by growers as to whether to cut for hay.”

Crops with sufficient biomass could become hay for growers to store, value-add through their own livestock, or sell for cash.

“They might cut 4.5-5t/ha, and they might get $300/t for hay; that’s more than they’ll get for grain by area.”

On-farm bids for barley are currently sitting at around $250-$260/t, close to a break-even figure at best when input costs are taken into account.

“The delivered market and where the grower is are miles apart.

“There’s not a lot of active selling by growers; they’re happy to sit it out.”

Mr Gerhardy said canola at a touch above $800/t delivered depot looked like being the cash sell for the Riverina grower, even if yields come in at a below-average 2t/ha.

Growers across the entire southern region are hoping for 20mm at least to finish crops, and avert the potential of high screenings and low testweights discounting grain value.

In pockets of NSW, Vic and SA, some cereal crops are though to have lost around one third of their yield potential after being top-dressed with urea, and not getting enough rain to maximise inputs.

“When you’ve got late crops, you’ve got to have a late spring; what we have is a bob-tail spring.”

Carry-out from last season means Victoria, NSW and Qld all have considerable stocks in bunkers and silos on farm, and at bulk-handling sites.

“The consumer is sitting back and buying hand to mouth.”

Tags: barley, wheat, crop, yield, sorghum