Australia: Prices ease as Victora yields surprise

Prices for feed wheat and barley have fallen in the past week as bigger-than-expected yields hit the bins in Victoria, and some in the northern trade quit their long positions.

Modest buying from stockfeed millers on both grains has also contributed to the drop as consumers sit back on adequate near-term coverage, and hopes that lower-quality grain at discount prices will hit the market early next year.

A hectic export program for barley to China and wheat to a variety of destinations has minimised falls in the southern market, despite the overnight rally in the Australian dollar.

Table 1: Indicative prices in Australian dollars per tonne.

In Grain Central news, we this week farewellSally Inslay.

Sally has been a valued member of the team since Grain Central kicked off in 2017, and we wish her all the best for her well-earned retirement.

This is our last Feedgrain Focus for 2023, and the item will return on January 11.

On behalf of the Grain Central team: Merry Christmas and a Happy New Year to all our readers.

Demand for feedgrain from opportunity feedlotters has fallen away in recent weeks following rain over pastoral areas which has prompted some traders to unwind long positions built up when a very dry summer was expected.

“The trade’s selling it down; they can’t export it, and they want to get rid of it,” one trader said.

Consumers are also eyeing the southern wheat crop for its bigger-than-expected volume and low protein, including a proportion of rain-related downgrading, as buffer stock.

While vertically integrated feedlots are expected to keep running at full occupancy into next year, smaller operations are feeling the impact of higher feeder cattle prices and high wheat and barley prices.

“What people are starting to ask is: How much longer can we have numbers with a four in front of them?”

Southern Qld’s consumers are generally sourcing their feedgrain from no further south than Moree and Narrabri in northern NSW.

Spot sales of southern grain booked as backloads from the southern harvest run are also putting some downward pressure on prices in an already well-covered market.

“We’ve got a few fellows coming home from down south after carting in the harvest in NSW and Vic and they’re bringing a load with them to help cover the costs.”

Some paddocks in Vic, South Australia and southern NSW remain too wet to harvest.

Most affected are Vic’s southern Wimmera, which received 20-30mm of rain in many locations in the past week, and parts of SA.

Some wheat and barley crops in SA got drenched, but the vast majority of the state’s cereal harvest was in the bin before the rain.

Storms brought some isolated falls in the past week to pockets of NSW, but all up, the rain has been helpful in replenishing subsoil moisture, and ideal for corn and sorghum now in the ground.

In Vic, Rex James Stockfeeds commodity manager Tim Hogarth said growers have been pleasantly surprised by their yields but not protein following more spring rain than anticipated.

“Even though some growers fed a heap of urea, some crops are struggling to make APW,” Mr Hogarth said.

Wheat test weights have been very high, with some close to 80kg per hectolitre, and Mr Hogarth said harvest in the Goulburn Valley and north was expected to finish in the coming week.

Grower selling has been limited, and big dryland yields of more than 6t/ha are common, with some growers recording 7-8t/ha.

With different commodities to sell, and plenty of them, Mr Hogarth said growers were being judicious about what to sell off the header.

“Growers have been selling just to generate cash flow.”

While the Vic wheat harvest is yet to resume full pace after rain late last week, the quality picture is becoming clearer.

Industry sources collectively estimate that state’s wheat crop is around 50pc complete, and has potential to set a record.

Around 75pc of total wheat receivals are expected to be ASW including downgrades to feed, with around 20pc APW, and 5pc Hard.

Conversely, South Australia is expected to have around 60pc Hard, and will be supplying more wheat than usual to domestic flour millers and less than usual to the domestic stockfeed market who will be looking to Vic to supply their mills.

GeoCommodities broker Brad Knight said spreads have widened as the wheat-quality picture develops.

“There’s been a drop in APW prices, and the spread between ASW and APW has widened,” Mr Knight said.

“There’s the likelihood now of a heap of feed wheat in Victoria.”

Riordan Grain Services manager Mark Lewis said a spread of around $15/t had now developed between feed and ASW wheat.

While the early Mallee region was harvested ahead of the rain, Vic’s Western District had barely started.

Falling numbers as an indication of sprouting are yet to emerge as a widespread reason to downgrade wheat from ASW, but with proteins of less than 9pc common before the rain, protein could be the deciding factor.

“It was a lower protein year to start with.”

Tags: China, barley, prices, yields, feed wheat, sorghum, feedgrain