Australia: Prices firm despite improved yield prospects

Prices for wheat and barley have firmed in the past week in response to limited trade and grower sales, despite softer global values.

New-crop values lifted in all quoted markets, going against an expected easing brought about by rain which has brightened yield prospects in Western and South Australia and Victoria.

Sources said most of the prompt volume booked since Friday has been trade to trade, and that chickpeas in the northern region and canola in the south have been the focus of any new-crop selling interest from growers.

Table 1: Indicative prices in Australian dollars per tonne.

Pockets of southern Queensland’s Western Downs are looking for rain to shore up yield prospects ahead of what is shaping up to be a big and early harvest.

This has consumers comfortable that plenty of wheat and barley will be hitting the bins by October, and most are well covered for the coming quarter, and buying very little for August-September delivery.

“It’s all pretty quiet; there’s not a lot of volume on the sell side,” one trader said.

While the northern growing season has up until now delivered mostly ideal amounts of rain at the right time, recent frosty and windy weather has dried out the topsoil in many paddocks, and rain is needed by mid-August to shore up yield prospects.

“If we get three weeks down the track and we haven’t seen rain, it’ll put the nervousness back into the game.”

Production prospects are looking solid for the Queensland and northern New South Wales chickpea crop, which has plenty of subsoil moisture under it.

Trade sources say growers looking to forward sell are generally booking chickpeas at attractive prices, and one trader said some growers were selling small amounts of new-crop wheat on multigrade contracts.

Demand for sorghum in anything other than the top grade is thin now that the main window for prompt bulk shipment out of Brisbane and Newcastle has just about closed.

Good rain in the past week centred in Victoria’s Western District and South Australia’s South East has buoyed prospects for pasture growth once temperatures start to warm up.

However, graziers remain in the market to fill their unseasonal winter feed gap, but volume sought is diminishing.

“Barley has been propped up by farmer buying for sheep,” Riordan Grain Services general manager Mark Lewis said.

“There’s not a lot going on, but there is still a bit of export around,” “The weather’s improved things in Vic in the past couple of weeks with a bit of rain around, and good crops in NSW will keep a lid on price.

Mr Lewis grower stocks of grain held on farm are being drawn down, and warehoused grain is likely to be the “go-to” ahead of new-crop becoming available.

Growers’ forward selling of new-crop cereals remains limited as global values fail to excite, while canola’s recent rally has seen some tonnage booked.

“This rally in canola in the past three of four days means the grower is starting to engage…and bits and pieces in cereals are trading forward.”

At Young on the south-west slopes of NSW, Grain Focus director Michael Jones said most consumers seem to be well covered, although small amounts are being bought on-farm rather than out of warehousing.

“Exporters are chipping away at what comes out of warehousing, but wheat and barley is quiet,” Mr Jones said.

“There’s some activity on new-crop canola…now we’ve come back up again.”

Mr Jones said the delivered port bid for new-crop ASW at around $350/t will yield an unattractively low profit to the grower based on average yield prospects, so most are sitting on their hands in terms of forward sales.

Regular rain has above-average yield prospects in sight for most NSW crops, and Mr Jones said the season is shaping up as “brilliant” in the Young district, with more rain on the near-term forecast allowing growers to keep top-dressing crops.

Little impact from Friday outage

Sources reported little if any interruption to the grain supply chain from Friday’s Windows outage which created havoc in some sectors including air travel.

July is traditionally one of the quietest months for execution of winter-crop contracts, so low volume is thought to have minimised the impact.

Some sources said CropConnect was unavailable for a short period on Friday afternoon, and this has been verified in the following statement from GrainCorp:

“We’re aware that some customers experienced issues accessing CropConnect last Friday due to the major Windows outage, but thanks to the swift efforts of our technology team, the platform was back up and running within a few hours.”

Tags: wheat, yield, stocks, markets, sorghum, grain, barley, prices