Alistair Murphy, Agfarm Account Manager CNSW
The majority of markets have firmed this week, thanks to help by a bounce in international futures in the US. This has meant we have started to see some increased levels of engagement from the growers’ selling side, though still not in any large volumes. It has been considerably dry here in Central-western NSW, and with cereal production noticeably down in this area, sellers are still waiting to see if there will be any further drought premium start to appear in the market.
It is interesting to note that the massive delivered Newcastle SFW1 feed wheat market has been the least responsive to any upside we have been seeing in the last month. Likely this has been because this market has felt the most covered compared to all the other Northern delivered homes markets. We are presently seeing a limited depth of bid into the delivered Newcastle domestic market, which is a little surprising in a year where we have grown a significantly smaller crop in traditional key drawing zones.
Barley bids came in over and above values that we were seeing coming through the feed wheat complex early last week. Exfarm barley bids came in at $265-270/MT February pickup Central NSW, with feed wheat priced a discount of -$3-5/MT, depending on location. This is up about $30/MT on the season lows, and up a whopping $145/MT from 2016 harvest values. Though even with the recent upside we aren’t seeing a great deal of liquidity; given that barley is in tight supply and the majority of barley that is trading is actually old carry-over stock from the 2016/17 season.
Track protein wheats haven’t really moved either way this week, but in reality holders of unsold protein in the bulk handling system are likely still $10-15/MT away from considering committing any further significant volumes. Track ASW1 saw an increase in the bid this week, and interestingly enough the values that we are seeing are well above the theoretical lowest-cost base of domestic execution. Without any real bulk export markets incentivising this premium, one would presume it’s more so a case that buyers are willing to pay over domestic execution levels to own stock in which they can opportunistically trade or swap at a later date.
Canola had a slight bounce this week, though much like the protein wheat, sellers are still a good $20/MT away from making any decent tonnage commitments. Central West canola site values are around the $470/MT levels, location dependent. As a rule of thumb, sellers like to see the number five in front of values before selling, but even at the magical $500 level gross margin returns are not overly appealing given that yields in the oilseed markets were extremely disappointing. Chick peas appear to have plateaued for now, still pricing in the low $600/MT range delivered Central NSW packer, though after last week’s bounce we have seen sellers retract from the market once again now that values have settled slightly lower.
Prices as at Friday 2nd February 2018