Alistair Murphy, Agfarm Account Manager CNSW
Harvest is all but wrapped up in Northern NSW and Queensland, and Central NSW is about 85% complete. As harvest in these areas nears completion, it appears the trend of high quality wheat has continued. Although not reflective of total deliveries across all areas, the majority of wheat harvested in the Newcastle zone this year has been H2 or better. This trend in quality has seen grades start to adjust accordingly with APH1 and APH2 spreads narrowing considerably this week, and base grade spreads for ASW1 and APW1 doing work to the upside. Buyers are reporting it’s very hard to buy 70/10 feed wheat and barley, and it’s easy to see why. Using Agfarm clients as a base and assuming deliveries are consistent across the board, a whopping 87% of wheat delivered into Newcastle zone is H2 or better. There is not a great deal of ASW or APW around, so the feed wheat market needs to start pricing more aggressively in order to garner liquidity in these destination markets.
We have noticed a distinct lack of barley delivered into the bulk handling system this year, and with good reason. Growers have been utilising onfarm storage for barley and low oil canola because these commodities will be best priced into the domestic market once harvest liquidity starts to wind down. And with how things are going with a significantly smaller crop, we expect this to happen very quickly in Central NSW. It’s not all bullish news however, as the Victorian crop is still looking to be thumper and should there be an abundance of ASW1 in this zone, premiums for SFW1 delivered into northern markets will be capped depending on what the cost of ownership is in Victoria and then, what the long haul cost of freights works out to be.
It appears the mid-range weather platforms are suggesting some significant rainfall this week. Should this eventuate, we could very well see some potential downgrades on any crops yet to be harvested. Though weather has a funny way of changing rapidly and the outcome could be vastly different to what is expected, so watch this space!
Photoed: Wheat harvest continues at Albert, NSW
Prices as at Friday 24th November 2017