SNSW Market Update 24/08/2018

Nathan Michael, Agfarm Account Manager SNSW

Not much has changed in terms of crop conditions in the last week and if anything, crops may have slightly improved. Many areas received 5-10mm which was certainly welcome and has maintained the condition. Generally, the areas that were looking in reasonable shape are still hanging in there (especially south and east of Wagga Wagga) and are still on track to produce a crop. Whether they are able to produce anything close to average remains to be seen. In one sense, it is just as much about whether we can avoid (hot/dry/windy) than simply getting a large fall of rain. All in all, there is still potential in Southern NSW, especially for cereal crops with canola production likely to be very small. All eyes are on the radar for this weekend, with the possibility of 50mm in some parts of Northern NSW and Qld, enough for drought affected farmers up there to commence a large sorghum planting.

New crop wheat prices have retreated for the first time in over a month to around $445/MT Port Kembla track. While this is still a very strong price, a combination of some increased liquidity (albeit outside of NSW), Chicago futures coming back a bit, the prospect of some decent rainfall and the arrival of some WA boats into the NSW ports has meant buyers have found ample reasons to pull the price back a few dollars. On the ground, old crop SFW wheat is still making around $400-430/MT exfarm, even close to the Victorian border. The demand from graziers is continuing but certainly not at the same pace as a few weeks ago. In short, sellers are finding more and more resistance from buyers and the days where the price was increasing at $20-30/MT per day look to be behind us. There’s no doubt demand for wheat will continue to be strong, but if other areas such as Vic and SA continue to be willing sellers, this will limit the upside into the NSW markets.

New crop barley prices have remained extremely strong with almost zero liquidity in NSW. For those growers who have unfortunately had to organise contract washouts, it has been extremely difficult to do so in the current environment. Quoted bids are still in the vicinity of $395-400/MT Port Kembla track and even consumers who would love to get some cover are having to either buy wheat as an alternative or try and buy closer to harvest. Old crop parcels of barley are still being sold into consumer homes at anywhere from $430-460/MT delivered and it seems where the grower is not a seller, the trade will come to the table.

 
 

Canola crops across the board are poor. There are pockets of crop around Wagga Wagga and some around the Victorian border and South West Slopes in good condition, but large parts of the state have canola crops that either did not germinate at all or are so under-developed they will almost certainly be grazed off or used to make canola hay. As a farmer, the option to make hay is always there on a yearly basis, but rarely have we seen such an insatiable demand for hay as we are seeing currently. Those who are in any way undecided, might lean towards “a bird in the hand” rather than risking taking the crop through to harvest. New crop canola is seeing almost zero liquidity at $605-$610 Port Kembla track, and similarly the old crop stocks (up to 10% still unsold) are still waiting to be marketed. We can only assume given the current state of the crop in the ground, only a site bid starting with a $6 will gain any traction.

Photoed: Dryland and irrigated wheat crops around Coleambally.

Prices as at 23rd August

 

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