SNSW Market Update 3/08/2018

Nathan Michael, Agfarm Account Manager SNSW

Any hopes of achieving average production for this year in any part of NSW are well and truly gone. Crop conditions are varied across the south of the state, with crops north of Parkes probably in the worst shape at the moment, followed by crops west of the Newell Highway. Crop development is also quite varied, with some areas sitting on 0% germination, through to areas with plants out of the ground and green, but still quite immature for this time in the season. These areas will be our critical areas for this season; these are the places that still have the potential to produce grain in decent volume if we get much needed rain over the next 2-3 weeks.

At this point in time, the extent of the drought is largely known by all market participants. A very low NSW production figure has already been factored in and the industry as a whole is turning their attention to VIC, SA and WA, where reasonable production is still likely. Grain is already filtering into NSW from the other states, and this movement will likely continue well into 2019.

Apart from rain, the other big variable is the extent of the QLD and Northern NSW Summer crop, which (once again) is dependent on enough rainfall to justify the plant. Although we do try and keep these reports region specific, the outcome of the NNSW/QLD summer crop plant will have a huge influence on where grain produced in Southern NSW will be flowing over the next 12 months. Weatherwise, Wagga is expected to receive 1-5mm today, with even less expected further west and north. Monday has some rainfall potential as well, but again only for falls between 1-5mm – unfortunately, neither of these events will be significant enough to substantially change the situation.

New Crop wheat bids continued their upwards run to an eye-watering $420/mt PKE for APW1 multi-grade. To put this into perspective, this is $120/mt over what growers would call a “good price” to start selling New Crop grain at this time of year, if you are guaranteed a certain level of production. It is all relative and sellers will need every bit of the price rise to account for the poor yields expected this harvest. Ex-Farm feed grain in general is getting harder and harder to buy and as a result, wheat is trading at $340-$365 XF. We suspect that a lot of the price rises in the New Crop market are being driven by contract washouts, where buyers are trying to find replacement values for grain, but sellers are nowhere to be found.
Old Crop barley prices continue to rise off the back of limited but strong demand from livestock producers sourcing feed. Ex farm values are anywhere from $330-340/mt around the VIC border up to between $370-400/mt in northern Port Kembla zone. Despite these prices, grain volumes coming to market ex farm are limited and will continue to be tightly held until any significant rain eventuates. As for new crop values, forward contracts are being done at around $375-380/mt PKE Track. This is very much unchartered territory for most, and these prices don’t look like they will slowing down anytime soon. A keen eye for feed grains will shift to Sorghum production as we move into spring/summer. Should we get a decent Sorghum crop this season, it will be the main contributing factor to cooling down the current Barley prices, otherwise they should remain firm for the immediate future.

Old & New Crop Canola prices have jumped significantly in the past few weeks, mostly off the back of domestic supply issues. The recent AOF Report estimated this season’s production at just over 2.6MMT, a significant production decline of over 1MMT from last year. Most of this production decline is on the east coast, with the majority of the NSW Canola crop being restricted to the South West Slopes and VIC border areas. Old and new crop markets are both marching towards $600/mt PKE Track, with old crop around $580-585/mt, and new crop sitting just above, at $595-600/mt PKE Track.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prices as at 2nd August

 

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