Nathan Michael, Agfarm Account Manager SNSW
The last week has seen demand for warehoused stocks increase slightly and a $5-10/MT improvement in exfarm grain. As the weather remains hot and dry across most of Queensland and NSW, buyers have shown strong interest in securing grain supply for the Feb-March period. This reaffirms our belief that whilst there was a lot of cover in place for the first couple of months after harvest, buyers have had to step back into the market for their customers for later in the year. The sowing window (Mid-April/May) is likely to be difficult for buyers as selling in the period is usually quiet due to the focus on sowing.
Whilst wheat selling has been quite slow in the system, there are still those that have run out of patience with current prices. On the whole, probably not much difference price-wise from last week. Those with higher targets in mind have been inclined to sell at the market largely for cash-flow purposes. On-farm prices have continued to increase on the back of demand from the North. Most growers are able to achieve in excess of $250/MT exfarm around the Western Riverina, and some parcels further north are trading at close to $260/MT, as carriers are offering competitive rates to cart all the way up to the Darling Downs. There has been limited demand for APW and H2 wheat at the moment as full attention is being placed on covering off feed markets. End users are reporting that there is a lot of discussion around whether to switch (where possible) from barely to wheat, to make the most of the increased supply and the negative spread.
Demand for barley has been very strong to move north and east. Barley delivered to the Darling Downs has been trading at anywhere from $330-350/MT delivered. It is not really known how much is trading at the top of this scale (maybe only small tonnages), but needless to say, it is getting very expensive to buy. Because of these prices, we are seeing some demand destruction also, as users that are able to are switching to wheat. Even some feedlots in the Western Riverina who haven’t used wheat for ten years are doing so at the moment. Exfarm prices are over $250/MT in most areas, even up to 100km south of Wagga. Barley in warehouse has also traded up to $270-280/MT track to try and flush out any unsold tonnes.
We have seen some canola trade at up to $525/MT PKE this week. Volume wise, this is only quite small, but it shows a willingness for some growers to engage the market as we get nearer to $500/MT site. Suspect that another upwards movement of $10/MT would cause a lot more of these unsold stocks to sell.
Prices as at 16th Feb 2018