Sam Davidson, Agfarm Account Manager Victoria
Big news items for grain and oilseed markets this week were predominately northern hemisphere orientated. The first new season demand and supply estimates were published from both private consulting businesses and government agencies over the past few days which gave some direction to cash markets globally. Current estimates remain supportive of Agricultural commodity markets over the long term however, Australian traders believe these figures are already priced into our markets and should have a muted affect locally. There is however plenty of weather risk to play out over the short to medium term, so any detrimental forecasts should see further upside in global values. Not that this matters a great deal, we have our own supply and demand story playing out here at home.
Victorian wheat markets managed to hold onto last week’s gains and even managed to move a tick higher in places. We saw a slight move to the downside on feed wheat delivered to the Western Districts for a May/June delivery period but a slight uptick for ASW1 delivered to the Melbourne/Geelong zone. Limited open demand from traders continue to provide enticing opportunities for growers holding unsold 2017/18 season wheat onfarm. Reasonable volumes of SFW1 traded between $295-300/MT exfarm throughout central Vic.
Barley markets were a little more sluggish than wheat and canola this week, however we did see solid sell side engagement for new crop delivered silo markets particularly in the Central, Wimmera and Western Districts.
Canola markets managed to show some life again, however this market remains predominately bid by trading houses with oilseed crush plants or bulk handling networks to support. A late break in the sowing season has a reasonable volume of production risk pricing into the forward contract market. However, this premium has the potential to weaken should rains arrive before late May. Certain rail sites throughout Vic are starting to show bids closer to offer prices, however growers are somewhat curious to see just how high this market can move and will re-adjust on each move to the upside.
Old crop grain and oilseed stock continues to be dependent on domestic order flow, that is moving feed grain from surplus regions such as South Australia and Victoria to deficit regions, New South Wales and Queensland. New crop markets on the other hand remain dependent on weather. Markets will be watching soil moisture profiles and attempt to gauge its effect on recharging the East Coast grain and oilseed balance sheet. Looking ahead we anticipate continued weather driven volatility over the mid to short term however, until supply risk settles, domestic cash markets should be supported at current levels with potential for further upside. In saying this, things can change very so keep an eye on buyer demand for old crop and weather for forward contracting.
Sowing at Boundary Bend Victoria
Prices as at 11th May 2018