VIC Market Update – 20/07/2018

Sam Davidson, Agfarm Account Manager Victoria

Victorian wheat markets managed to show a touch more energy this week with buyer engagement sharper relative to recent weeks. Delivered buyer markets saw the majority of buyer interest with Central Vic bids for ASW1 or better increasing by $6/MT from $311/MT to $317/MT delivered JUL-AUG and SFW1/SFWR delivered Western Districts over the same period increasing from a woeful $310/MT to much more attractive $317/MT. It should be noted that buyers, albeit reluctantly, were willing to move higher to meet offers for some delivered markets, although I wouldn’t say we’ve returned to the “seller market” conditions experienced throughout MAY-JUN.

While buyer interest has increased, we’ve seen seller liquidity drop like a stone. Growers are weighing up production risk vs price reward, and for the time being concluding the risk outweighs reward, thereby are happy to hold remaining unsold length and wait to see how the balance of the season develops.

This time of the year it might seem a little strange for higher protein wheat to get much interest. Australian exporters are usually winding down their programs and handing over to northern hemisphere programs. However, we’ve seen an uptick in demand for H1/H2 delivered into the Geelong terminal as well as some interest from Melbourne packers. Wheat exports on the Geelong stem currently sit at 122,500MT for JUL/AUG and 60,000MT for September. Portland has light demand at 55,000MT AUG/SEP.

Barley markets were incredibly interesting this week with traders and end users indicating they’re not as confident of new crop production as they were two weeks ago. New crop F1 barley delivered Melbourne/Geelong zone gained $10/MT week on week from $308/MT JAN/FEB to $318/MT for the same delivery period.

2017/18 season barley markets are more complicated. Public bids have remained subdued but offers at anywhere from $15-25/MT over the bid have managed to garnered interest.

Tight stocks and strong private demand from graziers continue to produce skinny trading volumes and low liquidity. End users appear to have dropped as much barley as they can out of the feed ration and are using wheat, field peas, beans, just about anything as a substitute. Despite appearances, demand is still there within the barley market, you just need to know who to approach.

2017/18 canola markets managed to hold their ground week on week with steady demand from Australian domestic crushers propping up the bid. Although production forecasts for the coming season continue to contract, buyers are still sitting firm at their bid and rarely coming up to meet offers. Sellers that have taken a punt and carried canola this far into the year are happy to trickle bits and pieces into each upside movement but seem to be for a trigger point of $550/MT track before quitting the lot. As with wheat, canola growers concluded production risk outweighs price reward and thereby happy to stay unsold on new crop until production risk tapers lower.
 

Prices as at 19th July 2018

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