Sam Davidson, Agfarm Regional Manager Vic
Victorian wheat markets managed to hold somewhat firm this week, despite considerable offshore pressure from weaker US futures and a stronger Australian dollar. Buyers attempted to walk the bid lower in kind, however dry conditions throughout the western districts, Mallee and Wimmera pressured seller liquidity and thereby restricted the ability of the trade to move cash markets lower. A dry eight-day forecast indicates a continuation of market conditions so the coming weeks may result in low trading volumes at higher prices, however should rain eventuate or the seasonal outlook improve we could see greater volumes.
Another interesting development we have noticed over the past few weeks comes by way of trading houses, and the interesting methods utilised to support their fledgling bulk handling networks. Due to an increase in on-farm storage and thereby a subsequent reduction in receivals, the larger bulk handling networks have been actively bidding and engaging the market with thru-put bids at +$12/MT to their respective delivered silo bids. Whilst not a new concept, the sharp increase in demand for thru-puts this season indicates a shift in accumulation methods, and might be a viable option for growers based out of the draw zone of domestic markets.
Barley markets received another kick higher this week as dry conditions throughout Victoria and continued interest from exporters squeezed cash markets $5-7/MT higher throughout the week. This week’s port data showed there was 55kMT of barley added to Geelong’s Port Terminal for export throughout April, which should add support to current replacement bids. Buyer interest also shifted into the west of the state, indicating a tightening of seller liquidity for both the Melbourne and Geelong port zones.
Canola markets managed to finally post a weekly gain this week, however as stated throughout previous market commentary, each rally in cash markets should come under pressure from reactionary grower selling. Victorian port data failed to demonstrate any signs of a recovery in canola exports, with zero tonnes added in this week’s shipping stem for April. Consecutive increases in Australian canola production and below average demand from historically strong export markets appear to be maintaining their weight of influence on cash markets. The recent trade spat between China and the US might provide some upside in local terms, but we are yet to see this story play out. Something to keep an eye on.
Prices as at 29th March 2018