Nathan Michael, Agfarm Account SNSW
As we speak (Friday 4th May AM), there is light misty rain falling in Wagga Wagga, but unfortunately in total, we only saw <5mm overnight. There was a significant rain front coming west from Adelaide, but the majority of this has drifted too far south to give us much relief. There is not much in the way of rainfall possibilities until the end of this month. As mentioned last week, the later the break in the weather, the higher the swing from canola into either wheat, or more likely barley. This won’t affect the old crop supply and demand but may have a large material effect on the supply of feed grains for next year. Old crop grain in general is in strong demand from all directions and barley especially is in short supply. With regards to sowing progress, it is estimated 40-50% of canola has been sown dry and maybe 30-40% of wheat and 10-20% of barley. It is hard to be very accurate with these estimates, as there is still a decent number of farmers who will not commence sowing until there is a reasonable amount of moisture available.
New crop wheat has really moved into drought pricing territory, with Port Kembla and Melbourne track numbers ranging from $315-330/MT for APW. This will give new crop sellers up to $290/MT in some cases at sites like Junee and Temora. While this is very compelling, many can’t bring themselves to sell given the lack of moisture in the ground. We do need to keep in mind that many of the longer-term weather forecasters are still predicting an average chance of an average rainfall break in Autumn. With regards to old crop wheat, the spread from SFW type wheat to H2 is almost negligible. SFW wheat is pricing into feedlots and consumers at anywhere from $300-315/MT delivered and many farmers are able to achieve a $275-300/MT exfarm, depending on location. The Griffith market zone has been trading at around $300/MT delivered while further east around Young, the price is $310-315/MT. At these prices, there is little incentive to take grain further afield up to Queensland.
The demand for barley has continued with most prompt options starting with a 3 in front of the price. Further south towards the border it may be $5-10/MT less, but this is still stopping grain heading to Melb/Geel for now. New crop markets are also heating up, with the Port Kembla track market at around $270-280/MT, and the exfarm market at around $250/MT for F1 delivered January to March. We think with the increase in area planted to barley potentially being around the 10-15% mark, anything near average yields will create a decent supply for next season and this will present a good price. Currently it looks as though 10-20% of barley has been sown with the majority to come over the next two to three weeks.
Canola has remained steady for the most part with overseas movements slowly getting passed on here. Old crop canola is around the $540-542/MT level, so a few sites are hitting over the $500/MT site level now. New crop isn’t far away from this at $538-340/MT track and $524/MT January delivery into ROBE Wagga Wagga, and we suspect with a lighter plant through NSW this may stay firm. There has been very little forward contracting for new crop canola as the risk vs reward isn’t quite there.
Pictured: Sunset over the paddock in Holbrook
Prices as at 4th May 2018