Matthew Noonan, Agfarm Account SNSW
Another week has passed with continued positive reports from around the area. Although growers are far from comfortable, given the germination of most crops there is now a lot more confidence in the coming season. In general, cereals have fared much better than canola and even in areas where cereal germination has been good, canola is patchy at best. There are some areas of course, where canola crops are established and growing well, but given the late start to the season its estimated up to 15% of canola across the state has been switched to wheat or more likely barley. In Wagga Wagga, we have a 70-80% chance of rain on Friday and Saturday, which would be a great help to keep these crops developing. As always, spring will make or break the crop as a whole, but with the rainfall received over the last month, we have the potential for an average crop across the region.
The last week saw second and third tier buyers of wheat largely disappear, as the markets they service have bought themselves enough short-term cover. Demand from feed lots continue to decline as a lot of stock seems to be hitting markets and grass is beginning to grow in the paddocks. Old crop feed wheat that was selling at $330-335/MT exfarm is now struggling to trade even within $5/MT of these values. The new financial year and the recent rainfall has meant a significant amount of grain has hit the market, thus keeping a lid on prices for the moment. H2 wheat is trading at the same level as SFW and protein needs to be at least 13% before any premiums are available. New crop opportunities exist for an exfarm January/March pickup at $300/MT on multiple areas, and track values although back slightly from last week are still $340-350/MT PKE. Even at these historical levels there is little grower engagement. It appears most new crop sellers have made their move already and will wait until later in the season before taking any further positions.
Barley markets have remained calm the past week with demand remaining constant but not at the feverish pace that was there four to eight weeks ago. We are still able to sell small parcels at around $340-350/MT exfarm in Western Riverina, while below the Murrumbidgee is around $10-20/MT less. For now, it looks as though old crop pricing has topped out with SA boats heading to Brisbane and opportunistic sheep feed lotters declining as they send their stock to market to meet the big prices being paid there. We may see another kick in early spring, but this will all depend on weather, and how the 2018/19 crop is shaping up.
As for new crop, F1 is still pricing around a $310/MT Port Kembla track, and with minimal forward business being done it should hold for now. It will only take one or two buyers to drop back slightly to cause market depth to disappear putting downside pressure on prices.
Some old crop canola parcels have come to the table in the new tax year. In some cases where oils where low (38-41% average) we have been able to negotiate a flat price alternative maximising return to growers. This market seems to be somewhat satisfied most of the time and market direction will rely on new crop values. Overseas markets are playing tug of war at present with European Matif Futures increasing due to a hot June causing concern for rapeseed crops, while Canada is receiving some timely rains and is on the up, causing ICE Canola to be steady to softer. Back home, most Australian states production should be now starting to improve off the back of recent rains however NSW north of the Murrumbidgee will be the question mark, so until more certainty is about on production, Port Kembla track values should hold a premium over southern port zones. Currently we sit around $570/MT Port Kembla track.
Prices as at 5th July 2018