Nathan Michael, Agfarm Account SNSW
There is a growing confidence the forecasted rain front will amount to something decent. By decent we mean in the vicinity of 10-20mm. Driving around the area west of Wagga Wagga earlier in the week, there seems to be around 1/3 of the crop not yet out of the ground, 1/3 out of the ground with patchy germination and 1/3 out of the ground and looking reasonably good. 20mm of rain on crops struggling for moisture will make an enormous difference, especially for those not fully emerged. Many people are comparing this year to 2005 in terms of seasons, where the break in the season came right at the end of June. That year turned out fairly good production wise, so there is still hope things can turn around. In this area, everyone is all but finished sowing, although we do hear of the odd tractor still putting in some late barely or oats. Much of the attention has turned to managing livestock and securing expensive grain and hay to keep them alive. Many of the opportunistic cattle on feed have been sold but there is still a lot of demand for sheep feed. At approximately $20/kg for wool and good demand for lambs, it still makes sense to feed even at $350-$400/MT for grain.
Old crop demand for wheat has crept up slightly from last week, although we have not seen much more grain hit the market. Delivered Griffith is around $335/MT, the Young market is $340/MT and Newcastle is around $385-390/MT delivered. It seems buyers are starting to get coverage at these levels, whether through the trade or through grower selling, but either way, there is not the same pricing aggressiveness seen in the recent past. Growers could still expect to get $320-330/MT exfarm for SFW wheat, and protein premiums really only start at 12% or better. Minimum 14% wheat is still only likely to achieve +$20/MT off these values. There has been some limited new crop selling mostly in the south and the east of the region. Multi-grades have been around a $330-245/MT Port Kembla track providing a $285-300/MT site for APW at most locations.
As per last week, F1 barley has found a new base for the moment. There is still grower to grower selling taking place at $360+/MT but to sell any decent volume, the level is likely to be around $345-350/MT exfarm. Even at this level, buyers are likely to be restricted to tier two and tier three buyers, as the larger corporate buyers are not able to make any margin into their usual trade homes. Buyers at this level seem to be servicing the eastern sheep feeders (Orange, Molong, Goulburn) and there is also some going north to the Liverpool Plains. Any end users who are able to, have switched across to wheat, as the price and the supply is easier to manage. New crop barley on an exfarm basis is being bid at $250/MT off the header with $5-10/MT extra for a January pickup with floating malt spreads. Even though these are historically very strong pricing levels, the selling interest is very muted and is likely to stay that way until we see decent new crop prospects.
Old crop canola is being bid at around the same level as last week ($555-560/MT PKE) with little selling interest. For this situation to change, I suspect we will need to see another $10-20/MT on the current price. There is still 10%+ of system stock unsold and at some point, this will have to be marketed, but currently we are dealing with unmotivated sellers, which, considering the vast reduction in new crop canola hectares planted and the dubious condition of some of the emerged crops, seems reasonable.
Prices as at 7th June 2018