Matthew Noonan, Agfarm Account SNSW
We are currently in the middle of an icy cold front which brought with it a limited amount of rain. Wagga Wagga received around 5mm of rain, and although beneficial, it is on the lower end of what was predicted earlier in the week. Farmers continue their sowing programs and are mostly 60-70% complete. Some are reporting earlier sown canola has started germinating and the follow up rain this week will help to keep the crop alive. At this time of year, as long as the rains keep coming, we may get away with a limited moisture profile for a time. We have had various reports of graziers, even around the South West Slopes, de-stocking due to the limited feed available. However, based on the level of enquiry looking for wheat, barley or lupins there must still be a lot of stock in feedlots. The increased volumes of stock hitting the markets has caused the average price per head for background cattle to come off at least $300/MT from this time last year, so this is being seen as an opportunity for the commercial (rather than opportunistic feedlots) to buy as many as possible and keep their feedlots full. Even with grain prices where they are, the lower cattle prices are helping keep demand in the sector strong.
Old crop wheat parcels have been trading at around $305-310/MT exfarm and based on strong buyer demand from all fronts, it has been relatively easy to achieve these values. It is very much an offer-based market and as long as the grain is priced within $5-10/MT of the bids, in most cases it has traded. New crop APW Port Kembla track values have been around the $325-330/MT mark with very attractive spreads (ASW -$10/MT, H2 +$10/MT). Growers are able to achieve $280-290/MT delivered site in most cases, however these options come with a very high level of production risk. For some, these prices represent a fantastic opportunity to start their new crop sales while for others, without the risk tolerance or moisture profile, they are viewed with indifference.
Barley remains firm in all markets. With the very dry autumn causing pastures and grazing wheats/brassicas to not take as well as many would like, sheep and cattle growers are looking for supplies/insurance heading into winter. For now, we have been doing small sales of old crop anywhere from $290/MT in the very south of the state to $320/MT exfarm north of the Murrumbidgee. It looks like this market will remain until crops start to take hold a bit and there is more security around new crop production. New crop (2018/19 season) F1 barley exfarm is pricing at around $250-252/MT for Jan-Mar 2019 movement or around at $285/MT Port Kembla track. You might be thinking ‘why would you be doing new crop at present?’. The thinking behind this is; barley prices are at a historically good level and given barley plantings are expected to increase by 10-20% Australia wide, if we receive anything near an average yield this could result in potentially lower prices come January-March, but only time will tell.
Canola remains the hardest to pick in terms of where the market may go. If you have old crop stock remaining in the system, prices are just hitting back above $500/MT site in many locations giving a $30-40/MT rise from the lows but still $20-30/MT off the highs from late November. But with the dry weather, dependent on cashflow and whether you think further rises will cover the cost of carry, it still may be a hold for now. This is definitely worth keeping a close eye on as opportunities may be fleeting when domestic crushers jump in and out to secure supplies as they require. Looking at new crop it’s possible to lock in $500/MT+ site at present which normally would present good selling/value, but again with the dry start and reduced acres planted, prices may set a floor. Unfortunately, oilseeds will follow what the overseas oilseed markets are doing and currently there are a lot of question marks around the world.
Seeding west of Griffith NSW
Prices as at 11th May 2018