Matthew Noonan, Agfarm Account Manager
Markets continued to recover this week, with both wheat and barley receiving some enquiry from sheep and cattle producers looking for feed prior to winter. Larger consumers also seem to be looking for some extra cover as the decline in prices starts reversing. There is some rain on the forecast through to the end of March, but there doesn’t seem to be any significant falls predicted in the major wheat belt area through central NSW, western or southern Riverina. In light of this, it looks like canola will be getting pushed out of the rotation in favour of barley, given it has been the best gross margin performer over the past five to 10 years. As the pivotal April 25th draws closer, all eyes are on the sky, however the attitude at the moment seems to be that rain or no rain, there will a crop planted.
Markets finally have some life and excitement back this week. There has been increased interest from consumers to extend cover while trade parties with positions look to either cover in or reposition. WA/SA values have slowly crept higher again as a result of inaction from growers on the sell side, so everyone is trying to find the price that will bring growers into the market. Considering the price slide we have seen over the past three months, it is probably too early to see any significant engagement from growers, however this may change if another $10/MT plus on current delivered prices such as Griffith market zone is realised, which is currently bid around the low $400-405/MT range Mar/Apr. On the flipside, a good break now will signal a short-to-medium term decline in prices again, however it could be a case of short-term loss long term gain if the break is good enough to set us up for a good 2019/20 season.
Having a quick look at wheat, 2019/20 new crop values have held their gains also at around $350-355/MT Port Kembla track as the slide in CBOT has steadied up the past week. Again any good break of rain will reduce these values, but taking on physical cover might not be a good idea just yet.
Barley continues to show a few inklings of life. There has been some grower to grower sales going through in the high 300’s – 400/MT over the past few weeks. Most major delivery points are well down on these levels. In saying that, markets like Griffith and Wagga/Jindalee have moved higher the past week to around $385-390/MT delivered, closing the spread to wheat. Unfortunately, this could mean barley prices won’t push too much higher as the current spread favours wheat in the ration, however it may begin to push wheat prices higher. New crop prices remain rather steady compared to wheat at around $260-265/MT Port Kembla Track.
Canola markets have held steady over the past week. In delivered markets, Wagga is sitting at $595/MT and Numurkah is at the $580/MT mark. The Port Kembla track market has seen a little jump with some sites now up around $610-612/MT mark. Overseas markets still remain subdued, with a good South American soybean harvest likely and political issues with Canadian canola exports being banned into China. New crop prices are sitting around $565/MT, which in most years would be a very decent price, but with current conditions and the forecast not yet showing anything exciting, growers are likely to remain cautious of forward physical sales.
Prices as at 14th March
* View of current market pricing. Does not represent current Agfarm bids.