Matthew Noonan, Agfarm Account SNSW
The vast majority of the region received somewhere in the vicinity of 12mm over the course of the week. Some areas south and east of Wagga Wagga received up to 25mm with areas to the north and west receiving less. This won’t immediately change the production outlook for the East Coast, however it will certainly help to establish struggling crops and help germinate crops not yet out of the ground. More importantly, with further rain predicted for next week, it will help build grower confidence in the season. Interestingly, the rainfall didn’t push prices lower as expected, bringing us to the conclusion buyers are still not as covered as they would like to be and presumably, until this occurs, prices are likely to remain strong.
Wheat prices were largely unchanged over the last week as many end users have reluctantly changed from barley to wheat keeping demand for feed wheat at high levels. On an exfarm basis, SFW type wheat is still likely to trade around the $325-330/MT level with delivered homes securing a reasonable about of cover at current prices. Griffith is around $335/MT delivered, Young is $10/MT over this and Newcastle is still trading at around $385/MT. As things stand, if we continue to receive a decent amount of rainfall over the next month, we expect to see unsold wheat stocks hit the market meeting demand and keeping a lid on a further price rises. With regards to new crop, very limited parcels of APW multi-grades are being sold at $340-350/MT Port Kembla track, giving those willing to take the chance slightly under or slightly over $300/MT site. By any measure, these are extremely high pricing levels and due to current production risks, very few people are taking the chance.
Small spot loads of F1 barley are still shifting around the area with the best price recently being $360/MT exfarm Western Riverina. Larger parcels are trading at around $350/MT for June/August movement. For some time now, barley has been at a decent premium to wheat and provided more relative value. For new crop, the spread from ASW1 to F1 barley reverts back to a negative of -$27/MT under ASW1 at $310/MT Port Kembla track or $260+/MT site.
This is a good level to start forward sales and take some price risk off the table if your production confidence allows it. Exfarm January-March 2019 options are around $260-270/MT for the F1 base grade with options for malt at +$15-20/MT and F2 at -$15/MT. ABARES has release their 2018/19 forecast predicting NSW has added a further 60,000 hectares of barley compared to last year with an average yield of 1.85MT/ha. These hectares could be on the conservative side, but in the end, it will be the yield that determines if we can replenish barley supplies in NSW, which should run quite low this year.
Old crop canola is still out there but being held tight and is currently sitting close to $550/MT Port Kembla track. New Crop continues to sit above $560/MT Port Kembla track, and in most years would provide value at these levels, but with conditions the way they are there has been little to no forward marketing. Nov/Dec new crop into delivered destinations is pricing at ok levels with Newcastle at $571/MT, Footscray at $553/MT and ROBE Wagga Wagga at $525/MT. Again, based on seasonal conditions, it is expected canola to be much further advanced prior to making any forward sales. And with the decrease in acres throughout NSW, pricing levels could hold should overseas factors work in our favour.
Pictured: Wheat north of Wagga Wagga taken Thursday 14th June
Prices as at 14th June 2018