SNSW Market Update 21/09/2018

Nathan Michael, Agfarm Account Manager SNSW

There has been no rain whatsoever in the last week. It seems that locally and state-wide, the production capacity of NSW has deteriorated further. The Wagga Wagga team has spent the last three days at the Henty Field Days and it seems a huge number of Southern NSW farmers are considering cutting cereal and canola crops for hay. We are not expecting everyone to go down this path, as it is not ideal from a cost or a marketing perspective, but purely based on the number of conversations, there will be a lot of hay produced. The extent of the frost damage locally is becoming more and more evident and it seems there is a lot of damage, in cereal, pulse and canola crops. Close to the Victorian border the damage looks to be the worst with reports of 70% (apparently) lost in some areas. Market wise, the extent of the frosts in WA has really spooked all new crop grain markets and we have seen prices rally by a further $20-30/MT across all commodities as all market participants try to find levels where the market will trade.

The brief respite for surging old crop wheat prices appears to be over. The old crop Griffith market has risen from around $427/MT a week ago to $446/MT today, so the demand has really returned with a vengeance. Even though it appears the eastern sheep feed lotters have reduced their buying, other feed lotters and feed mills still have an appetite for old crop grain. As we have said previously, there is not really much incentive to buy a lot of cover at current values, so many buyers need to be in the market all the time. New crop wheat values have jumped by an average of $20/MT in the last week, largely on the back of grower washouts. Given there is very limited new crop selling, the market has had to grind higher and higher to find levels where replacement grain is able to be bought. Currently bids are a stratospheric $480-485/MT Port Kembla track, but further bad news regarding frost damage may drive it higher still.

Old and new crop barley markets found another reason to jump significantly this past week with frost in WA. We’re sitting around $450/MT+ exfarm for Western Riverina and Central West areas, but as we have said in previous reports, demand is limited to graziers and smaller end users with most large consumers switched to wheat for now.

 
 

New crop received the same treatment with a jump of $20-30/MT Port Kembla track due to the washout issues and declining fortunes of this year’s NSW crop. There are pockets out there where barley seems to be faring better than wheat and canola, but all things considered yields look as though they will be well below average.

Canola has been steadily rising over the week but has not seen the dramatic jumps barley and wheat have. This can be attribute to a few factors. 1) Not a lot of canola has been forward contracted. 2) There is a small percentage of old crop still out there in the system unsold. 3) Even though we are mostly detached from overseas (CBOT) movements, soybean markets have kept any price increases to a minimum due to the China/US trade relations. I think we will see a good appetite at harvest from processors to accumulate what they can, and prices will be good until they start to hit levels of coverage for the 2019 demands that give them some comfort.

Prices as at 20th September

 

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