Nathan Michael, Agfarm Account SNSW
Driving around the Southern NSW region toward the end of last week gave us a bit of insight into the current condition of crops both in the ground and germinated. Many areas south and east of Wagga Wagga have got some good germination and crops are around 5-10cm high. At first glance, it would appear these areas are well positioned; however, this germination is mostly into soil with very little moisture profile and they may struggle (along with the rest of the region) without further rainfall in June. West of Wagga Wagga, the situation is worse. The Southern Central West and Western Riverina has been unlucky and missed out on much of the rainfall we received further east and south. Some parts of NSW are making do with less than 50mm since Christmas and combined with constant stock feeding, are not in an ideal position. Having said that, the planting programs have continued and although much of the sowing occurred into very little moisture, a decent break in the season before mid-June, would still rescue the season. To give an idea of new crop selling confidence (or lack thereof), we are currently looking at just under a $350/MT Port Kembla track for wheat and selling volumes are virtually non-existent.
On feed and energy values, wheat should technically trade at a premium to barley. Historically, this has been in the vicinity of $5-20/MT. Currently, this premium is a $20/MT discount and wheat is trading at $320-330/MT exfarm compared to barley trading $20/MT over these values. This is a reflection of the lack of barley supply into the market and the inelasticity of demand for many of the consumers who require barley in their rations. Even at the discount to barley, wheat is still very much in demand and parcels continue to trade at $310-330/MT exfarm. As mentioned above, new crop wheat is being sought by buyers at around $350/MT Pork Kembla, giving well over $300/MT delivered silo for the upcoming harvest. But, until we see a decent break in the season, it is not likely to attract many sellers, it’s just not about the price anymore.
There has been little change week on week for barley pricing levels with old crop being bid at around $340-350/MT exfarm in Central West and Western Riverina as consumers in the north and east continue purchasing to feed stock on hand. Even with a few boats coming into Brisbane from WA/SA/VIC this won’t completely reduce demand. Any significant rain on the current season crop will help supply concerns going forward and may soften prices periodically, however its expected there will be a good premium for feed barley until the new crop comes online. As for new crop pricing, Port Kembla track is pricing at around $295-300/MT. At this level there is defiantly value, but there isn’t much liquidity at the moment.
Both new and old crop canola values remain firm and reasonably close at around $555-560/MT PKE track level. This, in most years, would represent good value, but with new crop conditions the way they are, it’s unlikely we will see much selling. Acres west of the Newell will be cut right back, while to the east and down around VIC border they should maintain a fair share of the area planted last season.
Prices as at 24th May 2018