Matthew Noonan, Agfarm Account Manager SNSW
This week the marketing focus very much shifted from warehoused grain to exfarm stocks. Over the last seven days we received a lot of enquiry on both sides of the ledger (buying and selling) and growers are now, once again, in the box seat for selling grain. Exfarm numbers for wheat and barley are strong, and growers have been rewarded for holding off sales to this point. Barley is likely to get very hard to buy, due to local domestic consumers competing with demand from Queensland and the East Coast.
Across the wheat markets, given we are now well into the new sales month, we have seen less urgency about selling for the purpose of avoiding another month’s warehousing charges. Prices have improved $3-5/MT in most cases across the board since last week, and consumers are showing interest in exfarm and delivered parcels of ASW/SFW type wheat. We have traded ASW around $255/MT exfarm, which will work into the northern markets at this level. The availability of backloads for carriers has also helped with the liquidity in these markets, as carriers are able to execute grain at a lower cost. High protein wheat (+12%) is also receiving good premiums, with APH2 selling at $282/MT on the South West Slopes. It is expected the demand for wheat will remain strong in the short to medium term as consumers drive to fill their February-April commitments, even though feed wheat is still at a slight discount to feed barley.
A reduction in barley availability between now and the end of the year is very likely, as growers are aggressively pricing exfarm grain and taking advantage of premiums over feed wheat. Several consumers (both feedlots and feed mills) are seriously considering reducing barley in their rations, or even taking it out altogether, as on a like-for-like basis wheat will provide better energy/cost ratios. However, for many, this is not an option, so those who need to continue using barley should keep demand strong for the rest of the year. On an exfarm basis, we have been trading barley at $250-255/MT and have been seeing good liquidity at these levels. For local consumers, they have had to pay premiums to secure coverage for the next couple of months, and everyone is going to make a concerted effort not to be caught short.
For canola, in short, only very low volumes are being sold at current levels. Growers would rather sell wheat or barley than sell canola at $460-480/MT site. Only forced sellers will have any interest in engaging with the market. Having said that, a price rally of $20/MT would likely sell most of the remaining unsold stock.