Southern NSW Market Update – 15/12/2017

Nathan Michael, Agfarm Account Manager SNSW

This week has seen Southern NSW harvest completion move to 80-90%. Aside from one or two exceptions, it seems any wheat harvested after the last rainfall event has suffered from falling numbers issues. As a result, most of the late-harvested wheat is either AH9, the higher protein version of AH9 (AH9H) or SFW1. It’s not an absolute disaster price-wise as there is still good demand for these grades ($220-$240/MT Site), but still disappointing nonetheless. Looking ahead, we should have a relatively clear run weather-wise to complete the harvest, with all but parts of the southern Riverina, South-West Slopes and M.I.A left to finish.

SNSW Harvest Progression

We have seen further determination in the wheat protein spreads this week, as buyers concentrate on the lower AH9-type grades. Sellers have been running out of patience on the higher grades and a number have reverted to chasing prices down lower. If buyers are putting out prices $5-10/MT lower on a weekly basis and are still buying substantial tonnes, there won’t be any significant upside in the short-term as this situation plays out. Longer term is a different story, but harvest selling pressure is a big factor at present. Lower grades of wheat have remained down-priced as well but not to the same degree. ASW has been trading $270-275/MT while there is a $15/MT spread to APW. Onfarm wheat (ASW/SFW) is trading around $235-245/MT exfarm in most cases, with a $15-25/MT spread for protein. As a base, the Griffith market continues to be bid at the $245-250/MT level for January, which is holding prices at these levels currently. Grain put into storage is unlikely to be taken out again until the new year, and may be harder to pry off growers at current levels.

Track barley prices have lowered slightly on malt, just in line with wheat and canola. However, F1 remains rather steady as limited stock sits within the bulk handling system. We think there is more onfarm this year, so seasonal conditions and lower acres planted overall mean barley stocks should remain tight going into 2018 and through to the next crop. As we see it now feed barley prices are on par with feed wheat, with no real spread at present. The majority of Riverina feedlots are pricing at $252-260/MT (Jan-Apr delivery) while feed wheat into Griffith market zone sits around $245-250/MT. Barley should hold and with exfarm prices now hovering around $240-250/MT. This provides good selling levels for movements in the first quarter of 2018.

The Canola market continues to soften based off increased production in Canada and increases to South American soybean prospects. Locally, we have seen harvest progress further through NSW and into VIC with grower selling still taking place. As prices start to dip below $500/MT site, the question should be asked if this will this stop selling in the short term. Most local crushers also seem to have a comfortable level of coverage for the short term. As we sit today we are still in the top 30% of historical pricing levels.

Photoed: Loading grain into onfarm storage in Murrami, NSW

SNSW Onfarm storage_Murrami_20171215

Prices as at Friday 15th December 2017

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