Sam Davidson, Agfarm Account Manager Victoria
This week we saw a more pacified wheat market throughout Victoria. Although bids for 2017/18 stocks managed to gain, the pace of increase has certainly ebbed lower. We could attribute this to supply deficits in northern markets (Queensland and Northern New South Wales) appearing to have been adequately supplied by recent wheat shipments from South Australia and Western Australia at a track bid of $300/MT for 2017/18 APW1.
This has seen the Victorian wheat market sit somewhat stagnant at $315-320/MT track. However, while the weight of influence from northern market demand appears to have peaked for the time being, recent weakness in offshore futures and a stronger Australian dollar failed to significantly impact Victorian cash markets this week. This indicates markets remain predominantly driven by a tightening supply balance sheet and unchanged domestic demand, and we should continue to see our market run its own race despite changes in global market structure.
Delivered buyer markets managed to either hold onto recent gains or edge slightly higher this week as traders remain advocates of buying in delivered stock from the grower and carrying system stock. However, SFW1 delivered to the Western Districts proved to be the exception to the rule bid +$20/MT over at $320/MT track for June, but failed to attract an overwhelming volume of offers.
Buyer engagement remains solid but slightly subdued compared to recent weeks. Grower liquidity remains tight as speculators gamble on higher prices to eventuate throughout the second half of the year. In general terms, bid/offer spreads sit anywhere from $5/MT to $8/MT, however as the eventual cashflow driven selling lifts grower engagement it still feels as though buyers will lift to secure supply.
2017/18 feed barley markets gained again week on week, with gains reflective of just how tight supply is this season. New crop bids on the other hand weakened anywhere from $5-10/MT as forecast rain over the next two weeks reduces production risk throughout the Wimmera and Mallee cropping regions.
Canola markets continue to move against unsold positions with cash bids taking a $7-9/MT hit throughout the week. Grower selling into the recent rally might have been enough to fill prompt demand from the trade, however volumes still feel a little too light to have completely covered domestic demand for the second half of the year. New crop bids sit anywhere from +$20-22/MT over old crop indicating the potential for reduced supply in the new year.
Prices as at 7th June 2018