Sam Davidson, Agfarm Account Manager Victoria
Victorian cereal and oilseed markets were slightly lethargic this week. The pep, energy, excitement and drive appear to have taken a dip, however the overarching narrative remains unchanged. Buyers are itching to walk old crop cash markets lower but remain keen buyers of new crop.
Buyer demand and grower liquidity remains the key driver for 2017/18 season markets. APW1 bids managed to hold at $320-322/MT with ASW1 trading at parity to APW1 throughout all port zones. In contrast, premiums for higher protein wheat in the bulk handling system came under pressure with support seen at +$12/MT for H2 and +$22-25/MT for H1. This is a reduction of $5/MT from previous months. However, domestic milling demand appears to be supportive for H2 at +$10/MT to APW1 delivered buyer.
New crop production risk priced into new crop markets lowered on the back of last week’s rain. Growers reported healthy falls throughout the Campaspe, Corangamite and Moyne regions but remain reluctant forward sellers due to the scattered nature of this year’s break and memories of last season’s November 4th frost event. While reduced forward selling will provide support for new crop markets, a decent break should see some of the risk premium built into new crop bids decline sharply. Something to keep an eye on.
Delivered silo feed barley markets were a little fickle this week with Melbourne sites pricing anywhere from $312/MT to $303/MT track. The 2018/19 – 2017/18 seasonal spread flags old crop sales should be completed before new crop tonnes hit the bins. Geelong terminal and Corio remained unchanged as the best bid sites at $312/MT and Melbourne up country sites were flat at $300-303/MT. Site bids appear to be dependent on buyer positions and cost of execution however we have seen this situation play out over recent weeks and barley prices have managed to build week on week, so trade flow should see upcountry site bids pick up. Gains seen this week in both the Darling Downs and Adelaide markets support this position.
Canola markets continue to be a domestic crusher buyer market this week. The 2018/19 – 2017/18 spread remained relatively unchanged throughout the week at an average of +$30/MT throughout Victorian port zones. This market spread indicates unsold canola should be carried over to the next season.
Pictured: Irrigated canola East Borung
Prices as at 21st June 2018