Sam Davidson, Agfarm Account Manager VIC
Victorian wheat, barley and canola markets have been under pressure this week as rain forecast throughout Eastern Australia sees traders discount Victorian grains and oilseeds. Supply and demand models show next week’s rain event will be too little too late for 2018/19 winter crops, but it will see a speculative increase in sorghum production throughout NNSW and SQLD.
Prior to the looming rain event we had seen new crop wheat bid $405/MT Geelong track, canola at $604/MT and barley at $485/MT. While the market has tapered off by $10-15/MT we did not see a great deal of grower engagement, even at the recent market highs. From conversations with farmers, the reasons behind the lack of market activity seem fall into two categories.
1. Growers are comfortable with production risk but happy to sit back and wait for further upside, or
2. Production risk is still far too high to warrant commitment on the forward sell.
So, while market prices have taken a slight dip this week, it will need a significant increase in selling activity to support the move lower.
Growers holding any length in old crop wheat, barley or canola continue to be rewarded in the market with these prices managing to show more resilience than new season. 2017/18 SFW1 delivered to Hanwood/Yanco/Tabbita throughout SEP-OCT tried to move $10/MT lower, from $425/MT to $415/MT, but did not attract firm offers. Instead we saw SFW1 parcels trade anywhere from $422-425/MT with most buyers rising bids to match offers. As we move further south, delivered buyer markets taper lower with bids for SFW1 delivered SEP-OCT to the Western Districts delivery zone sitting anywhere from $395-400/MT without significant volumes offered.
Barley markets showed a little more pep and energy with bids while new crop markets have taken a slight hit, however growers with any remaining unsold tonnes are not sellers at that level. New crop markets remain priced anywhere from $10-12/MT below 2017/18 season bids, indicating sales for old crop barley should be wrapped up before buyer seasons shift to 2018/19, this will occur in October.
Canola markets are showing sustained strength as Eastern Australian supply and demand forecasts show tight carry out for 2017/18 stock, as well as reduced year on year production. Growers have indicated they would be sellers at $615-625/MT track throughout the Geelong, Portland and Melbourne port zones, however bid/offer spreads indicate the market is at least $10/MT away from these targets.
Photoed: Spraying wheat, Foxhow Victoria.
Prices as at 23rd August