Sam Davidson, Agfarm Account Manager VIC
Victorian wheat markets soared this week with prices rallying $26-$33/MT for 2017-2018 season stock. Dry conditions throughout the Australian east coast is keeping both the frequency and the volume of offers low from sellers, which in turn is making it tough for traders to buy replacement stock from growers. We are also seeing wheat export demand pick up throughout Victorian ports with 102,000 MT scheduled for August and 85,000MT scheduled for September. Whilst the majority sits on the Geelong stem, all port zones should see a lift in price as exporters attempt to draw in enough supply to meet their sale obligations.
This demand has created a unique situation in VIC. Mills/feedlots based in central and southern NSW are attempting to purchase grain in Northern VIC road and rail depots, and exporters are bidding on sites throughout the central and southern road and rail depots. Basically, two separate markets are tugging at opposite ends of the same supply. Economic rationale dictates that prices should adjust higher to match supply with demand. Depending on traded volumes, we could see further price upside over the short to medium term, but this remains dependant on market liquidity and how the Victorian spring weather outlook develops.
This week we saw SFW1/SFWR delivered to the Western Districts of Victoria gain $26/MT week on week with little volume offered. We saw strong volume of ASW1 trade into central Victorian mills and feedlots at $330 delivered buyer AUG-SEP, but minimal sellers into the Goulburn valley at $348 over the same period. H1 wheat delivered to Melbourne Mills gained $13 week on week however H2 wheat delivered to exporters throughout the Melbourne/Geelong zone managed to outpace H1, gaining $29.
Barley markets were refreshingly stronger week on week after a somewhat flat period over June-July. Whilst demand from feedlotters and mills has tapered off due to high prices relative to wheat, we have seen some export demand lift delivered markets from $305-$310 a week ago to $325-$335 this week. As is to be expected, malt premiums have all but disappeared, however sellers have been happy to let old crop malt barley to go as feed. Old crop – new crop F1 spread currently sits at +$36, indicating continued supply concerns for new crop barley.
Canola markets have demonstrated some resilience with prices not only holding onto recent gains but building week on week. Melbourne, Geelong and Portland track markets have all managed to gain $6-$9 week on week with domestic crushers the predominant buyers. Fear of new season crop failure should see traders continue to scramble for ownership on both forward markets and spot markets. Despite the tough season, canola growers in the Wimmera, Western Districts and Central VIC have remained positive overall. Although a decent rain would reduce some stress and anxiety, most are buoyed by 10-12mm falls keeping both hopes and plants alive for a decent spring finish.
Prices as at 26th July