Australia: barley leads lift in prices

Prices for all feedgrains have risen in the past week on tight logistics and the global market’s ongoing rally in response to Russia’s invasion of Ukraine, which has growers looking for ever stronger bids.

Barley prices have risen $10-$12 per tonne as its discount to wheat and sorghum narrows.

Domestic consumers are extending their coverage as the likelihood of a softening in prices appears unlikely in the near term, and looking for inputs close to home as the impact of rising diesel prices adds considerable cost to transport.

A domestic market for rain-affected chickpeas has developed in the past week or two, with piggeries the main customer, and inclusion rates for cottonseed are on the up in feedlots.

Table 1: Indicative delivered prices in Australian dollars per tonne.

With a bumper sorghum crop being harvested in northern New South Wales and southern Queensland, and the start of winter-crop planting only weeks away, northern growers appear to be more willing sellers than their peers in the south.

Rain Ag commodity broker Scott Merson said readiness of the northern grower to meet the market was being driven by a desire to free up some on-farm storage space ahead of what looks like being another big year for winter cropping.

“I think as we get closer to planting, we’ll see more off-grade stocks let go,” Mr Merson said.

In the north, that covers mainly wheat with a low testweight of 65-68 kilograms per hectolitre, and downgraded chickpeas.

Industry sources say nearly all of the interest in downgraded chickpeas has come from piggeries, and the market is trading at around $350/t delivered Downs.

Due to quality issues caused by rain over much of the crop at harvest, chickpeas are not being shipped in bulk out of Brisbane or Newcastle, where SFW grade wheat and some sorghum has booked out the shipping stem.

Containerised off-spec chickpeas have attracted negligible export interest, and are supplanting at least some of the canola meal or soybean component of rations at some piggeries.

“It’s a very cheap protein if they can make it work.”

Downgraded chickpeas have the added advantage of being in plentiful supply on farms close to northern piggeries.

This represents a saving in transport costs when compared with hauling imported soymeal from Brisbane, or canola meal from crushing plants at Newcastle or Manildra.

The climbing cost of road freight, prompted by expensive diesel, has road-transport operators looking to shorten their runs where possible, and could well see grain a long way from port lose its attractiveness to export accumulators.

Conflict in Ukraine has made food security a global headline, and brought a flurry of wheat demand to the market.

Mr Merson said northern consumers were active buyers regardless.

“They’re looking to cover for the next 3-4 months.

“They’re not expecting proper SFW wheat proper to become cheaper in the short term.”

Cottonseed inclusion rates are on the rise based on attractive pricing and plentiful supply.

“In nearly all my conversations…people are going from 6 per cent to 12pc, or 10pc to 13pc,” Integrated Animal Production nutritionist Rob Lawrence said.

“It’s cheaper than grain, and there’s plenty of it.

“Whole cottonseed is at a very competitive price.

“I think most people will max the cottonseed out at up to 15pc on a dry-matter basis.”

Mr Lawrence said chickpeas are unlikely to wriggle into rations in major feedlots.

“On an energy basis, they’re equivalent to sorghum, so people wouldn’t put chickpeas in as a grain replacement.”

Woodside Commodites principal Hamish Steele-Park said new-crop cottonseed values have firmed on export and domestic demand.

“Australian seed is very competitive versus grain, oilseeds and meals at the moment.

“I would expect feedlots to utilise at maximum ration content at current prices, and export demand is likely to underpin values.”

Mr Steele-Park said only supply chain constraints such as container availablity and packing space could temper demand.

“The spread between ex gin and DCT values has widened due to higher road freight and limited packing capacity.”

Cotton picking and gin has started in Central Queensland, with other regions expected to start after Easter.

Values ex gin are sitting at around $310/t in the Gwydir Valley, $300/t in the Namoi Valley and $305/t in the Macquarie Valley.

Southern NSW cottonseed is priced at around $350/t gin spread for new crop, and delivered Downs July-August seed is roughly $370/t.

In southern markets, liquidity remains low as bulk execution of wheat, barley, canola, lentils and faba beans to port remains the focus of the market.

“Logistics is the issue at the moment,” Pearsons Group grain trader Reagan Stroud said.

Grower selling has been thin, and domestic buying is modest at barley prices get closer to SFW levels.

“Growers are watching the rising market, and they’re largely absent.”

Mr Stroud said domestic consumers appeared to be well covered, and were largely sitting out the latest export-driven rally.

“There’s not a lot of liquidity.”

South Australian elevator margins are said to be below those in Victoria, which has enabled accumulators looking to load at SA ports to show higher prices to growers in the NSW Riverina and north-west Victoria.

“On barley, there are numbers that maybe work locally into SA, but not into Melbourne.

“Barley is becoming increasingly harder and harder to buy.”

In the northern as well as the southern region, transport operators appear keen to do shorter legs in response to high fuel prices.

This could prove a challenge for growers holding grain on farm and a long way from port.

“If fuel hasn’t had an impact now, I think it’s about to.”

GRAIN Central

Tags: feedgrains, cottonseed, Ukraine, Russia, domestic market, barley, prices, wheat, chickpeas, sorghum