Australia: dollar drop boosts prices

Prices for feed wheat and barley in the northern market have increased in the past week to what some are calling the top of the curve.

In the south, barley has closed the gap on ASW wheat, and is meeting renewed export demand from the Middle East.

The barley surge is pushing consumer interest more towards SFW wheat, which is priced most attractively at NSW sites a long way from port.

Recent rain has growers across Australia planting winter crops, and trade sources say grower interest in selling cereals has fallen away substantially as a result.

This, coupled with the Australian dollar dropping to US71 cents, down from 74c one week ago, has firmed prices for all quoted wheat and barley markets bar SFW wheat delivered Melbourne, unchanged since last Thursday.

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

Growers in northern New South Wales and southern Queensland are starting to plant wheat and barley into ample subsoil moisture, and many are harvesting sorghum and picking cotton at the same time.

Trade sources say bulk handlers as well as growers are contemplating where new-crop cereals will go, given the shipping stem out of Brisbane and Newcastle is booked solid until the end of the year.

Most growers have unsold SFW wheat and weather-affected chickpeas in storage, and bulk handlers are carrying plenty of wheat, most of it slated for export.

“The farmer is carrying a lot of grain in northern NSW, and they’re going to have to offload from July forward to make room for new crop,” one trader said.

Containerised and bulk exports of sorghum and wheat are continuing at a cracking pace, but bulk handlers appear reticent to build stocks away from port.

“Indications are that northern sites won’t take in more.

“You can forget what’s happened globally; the north is full.”

Queensland’s Labour Day on Monday will make for the state’s fourth four-day week running.

Ahead of previous weeks shortened by Easter and Anzac Day, most consumers are seen as well covered into June, and are now advancing on their July-September coverage.

However, consumers unable to take larger truck configurations, or in out-of-the-way sites, are having to pay up to book loads, especially with scattered showers slowing out-turn on some farms.

“There are plenty of shorts around,” another trader said, adding that operators were opting to deliver grain ex farm to port, and backload with fertiliser ahead of the winter-crop plant.

“Vessels are being done and that is sucking up all the road freight.”

New-crop cottonseed has started to hit the market as gins fire up to process what is expected to be Australia’s second-biggest cotton crop on record.

Cottonseed is priced at an attractive $385-$400/t May-September delivered Downs, with recent delaying the start to cotton picking in southern Queensland and northern NSW.

“There’s a late start to ginning this year with a few getting going this week but some still a week away from starting in northern NSW and southern QLD,” Woodside Commodities manager Hamish Steele-Park said.

“Old-crop stock is sold out and the delay in ginning is leading to some front-end May demand.”

Mr Steele-Park said values were pushing higher due to export demand, primarily from China.

“Seed is also competitive into feedlot rations versus meal and grain prices.

Cottonseed ex gin is around $330/t Moree and $320/t in the Namoi Valley.

In South Australia, Australian Grain Exports trader Tyson Hewett said the weakening of the Australian dollar, coupled with a surge in export demand for barley, has lifted prices in the Adelaide port zone in the past week.

“There’s certainly a lot of demand, and SA has got the export capacity,” Mr Hewett said.

Barley normally trades at a considerable discount to wheat, but the resurgence in export demand from the Middle East in particular has seen the two markets level on a delivered basis.

Mr Hewett said the rally has prompted some stockfeed millers to shift away from barley and drag SFW wheat from a greater distance as a cheaper option.

“There’s Riverina SFW going into SA.

“Barley’s the same price, and stockfeeders will be switching to SFW.”

In the Port Adelaide zone, both SFW and barley are bid at around $440/t delivered.

“They’re pretty extraordinary non-drought prices.”

Many growers in the eastern half of SA are still waiting for an opening rain to start planting into moisture, but are dry-sowing some cereals to get a start on their programs.

“Selling has certainly slowed up in the past month.”

In Victoria, GeoCommodities broker Brad Knight said domestic and export demand was strong for wheat, and growing selling was thin.

“They’ve definitely quietened down now they’re on the tractor.

“Recent memory says if they haven’t sold and hold, they’ll get rewarded.”

Wheat in the Port Kembla zone appears to be under pressure as logistic issues centred on one of two rail lines being closed for some months weigh on values.

This is pushing more grain towards Victorian ports, while grain from western Victoria and the Riverina pushes out through Port Adelaide.

Tags: sorghum, SFW wheat, ASW wheat, Australia, winter crops, export, barley, prices, feed wheat