Australia: Market dodges harvest pressure

Prices for feed barley and wheat have firmed to reflect limited grower selling in the past month which has seen one of the latest ever harvests take place across south-eastern Australia.

Yields have generally been better than expected, and quality has been mixed, with less downgraded grain than was initially forecast hitting the market.

Combined with healthy export demand, prices have escaped supply-side pressure because growers have offered only modest amounts of feedgrain to the market thus far as they concentrate on selling their higher-value commodities.

Table 1: Indicative prices in Australian dollars per tonne.

Buoyant demand from China for sorghum continues to set the price for the red grain, which is being exported in bulk and containers, mostly via Queensland ports.

This has created the unusual situation of feed wheat, feed barley and sorghum all being less than $10/t apart, when traditional spreads have sorghum at $40/t under barley and $60/t under wheat.

The mild and wet growing season has also shortened the supply of feed barley in northern markets because a much greater proportion than normal of Planet and other accredited varieties has met malting specifications.

“A lot of barley growers jagged malting this year, and the maltsters have been up here looking for it because it’s been so wet down south,” one trader said.

“There’s not too much feed around.”

New-crop sorghum from early-planted areas in northern New South Wales is expected to hit the market later this month, but the trade is not banking on supply-side pressure from it driving down prices.

“It’s never going to fit back into the domestic ration for a lot of stockfeed millers when the price is where it is.

“Sorghum’s pricing is purely export driven.”

Consumers are seen as mostly comfortable with their January-February coverage and are looking at SFW wheat as their bulk grain for coming months.

Because of wet and mild to cold conditions into December, many growers in the southern half of NSW, and in Victoria and South Australia started harvest at least a fortnight later than normal.

It means harvest for many in the later areas will finish in mid to late January instead of pre-Christmas.

With grain quality mixed, the impact has been a slow metering out of feed barley and wheat below APW or H2 specifications as growers concentrate on marketing milling wheat, malting barley, canola, and No. 1 grade pulses.

Aggressive marketing from Western Australia, where another huge crop has cereal exports cranking at record pace, is also making it a challenge for shippers in NSW and Victoria to compete.

Riordan Grain Services manager Mark Lewis said fortunes have been mixed for growers in Victoria.

“Quality’s all over the place, and yields are a bit disappointing in the Western District, but they’ve made up for it in the Mallee, where they’ve had a massive year,” Mr Lewis said.

Harvest will creep into February in regions including SA’s South East, and south-west Victoria, but most growers in Victoria’s Wimmera are expected to finish harvest in the next week or so.

“There’s still a bit of a premium for protein grades like H2, and there’s a lot of ASW.”

Mr Lewis said widespread downgrading has not been as prevalent as growers and the market were expecting.

“There’s not as much feed wheat as everyone thought there would be, but test weights are light as a general rule.

“There was an expectation is was all going to be feed, but we’re seeing a lot of ASW and APW.”

Mr Lewis said limited selling of new-crop feedgrain is expected to roll on for another few weeks, and “a bit of hand-to-mouth buying” was being seen from domestic consumers.

“There are still a few headers rolling, and a lot of farmers are looking to have a holiday after that.”

Tags: prices, wheat, yields, sorghum, feed barley, Market, feedgrain, Australia, China, harvest, grain