Australia: Spreading dry lifts southern values

Deteriorating crop conditions in much of New South Wales are driving wheat and barley prices higher in the southern market, where trade remains thin on limited selling.

In the northern market, wheat and barley are trading at evens now that the supply chain for southern and transshipped grain is fully operational.

Yield prospects for many crops in Victoria, and in the south-eastern corner of the NSW grainbelt remain above average.

However, the impact of frosts, dry conditions, and some hot and windy weather in September to date has quashed chances of above-average yields for many NSW crops.

Table 1: Indicative prices in Australian dollars per tonne.

Harvest of barley and early wheat crops in Central and south-west Queensland is gathering pace amid dry conditions, but volume is not expected to hit the market until next month.

Trade sources say export of wheat will be a modest affair this year, as feedlots, piggeries and poultry mills look to lock in anything coming off the header.

“There’s grain coming up from Victoria and southern NSW, and that’s not going to stop,” one trader said.

A succession of boats bringing barley from Western and South Australia is booked to arrive in Brisbane until June at least.

That barley is supplying consumers on the Inner Downs and South Burnett regions of Qld, and far northern NSW.

It is currently being shipped direct to consumers from the wharf in Brisbane, or from nearby storage pads, and RainAg will from next month be out-turning it from its Wellcamp site, which this week received its first truckload for commissioning.

“Barley out of Brisbane doesn’t work on to the Western Downs, and feedlots there are going to keep bringing it up by road from down south.

Yield prospects for crops across south-eastern Australia are mixed, with those closer to the coast on track for average or better yields.

Conversely, those on the inland side of the grainbelt are generally looking at below-average yield prospects.

“Crops are still in pretty good order once you get into that higher-rainfall county, but anything out from that isn’t looking so good,” one trader said.

“That’s why the market’s probably up $25 over the past three weeks.”

“We’ve been buying as much old crop as possible, and the now the grower isn’t selling old crop; if you can carry and store it, why would you?”

The trader said growers see no downside in pricing as rain stays off the forecast.

“If we continue to get dry conditions, we may see some smaller grain size and lighter test weights; yield and quality are all going to come down to the weather over the next few weeks.”

Wagga Wagga-based trader Peter Gerhardy, Peters Commodities, said mixed farmers were looking at hanging on to more grain than they were intending because of lamb prices, which are around half of what they were this time last year.

Those producers will retain stock for sale in autumn, when they are hopeful lamb prices will rebound.

“I think there’ll be a lot of excess stock hung on to and put on drought rations through the summer.

“That means there’s going to be more old-crop grain carried across.

Mr Gerhardy said some sure signs of moisture stress in paddocks were appearing on the outer slopes of southern NSW.

“Growers are saying that as every day goes on, rings around trees are getting bigger and bigger and bigger.”

That indicates crops planted close to trees, and in competition with them for moisture, are dying.

“We’re also seeing a bit more frost damage sticking its head up.”

Meanwhile, Riverina grain keeps pricing north to consumers in Qld and northern NSW, with the Sydney SFW wheat market at $445/t indicating that the drought premium has moved into Central NSW from the north.

Tags: conditions, Market, barley, prices, wheat, crop, yield, sorghum