Australia: Trade thin as growers bite bearish bullet

A consolidating season and weaker global prices have seen domestic feedgrain values ratchet down this week amid thin volume.

Many domestic and export traders are in Melbourne this week for the Australian Grains Industry Conference, where talk of limited export demand and a big new crop coming the market’s way have further softened buying ideas.

On the grower front, the likelihood of big yields from New South Wales in particular is expected to prompt a start on some forward sales.

Parts of Victoria and South Australia remain in need of good rain ahead of warmer weather expected in coming weeks to ensure even average yield prospects are achieved.

In contrast, Queensland, New South Wales and much of Western Australia have potential for a bumper season, with the promise of possibly the biggest wheat crop ever in northern NSW a topic of discussion at AGIC.

Table 1: Indicative prices in Australian dollars per tonne.

Wheat and barley crops in northern New South Wales and southern Queensland are showing the benefits of a brilliant season to date, but forward sales remain thin.

“There’s been more interest in new-crop selling for wheat and barley, and we’re waiting now for APW multigrade prices to pop up,” Sunrise Commodities broker Scott Merson said.

Consumers are feeling comfortable about having plenty of new-crop wheat and barley coming their way, and with limited competition from exporters.

Barley remains the lotfeeders preferred grain, as is usual over the summer months.

Prompt sales reflect more the drop in consumer bids as opposed to volume traded.

Delta Agribusiness broker Graham Martin Dye said this far out from harvest, growers were hoping for a rally of around $20 per tonne in wheat and barley values before they started locking in some new-crop sales.

Delta Agribusiness broker Tom Vanzella said the realisation that values were not going to rally based on local or offshore factors has started to hit home in NSW.

“Sentiment’s just starting to trickle through,” Mr Vanzella said.

In southern NSW Kelly Grains principal Chris Kelly said growers are still sitting on reasonable amounts of current crop grain, both in warehouses and on farm.

“There hasn’t been as much sold this year as normal, which is a bit reflective of price,” Mr Kelly said.

Spikes in the market created by targeted export demand are appearing from time to time, with accumulation for cargoes in Western Australia and Victoria recent bright spots that growers have been able to hit.

Clear Grain Exchange general manager Trent Smoker has reinforced Mr Kelly’s sentiments about grower-owned stocks.

“There’s lots of unsold grain around relative to this time of year,” Mr Smoker said.

Their willingness to accept the weaker bids has not been forthcoming.

“Sellers are holding on to their price ideas, even as the new crop keeps growing.”

Tags: yields, crop, Market, demand, feedgrain, sorghum, export, barley, prices, wheat