Domestic wheat cash markets firm
by Matt Wallis
After some busy weeks of burning diesel in the paddock, this year’s autumn sowing program is now approaching the finishing line, bringing with it a bit more optimism.
By the end of the week, the NSW cropping belt should be at least 85%-90% sown. Unfortunately the remaining central and northern NSW areas are running out of time for a rain event to ensure planting within the optimum window. Canola has been the biggest casualty of the dryer start, with year on year estimates of about 65% reduction in area planted. Due to the current soil moisture deficit, this number is expected to be much higher west of the Newell Highway. Wheat and barley have been sown at the expense of canola with the expectation that each commodity could be up by as much as 40% year on year.
Earlier sown crops are germinating well across southern NSW where the rain has fallen, in some cases allowing livestock to get a first look at established grazing wheats. The opposite could be said of the north where below average conditions have continued and a much-needed rain event is required for germination and establishment of winter crops.
Domestic wheat cash markets have halted their recent decline and gained $5-$10 week on week thanks mainly to favourable overseas movements. SFW1 into the Griffith market zone is trading up to $350/t delivered May while on the track market, 18/19 APW is up $5 on last week at $365 in the Port Kembla zone. Premiums are now starting to be realised for barley stored on farm with recent parcels trading up to $10-$20 above wheat.
Global futures markets have sprung to life over the previous week due to drenching rains of 2-6 inches falling across the US mid-west causing concern for the Spring crop planting. The nearby CBOT SRW wheat contract has exploded by 42USc/bushel while the December contact has gained 38USc/bushel on last week. Their respective swaps are up AUD $26 and $23 to $249 AUD/t and $257 AUD/t. With new crop basis currently quoted near $70 at Port Kembla, site prices for 2019/20 grain at $300/ton are becoming achievable once again. The Aussie dollar has sunk to its lowest levels since January 2016, trading at $0.6896.
Canola markets have been reasonably steady of late. At current prices they still offer relative value to historical averages with Newcastle and Port Kembla track markets both bid at $605 while the Newcastle crush was priced at $615 for May delivery.
It’s been over 10 years since Australia last imported cereal grains. Late last week The Department of Agriculture and Water Resources approved a bulk import permit for a 57,000 tonne consignment of high protein wheat on behalf of a leading Australian flour miller. The wheat is of Canadian origin and is due to arrive at Port Kembla within 6 to 8 weeks, before being exclusively processed under strict biosecurity conditions at Shoalhaven Starches in Nowra. In a press release issued by the flour miller, it’s stated that ‘inland NSW flour mills at Manildra, Gunnedah and Narrandera will continue to be solely supplied with only local, Australian wheats’.
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