Prices soften as headers begin to roll
By Matt Trewin
Headers have started to roll in some areas of New South Wales and harvest is officially underway. Barley is the main focus at the moment with yields and quality varying from area to area, such has been the cruel and unpredictable nature of the season. The barley crop in Victoria and South Australia is expected to be fairly large and this has started to be factored into markets over the last week as buyers sit on their hands and wait for some more liquidity. Barley prices delivered Melbourne have come off $20 in the last week and are now trading at $290MT. There is still no news as to whether the Chinese will buy Australian feed barley this year and so their seems few other alternatives for the grain than the domestic market. This should be a surprise to no one, given the drawn out nature of this dispute.
Undoubtedly, there will be flow on effects of the barley market onto the wheat market. The plentiful supply of relatively cheaper barley is likely to displace feed wheat from domestic dairy feed rations. This change in the supply and demand fundamentals is starting to be felt. We have seen the wheat market weaken over the last week by about $5MT, but is still holding up relatively well compared to barley. Historically wheat prices are still strong, trading at $350MT delivered Melbourne and these prices are nothing to sniff at. We are all aware that many on the demand side were severely burnt last year when they bought when prices were extremely high. While we are still in a drought market, this experience has lingered for many and are keen not to be burnt again. There doesn’t appear to be a lot of buying activity at the moment and this is likely to continue until the harvest in the southern states is more advanced and there is a better understanding of the size of the national crop. Growers may also be hoping prices will rise to the heady highs of last year and may well wait to sell – even though current prices are still strong. Right now both buyers and sellers are trying to understand what the other is thinking and how they are likely to behave.
Another factor playing on the market, which has been learnt as a result of the remarkable 2018/2019 season, is the capability of the well-oiled supply chain that moved grain west and south to the east with relative ease. Last year, 3 million tonne of grains flowed from southern and western states to the east and there is no reason why this will not continue given the state of domestic supply and the unfavourable price relativity with export markets. The efficiency of the supply chain has opened the eyes of east coast local buyers, who now have a broader perspective of their options. Of course, local buyers are likely to pay a premium for local product but there is now a limit to what they will pay.
Delivering made easy this harvest
With harvest underway in some parts of the country, our team have been helping growers register for the new Grower Delivery Application.
Same Same But Different?
Broadly speaking, the areas of supply and deficit are not too dissimilar to those of the previous year and with the strong possibility of a smaller national wheat crop there is some bullishness about the prospects for harvest pricing and beyond. So whilst it ‘feels’ like a carbon copy of last year, is it?
It’s beginning to look a lot like last year
Well what a week in sport! You have the Raiders who have been promising for some time finally get through to a Grand Final for the first time in 25 years, the GWS Giants in the AFL, who obviously played their Grand final a week too early and the Wallabies - well they are a bit like the Australian grain market at the moment - all over the shop.