SA Market Wrap - April

By Collette Wheadon

As we all adjust to the new normal for at least the next few months, it seems the farmers of Australia have been well ahead of their time demonstrating their expert skills in social isolation around April each year for generations! Some good falls throughout the SA Mallee over the past 3 months has been a nice reminder that it can actually rain, and has many growers almost ready to kick off their latest stint of tractor cab isolation, with the added benefit of going into some moisture unlike recent years.

Global grain markets continue to react to the potential flow on effects of COVID-19, and locally, supermarket shelves are being cleaned out faster than they can be restocked, creating solid demand for many agricultural commodities, and with it pricing opportunities for both current and new crop grain.

This domestic demand combined with east coast rains have all but turned the trucks around and reinstated the positioning of the SA/VIC borders within the grain market. For the last two years the bulk handling sites in Eastern South Australia had been adopted as part of Victoria with a focus on feeding the East Coast drought. For many sites in the Mallee and South East port prices had become almost irrelevant, and the draw zone of the major SA domestic buyers had shrunk to the point that to combat the trucks heading east SA end users had to jump on the cash boards and buy out of the system.

Through harvest and until recently we have seen delivered wheat bids in the NSW Riverina and Melbourne zones trading at a $20 - $30 premium over Murray Bridge and Wasleys. In the last week however, that has closed to evens with East Coast basis easing with some good falls in the last rain system, and bids in SA rising to $405 - $410 delivered. Not only has this kept the on-farm grain moving into SA homes but opened the draw zone significantly to incorporate the lower south east. This region over the last two years has all fed into the local feed market, Western Districts and Melbourne/Geelong zones. Delivered barley bids haven’t quite had the same demand as wheat with BAR1 bids into Murray Bridge rising to around $320 and blowing the wheat/barley spread out to $80.

The current volatility has also created some very attractive new crop prices with Port Adelaide 20/21 APW bids holding at $330 - $335, and barley bids peaking at $270, softening to $262 currently. The peaks of both had up to an added $10 basis premium at selected border sites, prior to the most recent East Coast rain event. These rains have since softened East Coast basis levels and has all SA sites pricing back of their natural ports.

While these new crop numbers are all very attractive, the volatility of current grain markets can make the decision on whether to forward sell or not extremely difficult, and particular focus must stay on the level of risk you are comfortable with. The last two years have acted as a stern reminder on the risks of forward sales when combined with issues such as drought and frost, but with a positive 3 month rain outlook hopefully we can leave the drought conditions in the past, as the uncertainty of everything associated with COVID-19 in the short term is more than enough!