SA Market Wrap - June
By Collette Wheadon
The 20/21 season continues to look promising throughout much of Australia with seeding being wound up in most districts. SA generally has hit the ground running, with many areas in the Mallee already passing last years in crop rainfall totals. Soil profiles are near full in some regions across the east coast, and things are definitely looking up from the past few years. WA has been the exception so far struggling to get a solid opening to the season, this is definitely one to watch over the next few weeks, with some looking to potentially lower crop forecasts if the dry continues.
The AUD continues to strengthen, and we have now pushed past the 0.70 mark. The USD has seen continued selling pressure pushing the DXY Index to twelve-week lows. This combined with the start of US harvest in the central and southern Great Plains has softened CBOT wheat to start the week with Dec 20 around $276 /t AUD.
Locally new crop cash prices have weakened significantly over the past few months with APW bids in the Port Adelaide zone at $285, down almost $50 from late march. Barley has managed to claw back some ground after the initial announcement of the tariff to be currently trading at $215 Pt Adelaide up $15 from the low.
For the last two years we have become accustomed to decile 9 pricing, but the 10 year pricing average for wheat in the PAD zone sits somewhere around $260 - $270 , and for Barley $220 - $230. So although we are south of our recent expectations, today’s prices still deliver value, especially if you believe they could move lower.
With the majority of the crops now up out of the ground, and some good moisture sitting under them, what’s your plan?
There is no better time to be going back over gross margins, budgeting input costs and knowing your cost of production to make sure we are looking at prices objectively. What is your marketing strategy and what level of risk are you comfortable with? If you’re happy to forward sell, how much, and what is your trigger? If nothing else, the tough conditions of the last two years have given us great insight as to how your crops can handle tough conditions, and assist to pencil in a conservative lower end yield should be encounter a tough finish.
History will tell us that as winter rolls in through June and July, it often brings with it periods of volatility and opportunity in the CBOT markets, but after already seeing a rally in march and now the AUD on the move, what will the next few months bring?
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