WA Market Wrap - April

By David Cripps

World markets are changing rapidly in reaction to the COVID-19 virus and its impact on all global markets over the next few months is anyone’s guess. As we have all seen, the panic buying from consumers in Australia has put pressure on domestic demand for grain and we have also seen the AUD drop from 70c to as low as 55c (recovered now to 63c) which has seen the export market push for market share as the price becomes appetising.

Wheat futures have rallied on the back of concern with the virus spreading further to most countries in the world, however it will be interesting to see how they perform over the next few weeks as the weather conditions in both Russia and the US are improving in recent reports after early concerns that they were a little dry for this time of the year.

The old crop (19/20) grain market has seen a significant spike in the past few weeks to see wheat prices above $400, barley $300 and canola $650 so good times if you still have length with any of these commodities.

Recent rains on the East Coast especially in NSW & VIC have certainly broken the drought in many of the most seriously impacted areas and some of these zones are now looking at good stored moisture levels to sow there winter crops. Couple with this all time low stocking rates and good forward pricing we may see the East Coast farmer plant as much area as possible to take advantage of this opportunity after the long dry.

Recent weeks have seen 20/21 pricing for all grains spike similar to old crop, with APWMG values at one point stretch into the $370’s which creates opportunity to take advantage of these historically high prices which personally I can’t remember seeing pre-seeding. However, if you are still scratching your head as to what you should do then consider a couple of things before making that marketing decision.

 

How much physical cover do I have in place already?

If you are not someone who usually sells forward and are concerned with the risk then a good rule of thumb is to not commit more than 25% of the lowest forecasted tonnes in the budget. This is only a guide and you need to sleep at night so don’t go further than you are comfortable with. 

Does this price fit with my budget and target pricing?

My guess is that the current pricing levels would be able to make most budgets work but again you need to be the decision maker here.

 

Let’s hope the opening rain in WA is not far away and you can get the crop in with good soil moisture, the task of seeding will take some of the focus off what today is a vastly different world for most of us.