WA Market Wrap - November
By David Cripps
As harvest progresses there are many parts of the WA wheatbelt experiencing higher than anticipated yields with some clients indicating results are exceeding expectation given extremely low growing season rainfall totals. This again proving how good the WA farmers are with their farming practices, however as a result of these low rainfall totals there are some regions in WA where yields will be below long-term averages.
Quality in the northern zones has areas showing up higher than normal screening levels in wheat especially with AUW1/ AUH2 and AGP1 binning grades required due to these quality issues. Expectation is that this trend would continue in some parts of north and eastern Kwinana zone but hopefully to a lesser extent as we move south with some of the wheat in these areas still green enough to take up some of the October rainfall events.
This week we have seen the market momentum slow on the potential for more trade restrictions and tariffs on imports of products by China putting downward pressure on the market anticipating that wheat may be the next one on the list. According to China state media barley, wine, cotton and beef with the east coast wheat market off close to 15% on wheat this week with the west following suit soon after.
The other factor which strengthened milling wheat prices over the past few weeks was the large rainfall totals posted in many parts of NSW. At this stage with growers re-commencing harvest it’s showing up that falling numbers issues are only isolated to date however the market will be watching prevailing forecasts closely for anything that could cause any significant quality downgrading.
Weather models this morning show the trough due over WA over the weekend is lower falls than anticipated and also less chance of major falls on the east coast. Initial harvest reports from growers is that yields are exceptional on a large part of Eastern Australia and in many parts are well above average. The large domestic consumer seems to be patient currently and waiting in anticipation for harvest progress before making another play on further purchases and with the majority of NSW/QLD coming out of two significant droughts they will be selling consistently into the market to finally get the cash flow required to keep the bank manager happy.
With the US election result still unknown it appears now barring a serious up-set, Republicans will retain control of the US Senate which will play havoc on Biden pushing any of his pre-election agenda including US healthcare insurance/ Green Technology targets and free college tuition. The one thing that’s apparent is if Biden is successful in winning the election the ghost of Mr. Trump will stalk America throughout his term so expect some turmoil on markets until such time as the political environment can stabilise again.
On a brighter note the Canola market is still gaining momentum in WA and trading at significant premiums to the east coast. I personally can’t explain this bullish run however this is great for the WA grower and with harvest well underway hopefully growers are making the most of this opportunity.
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