Cash markets shiver along with the growers

By James Massina

8th June, 2022 

As much of the country shivers through a cold blast, one could be mistaken for thinking the weather had somehow managed to take the heat out of cash markets as well! The weather continues to play havoc across most of the cropping belt, not least of all through New South Wales where many parts of the state are struggling to complete this season’s sowing program. It has been well documented that some resowing is taking place, in the regions where growers can in fact access their paddocks, as well as numerous reports of growers unable to complete their planning cropping programs with some as little as only 20-25% complete. Intermittent rainfall and low daytime temperatures not doing anything to aid sowing progress and some growers reportedly abandoning some hectares, some switching commodities and others fallowing or holding area over to summer crop where possible.

As the calendar ticked over into Winter, the nearby delivered wheat market came under quite a bit of pressure both in the north and south of the country. Over the last couple of weeks there were a number of reported trades onto the Downs in excess of $500/mt. This was short lived as the sellers lined up at that level and eventually, the buyers had the upper hand and that market traded down into the $460’s by the end of the first week in June. There was a similar story in Victoria as the softening Downs market weighed heavily pulling the Geelong/Melbourne delivered markets down with it. That market eventually traded into the mid $470’s by the end of the first week of June.

As the weather interrupts sowing, it is also negatively affecting sorghum harvest progress and potentially quality. Estimates today have harvest around 80% complete and it is difficult to see how a large proportion of what’s left in the paddock will not have some sort of quality issue when the crop is eventually harvested.  With harvest delayed and the quality of the remaining crop largely unknown, the sorghum market has somewhat stagnated with growers more or less unwilling to engage until they can get back into paddocks. At the time of writing, fortunately the forecast is leaning towards a drier bias over the next seven to fourteen days which will be welcomed by many.

Overseas markets have come under pressure of late primarily driven by reports of export channels out of the Black Sea region potentially opening up. Only time will tell if this eventuates though needless to say, the flow of product from that region will have a noteworthy impact on cash markets here and around the world. As is often the case in these environments, it will be news headlines that will impact markets significantly from day to day.