Existing world grains issues persist
By James Massina
13th April, 2022
Another week rolls by and another round of inputs into the discussion, more forcibly argued depending on the side of the fence you sit, seller or buyer. Fortunately, or not, none of them are new and now seemingly we’re only updating those already known market factors. Generally speaking, new crop activity across the state has been sporadic, as has been the case for the rest of the country. And for old crop, most of the focus from both sides of the market has been on execution. Weather, rail, road and labour constraints continue to be the primary focus for the industry as a whole.
From a canola perspective, this has been where much of the activity has taken place. The shortage of seed and subsequently oil around the world continues to play out to the benefit of the Australian grower. Those that have been carrying old crop have used the opportunity to tidy up some remaining tonnages, and those willing to take on a bit of production risk in the new crop space, have been engaging at flat prices that are historically extremely high. The flip side to this however is that basis levels for Australian canola continue to be at traditionally low levels. Plenty of questions still remain about the size of the 22/23 crop however coming off the back of a record crop last year, and canola pricing pointing to another large crop, basis could remain low for some time to come.
From a wheat perspective, again, the factors around the globe that are moving prices are largely known. The futures markets are being pushed and pulled from one headline to the next with glimpses of fundamental news having a meaningful impact. The most notable being the US crop condition report that made it to the top of the headlines and added a talking point for the bulls. From a local perspective, old crop markets have been steady to firm as a combination of road freight shortages, rail freight issues, wet weather and impending short weeks, put a bid into the market. Fundamentally, the old crop SND on the east coast is largely known however the question remains, how much grain is able to leave the country before the headers start to roll again. The road freight issue isn’t going away any time soon and the issues with rail execution behind almost every port down the eastern seaboard appear only to be worsening.
Unfortunately for many the sorghum harvest continues to be impeded by wet weather, also increasing, and realising fears of downgraded product. Export demand for our sorghum remains strong however with harvest delays and supply chain issues both on a container and bulk front, the market is stagnating between a grower unwilling to engage on quality not yet known, and the trade, waiting for the weather to clear. Fingers crossed for both that the weather eases and the tonnes begin to roll.
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