Which way will it flow?

By James Massina

24th August, 2023 

How quickly things change. It seemed not that long ago that the entire supply chain was at maximum capacity doing its utmost to get our record production out of the country. Compare that to now, when exports have slowed considerably, and grain is moving via sea freight from west to east. This slowdown in exports has seen road freight capacity increase in turn putting significant pressure on rates. This deterioration in road freight rates has allowed grain from the southern part of New South Wales to comfortably find its way into the domestic market in Southern Queensland. Barley and wheat both making the trek north to satisfy the ongoing demand into feedlots as those in that sector continue to see a winter crop in decline in at least the top half of New South Wales.

If it wasn’t already, the delivered Downs domestic market is fast becoming the key pricing point for determining new crop pricing for much of the country. It has already been well publicised that there are vessels sold and shipped from Western Australia into Brisbane to feed the domestic market and many are predicting this to continue into 2024. With road freight declining and a smaller export task out of the eastern states in the new crop year, rail capacity is also freeing up thereby widening the drawzone for the feedlot and poultry demand in southern Queensland. The origin of the supply this year for the domestic feed market may ultimately depend on the profile of the cereal crop which we will not know yet for another few months.

The potential of the West Australian crop has been on the decline and the industry is watching this closely as a source for east coast domestic demand. The northern part of that state has been below average for some time and whilst there have been intermittent rainfall events, they have not been enough to curb the declining crop prospects. The Geraldton zone and increasingly, the eastern and northern Kwinana zone is also starting to feel the pinch and the expectation is these will be well below last year and below average.

Closer to home there is a stark contrast in crop conditions from the top of New South Wales to the bottom. Recent biomass charts show northern New South Wales crops well below average, whereas areas south of the Lachlan River generally looking a picture heading into the crucial spring period. There have been a few reported frosts through the Riverina but no damage to speak of yet.

Despite a couple of bumps, canola markets have generally been firmer over the last fortnight with new crop flat price exceeding $700/mt at up country locations encouraging the grower to engage. The rally in price has also given the opportunity for anyone holding old crop to tidy that up as well, with bits and pieces of Newcastle and Port Kembla coming to market. Expectations are that any remaining tonnes will continue to trickle out towards harvest at full carry to new crop.