GRAIN REPORT

Where You Can Find The Latest Information On The Grain Trade In New Zealand.

Local Market Update

Autumn is upon us and we are getting near the end of this year’s harvest. Yields seem to be higher this year compared to previous years, and the overall quality is very good with the exception of some early dryland barley crops and affected hail crops. The wheat yields are looking especially good with many farmers growing their best crops to date. Protein levels in some premium milling wheats may become an issue with the higher yielded crops.

Prices have remained reasonably stable with only a slight dip. Sales are still largely into the dairy market and feed mills are still cautious with their procurement. We may see a rise in the demand with the impact of the drought in the North Island, increasing price of PKE and higher milk pay out which could then favour the grains price.

Ruralco is always looking for all types of grain to supply a wide range of end users. If you have surplus or uncontracted grain that you would like to sell, please contact Craig Rodgers or John Scott at Ruralco. Drop in your sample at any Ruralco Store, contact your Ruralco On-Farm Representative or the Ruralco Customer Service Centre on 0800 787 256 to arrange sample bags or pick up.

Canterbury Growers Pricing Per Tonne

Australian Update

Wheat prices have risen around $5 per tonne in the northern market in the past week, while barley has fallen by the same amount.

Wheat is now trading at $455/t per March-April delivery to Darling Downs consumers, compared with $375/t for barley.

Barley is now thought to be cheap enough to be buying demand in the northern and southern markets.

“The normal rule of thumb for the wheat-barley spread is $15-$30,” one trader said.

“It’s $80 now, which makes you wonder if wheat’s pretty tight, and there’s more barley around than we need now that drought feeding and backgrounding for the feedlots has quietened right down after the rain.”

In southern Queensland’s new-crop market, the July delivered Downs sorghum market is trading at $320/t in minimal volume, while January new-crop wheat is trading at $340/t, $30 above barley.

AUD supports barley

A weakening Australian dollar is making barley look more attractive to exporters.

This is expected to support prices in the near term.

The AUD’s continued slide took it to less than US 66 cents in overnight trading, a low not seen since 2009.

“Domestic prices are walking a fine line between a very competitive AUD, a tight old-crop balance sheet and improving winter-crop prospects,” Flexi Grain analyst Lachlan Hume said in the company’s daily market report.

Grower selling picks up

Cloud Break Grain Marketing managing director Ed Scamps said barley’s increased discount to wheat was buying it some demand from South Australia’s non-poultry feed millers who can switch between the white grains.

“End users are picking up their barley-buying program.”

Mr Scamps said end-users already had some cover through March-April, and were likely to extend it where possible due to the tightening wheat balance sheet.

“From a grower point of view, they’re fairly well sold, and stocks in SA are getting tight in the system and on farm.”

In the South Australian feed market, wheat delivered consumer is trading at $355-$360/t, steady on last week, but barley has eased a few dollars to $288-$290/t.

“With currency where it is, barley is nearing export parity, and its balance sheet is nowhere near as tight as wheat’s.”

Mr Scamps said concerns about COVID-19 and its impact on global grain demand also had growers keen to tidy up old-crop stocks, and looking at forward selling some tonnage at these high-decile prices.

Drought far from over

In New South Wales, grower selling has also picked up from negligible to modest levels on recent rain.

While patchy, the rain has enabled some producers to feel cautiously optimistic about the upcoming winter-crop season, and will allow them to start their ground preparation.

Falls in the NSW grainbelt in the week to 9am today include 23 millimetres at Ardlethan, 30mm at Mungindi, 42mm at Moree and 33mm at Tamworth.

Western Australia’s grainbelt has had widespread rain, with 80mm at Bencubbin, 104mm at Coorow West, 122mm at Gabbin, and 95mm at Mingenew being among the highest totals.

Registrations have been even patchier in Queensland, with Meandarra receiving 56mm, Roma 126mm, Springsure 39mm and Surat 145mm.

However, some districts keep missing the rain, and the NSW and Queensland drought is far from over.

The Central Queensland sorghum crop is now mostly planted, and forecast to yield 300,000t, above the standing ABARES estimate of 260,00t for all of Queensland.

China may take some of that crop which will hit the market in July, but the domestic stockfeed industry, and possibly the Dalby Bio-refinery, is expected to buy most of it.

Softer up-country

Robinson Grain wheat trader Jock Benham said the Melbourne wheat market had firmed, but inland values have largely stayed put.

“There’s a bit more grower grain coming to the up-country market, but wheat is pushing a bit higher in Melbourne.

“With the rate that wheat has been shipped out of Australia, it will probably remain where it is.”

Wheat is trading in the Griffith market this week at around $380/t delivered, $3-$5 above the Melbourne market, while barley is trading at roughly $304-$307/t delivered Melbourne.

“Drought feeding has slowed up, although it’s still worth putting grain into lamb with lamb prices the way they are.

Cottonseed hopes freshen

Heavy rain last weekend, particularly in the upper reaches of Queensland’s Maranoa River system, has sent a run of water through already full storages at St George.

The water will travel through the Dirrinbandi area into NSW watercourses which join the Darling River above Bourke.

The water situation generally has improved in the northern NSW cotton valleys, and looks set to secure late 2020 planting of cotton for picking in April 2021.

ASX mixed

The ASX wheat futures January 2021 contract settled $12/t cheaper this week, trading 260 lots last Friday.

Current-crop wheat contracts traded 1332 lots, settling in a narrow price range which ended the week within a dollar or two of last week.

January WM east coast wheat yesterday settled at $325.50/t, down from $337.20/t a week ago.

The March and May contract settlement prices yesterday were $361/t and $365/t. They settled a week ago at $361 and $365.90/t respectively.

Barley traded 360 lots during the week.

It would appear to have been mostly Mar/May spreading. No new-crop lots traded. The January barley contract settled yesterday at $277.50, 50 cents below a week ago.

March and May contracts were lower this week by $6/t and $5.50/t respectively.

Feed Wheat Comparison

Feed Barley Comparison

World Update

HIGHLIGHTS

Including upward adjustments for wheat, maize and barley, the estimate for world total grains (wheat and coarse grains) production in 2019/20 is 2m t higher m/m (month-on-month), at 2,172m. Mainly because of a reduction for wheat feeding, the forecast for consumption is trimmed, and with larger supplies but reduced use, the outlook for total grains stocks is boosted by 4m t, to 604m, a drop of 21m y/y (year-on-year). The figure for trade (Jul/Jun) is raised by 2m t, to 379m, mostly reflecting increased wheat shipments.

With the number for India lifted from the last GMR, the projection for world wheat harvested area in 2020/21 is almost 1m ha higher m/m, at 221m, an increase of 2% y/y. Largely reflecting the change for India, some 4m t is added to the outlook for global wheat production in 2020/21, to a new peak of 769m.

Stemming from upgrades for South American producers, world soyabean output in 2019/20 is forecast 3m t higher m/m, at 345m, albeit still 5% lower y/y on a heavily reduced US harvest. With consumption seen unchanged from before, stocks are lifted by 3m t, to 39m (-28% y/y); most of the increase is due to the major exporters as an upgrade for Brazil compensates for a reduction in the US owing to a slightly more optimistic export outlook. Trade is pegged 1m t higher m/m, at 153m (+1% y/y).

An improved outlook for India offsets reductions for other Asian producers, including Thailand, leaving global rice output in 2019/20 steady m/m, at 499m t, just short of the prior year’s peak. Global use is seen little-changed y/y, at 495m t. Together with a slight cut to carry-in stocks, the Council’s forecast for aggregate inventories is maintained at 177m t (173m). The trade figure is broadly steady m/m, at 44.2m t (42.5m), well below past peaks.

With declines for all the components other than rice, the IGC Grains and Oilseeds Index (GOI) weakened by 3% m/m.

OVERVIEW

Record harvests of wheat and barley more than compensated for a smaller maize crop to take world total grains (wheat and coarse grains) production in 2019/20 1% higher y/y, to 2,172m t, the second biggest in history. However, because of the lowest opening stocks in three seasons, total supply was only a fraction larger y/y, and as consumption continues to grow, a further drawdown of grains stocks is envisaged at the end of 2019/20, led by maize. Trade (Jul/Jun) is expected to expand by 4%, including larger shipments of wheat, maize and barley.

Preliminary supply and demand projections for wheat in 2020/21 point to an all-time high for production and a further build-up of stocks, but with inventory growth again concentrated in China and India. World maize harvested area in 2020/21 is tentatively seen growing by 1%, mainly on a rebound in the US, but global barley area could be down by 1% owing to potentially weaker returns.

Despite prospects for heavy crops in South America, world soyabean production is forecast to fall by 5% y/y in 2019/20 on a plunge in US output – down by almost 24m t. While consumption is predicted at a new peak, the y/y expansion of 2% is below trend and reflects expectations for marginal growth in China. Mostly on account of a sharp contraction in US inventories, global stocks are seen dropping by almost 30% y/y, to a below-average 39m. Trade may edge up in 2019/20 on bigger shipments to Asia in particular. Mainly on a rebound in the US, the 2020/21 global soyabean area for harvesting is projected to be up by 4% y/y.

Despite expectations for record output in India, where ample rains supported winter (rabi) plantings, global rice production in 2019/20 is seen edging lower y/y on reduced outturns elsewhere, notably in China and Thailand. Population gains are anticipated to push up consumption to a record, while carryovers may increase – including in the major exporters as larger stocks in India more than offset declines elsewhere. Trade in 2020 is seen recovering, to 44.2m t (42.5m), on bigger shipments to Africa. Global acreage is projected to expand by 1% y/y in 2020/21 on gains in Asia.

MARKET SUMMARY

The IGC GOI declined by a net 3% as worries about the spread of coronavirus combined with mostly non-threatening crop outlooks, pressured grain and oilseed export prices lower.

The IGC GOI wheat sub-Index fell by 4% m/m on the uncertain impact of the coronavirus on world demand for commodities. Also bearish were growing expectations for comfortable supplies in the season ahead.

Pressured by coronavirus fears and a broadly favourable production outlook in South America, the IGC GOI maize sub-Index was 5% lower m/m.

Monthly gains of 1% in the IGC GOI rice sub-Index were mostly tied to stronger prices in Vietnam, as availabilities tightened ahead of the main harvest.

Slow buying interest and prospects for large South American outturns contributed to a 3% drop in the IGC GOI soyabeans sub-Index.