GRAIN REPORT

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

Local Market Update

There has been little change in the grain market over the past month. Being well into the milking season demand was expected to increase throughout the month, however, this has not occurred, therefore leaving predicted prices flat.

Dairy farmers have maintained a cautious position, looking to buy in the spot market as needed rather than forward contract the whole of the season’s requirements.  There are some opportunities into feed mills but these are very price dependent. All the early submitted milling contracts seem to have been taken up, with some placed later still under consideration.

Feed wheat contracts for the 2020 harvest are on a case by case basis, with prices offered possibly easing from early season offerings. It looks as though there has been barley contracted at around the $370-$380/t depending on delivery point. There seems to be a good area of spring cropping options on offer from firms with pricing similar to last season.

It is also a good time of year to check storage facilities for pest infestations, with already a few bug problems being detected, the heat at harvest leading to warmer grain than usual contributing to this.

Ruralco is always looking for all types of grain to supply a wide range of end users. If you have free 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 Arable & Pastoral Representative or the Ruralco Customer Service Centre on 0800 RURALNZ (787 256) to arrange sample bags or pick up.


 

Canterbury Growers Pricing Per Tonne

Australian Update

Feedgrain Focus: Values retreat from highs in heated north

Prompt northern feedgrain values have retreated from their highs of mid-September as the market transitions to new-crop supplies, while in southern markets, prices have dropped a few dollars in response to timely rain in some areas. Many crops in southern districts including the Lower and Central Eyre Peninsula, Yorke Peninsula, Mid and Lower North and south-east of South Australia received falls of 20-40 millimetres in the past week, while crops in the Victorian Wimmera mostly got around 10mm.

The Mallee and New South Wales largely missed the rain and are losing yield potential as hay-cutting continues on crops with poor grain prospects.

Frost is thought to have clipped yield from some crops in NSW, Victoria and South Australia, and hay values continue their downward trajectory as supply increases.

Cereal hay in southern NSW is available at $260 per tonne on-farm, down around $100-$150/t on on-farm values for hay in northern NSW early this month, while Mallee hay is being offered at $210/t on-farm.

North covers shorts

The prompt delivered market for wheat on the Downs region of southern Queensland is trading at around $430/t, with Central Queensland (CQ) grain straight off the header, and boat wheat from Western Australia ex the Brisbane free-on-truck (FOT) market supplying the volume.

This price is down a few dollars from Friday, when scrambling for nearby deliveries lifted rates to a high of recent months.

“The exporter has no chance at the moment to compete with the prices being paid into feedlots on the Downs,” Delta Agribusiness Armidale-based broker Tom Vanzella said.

The CQ wheat harvest is taking place in a wide window this year to reflect the crop’s varied time of sowing, and many loads to date have had a higher-than-normal incidence of green grain.

Mr Vanzella has estimated the CQ wheat harvest to be nudging the halfway mark, and said green grain was not slowing the heady pace of off-the-header sales.

“Most wheat is going into the feed, so it’s not an issue, and I’d say 90% of the wheat harvested from south of Emerald has sold on to the Downs already.”

The Brisbane FOT wheat market is sitting at $410-$425/t for delivery up to December, and was supported last week by the realisation that Western Australia’s new-crop wheat and barley yield prospects had slipped in Western Australia.

Sorghum climbs

The spread between sorghum and wheat has just about halved from the benchmark $60/t, with current-crop CQ sorghum trading at around $335/t, which equates to roughly $400/t for prompt delivery on to the Downs.

“It doesn’t look like we’re going to get a spring plant of sorghum, so that means new-crop is a long way away.”

Moisture profiles remain desperately low in southern Queensland and northern NSW, and growers are unlikely to plant an early sorghum crop on anything less than 80mm of rain in coming weeks.

Given the current forecast for rain in summer-cropping areas, this looks highly unlikely.

NSW harvest nigh

Stewarts Grain Trading trader Robert Quinn, Inverell, said the northern NSW cereal harvest was expected to get going in the next 10 days or so, and the market was preparing to receive a very small amount of new-crop tonnage.

“A lot of growers are waiting to see what they’ve got in terms of yield and quality, and most won’t sell without an F2 option on barley,” Mr Quinn said.

Wheat, barley and canola crops are few and far between in northern NSW, as many with limited grain-yield prospects have already been cut for hay.

Last week, new-crop barley grown east of Moree was selling at around $420-$430/t on-farm.

“We saw a big spike last week, but it’s softened. It feels like the trade covered a lot of shorts last week.”

In nearby slots, an inverse of around $40/t lives on between the current-crop and new-crop markets, with the January Brisbane FOT price based on WA wheat sitting at around $380/t.

“A lot of sellers were trying to sell at those old-crop prices last week, and the buyers were trying to buy at new-crop ones.”

South softens

Griffith-based Grain Link trader Richard Gale said execution costs for landing Victorian, South Australian and Western Australian grain were being examined now that the inverse between current-crop and new-crop has disappeared, and local supply appeared to be shrinking.

“There are a lot of crops being cut for hay around here.”

South of the River Murray, struggling crops are being cut for silage as well as hay to supply Victorian dairies, while crops with good yield prospects in southern NSW, and northern and western Victoria look sure to be harvested for grain if the weather stays mild.

“The trade and the community are watching with interest to see how this crop finishes.  It looks like consumers from Dubbo and Narromine south will be fed by rail again this year, and the coastal and northern markets will be using boat grain.”

In the Riverina market, prices have eased by $5/t in the past week in response to recent yield-preserving rain, and wheat delivered into nearby and new-crop positions is trading at $370-$380/t.

Cottonseed stretched

Cottonseed nominal price advanced another $20-25/t this week as the ongoing dry conditions stretch supply, concerns also being raised about carryover stock to augment likely shortfall of new crop production.

“Cottonseed trade is in a low liquidity environment at the moment,” Woodside Commodities manager Hamish Steele-Park said.

Offer prices were quoted ex Gwydir Valley site spot delivery $670/t and ex MIA $645/t.

ASX lower in zig and zag

Both barley and wheat ASX futures fell $12/t through the week.

Weather markets in the critical month of September have seen ASX futures trade in approximately a 5-6pc band while industry balances the prospect of enough rain to finish southern crop, the damage caused by drought and frost already evident while maintaining a rational premium over export parity.

ASX feed barley (UB) January 2020 contract settled Wednesday at $305/t, the low settlement price of the week and almost $14/t below a week earlier. 348 lots traded and open interest rose to 1932 lots.

The eastern wheat (WM) January 2020 contract settled yesterday at $355/t, in a market which traded modest volume but at lower prices each day. A week earlier it was $367.50/t. The weekly volume traded was 2085 lots compared with 2118 lots previous week. Open interest on Wednesday fell to 13,161 lots.


 

Feed Wheat Comparison


Feed Barley Comparison

 

 

World Update

At 2,159m t, the forecast for world total grains (wheat and coarse grains) production in 2019/20 is unchanged m/m, as a 3m increase in the figure for barley (mainly for Russia and Syria) is offset by cuts for maize, sorghum, wheat and oats. Because of unfavourable weather, the outlook for grains output in Australia is lowered by 3m t m/m, mostly on downgrades for wheat and sorghum.

 Following an upward revision of 2m t for wheat, the EU total grains crop is placed at a four-year high. With the forecast for consumption unchanged m/m, the 3m t increase in the projection for world carryover stocks (aggregate of respective local marketing years) to 601m, reflects larger than previously estimated opening inventories, especially in the USA (mainly maize) and Canada (wheat). The 2019/20 (Jul/Jun) trade number is the same m/m, at 370m t, up by 1% y/y (year-on-year).

 Figures for soyabean supply and demand in 2018/19 are broadly unchanged m/m, with heavy accumulation in the US set to result in record carryovers, rising by 10m t y/y, to 54m. As marginal downgrades for the US and Argentina are only partly offset by increases elsewhere, the projection for global output in 2019/20 is trimmed by 2m t, to 342m, down by 6% y/y. With consumption lifted slightly m/m, carryovers are lowered by 3m t, to 38m, the y/y contraction of nearly one-third stemming from a plunge in US inventories. At 150m t, world trade is predicted to expand by 1m y/y.

 Global rice fundamentals in 2018/19 are little changed from August, with production, consumption and stocks seen at all-time peaks. Due to a marginal m/m reduction, world output in 2019/20 is predicted steady y/y, at a high of 500m t. Population growth will again be the key driver of demand as consumption advances further and, with supplies expected to be boosted by heavy carry-ins, aggregate end-season inventories are likely to rise by 2% y/y, to 178m t. Traded volumes could recover in 2020 on firmer demand from buyers in Africa.

The IGC Grains and Oilseeds Index (GOI) climbed by 1% since the last GMR, as increased export quotations for wheat and maize were only partly offset by decreases for soyabeans and rice.

 OVERVIEW

At 2,159m t, world total grains (wheat and coarse grains) production in 2019/20 is forecast to increase by 1% y/y and is set to be the second largest in history. The wheat harvest is expected to be a new peak (+30m t y/y) and the barley outturn is predicted to be an 11-year high (+14m), but the maize crop is forecast to shrink (-31m). The rise in output is entirely offset by tighter opening inventories, keeping global total supply unchanged y/y. All-grains consumption is seen gaining 1% y/y, to 2,186m t, led by growth for wheat and barley feeding. Ample and competitively priced availabilities of these grains are seen capping demand for alternatives, including maize. A third consecutive contraction of world stocks is envisaged, to 601m t, (down 26m y/y), with another drawdown for the maize carryover (to a six-season low) outweighing build-ups of wheat (to a record) and barley (10-year high). World trade (Jul/Jun) is seen rising by 1% y/y, to 370m t, mainly on bigger shipments of wheat and barley.

 In a season of record production, world soyabean carryovers in 2018/19 are seen at a high of 54m t (44m), including a more than doubling of US stocks. Stemming from a plunge in US output, global production in 2019/20 is predicted to contract by 6% y/y, to 342m t. Nevertheless, since fieldwork has only just commenced in South America, with acreage prospects in Argentina especially uncertain, prospects are highly tentative. With modest gains in Asia and key exporters pushing up consumption to a new peak, inventories are anticipated to tighten significantly, with US carryovers potentially dropping by almost 40% y/y. Global import demand is predicted to expand at a below-par rate of 1% y/y.

 World rice trade in 2019 is forecast to decline by 4% y/y as a steep fall in deliveries to Far East Asia – including to the key markets of Indonesia and China – is only partly offset by bigger shipments to Africa. Building on the prior season’s gains, projections point to record production, total use and stocks in 2019/20. With accumulation in China and the major exporters likely, aggregate inventories are predicted to rise by 4m t y/y, to a peak of 178m. Global import demand could recover in 2020 on an uptick in deliveries to sub-Saharan Africa. With China again expected to provide export competition in African markets, shipments by India and Thailand are likely to fall short of past highs.

 MARKET SUMMARY

Driven by gains in wheat and maize, the IGC GOI consolidated slightly after the heavy losses in the prior two months, rising by 1% m/m.

The IGC GOI wheat sub-Index posted a net-6% gain. Early declines, linked to heavy global supplies were later reversed on a flurry of new export tenders and deepening worries about North American crop prospects.

 After dropping to a more than 10-year low early in the month, the IGC GOI maize sub-Index subsequently strengthened, rising by a net 2% m/m, responding to strength in other markets and background risks to the US production outlook.

 The IGC GOI rice sub-Index dipped by 2% m/m, with prices generally pressured by soft buying interest ahead of the main harvesting period in a number of key exporters.

 With declines in South American export quotations outweighing a modest rise in the US, the IGC GOI soyabean sub-Index posted a 1% net loss.


 



Meet Our Experts

 

Craig Rodgers

GROUP MANAGER ON FARM SALES

@: Craig.Rodgers@ruralco.co.nz
Ph: 027 495 2029

John Scott

John Scott

GRAIN & SEED CO-ORDINATOR

@: John.Scott@ruralco.co.nz
Ph: 027 227 7048

Jack Dudley

Jack Dudley

GRAIN & SEED CO-ORDINATOR

@: Jack.dudley@ruralco.co.nz
Ph: 027 238 9014

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