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. With calving and the milking season set to begin, demand is expected to grow throughout spring. Dairy farmers in general seemed to have adopted a cautious approach, looking to buy in the spot market as needed rather than forward contract the whole of the season’s requirements. The weather and amount of spring growth will be the major factor on demand. There are some opportunities into feed mills but are very price dependent.

Milling contracts are beginning to be returned signed, with no word on what the uptake is.

Feed wheat contracts for the 2020 Harvest remain around the $400/t delivered mark. Currently there are no major Feed Barley contracts for 2020 harvest.

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 Seed 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 Seed. You can also drop in your sample at any Ruralco Store, contact your Ruralco 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

Feedgrain Focus: Trade tightens as eastern crop prospects split

Concerns about diminishing yield prospects for crops in south-central New South Wales and North-West Victoria, coupled with The Philippines’ volume buy of Western Australian wheat, have lifted prices for new-crop grain this week.

New-crop wheat and barley prices delivered Darling Downs are continuing to price off the December-January replacement price for shipped WA grain, and this has put the January-delivered Darling Downs market at $395 per tonne for wheat and $365/t for barley. This is up $5-$10/t on values quoted last week, and the rise has flowed through to new-crop sorghum for March delivery onwards on the Downs, which has traded today at $322/t, up from $315/t quotes last week.

Nearby price steady

Traders said nearby current-crop prices earlier in the week had drifted in the Brisbane free on truck (fot) market on the basis that most end-users had taken adequate cover for the time being. While barley has remained at a premium to wheat, both were quoted either side of $385/t fot Brisbane.

Stewarts Grain Inverell-based trader Robert Quinn said the up-country market was focusing on hay and cottonseed as paddock feed for sheep and cattle in the continuing dry conditions, and local wheat and barley. He said new-crop sales of grain were limited as farmers were uncertain about production prospects, and yields were looking to be so low they were concerned about holding enough for seed for their 2020 planting.

“We have seen zero grower selling on new-crop, and the prompt market for wheat is around $410/t ex-farm Moree and $420/t for barley."

“That Brisbane fot grain is cheaper, and that’s what most consumers are buying, but for those not putting in additives into what they’re feeding, local grain is more attractive."

“Local barley has a protein content of 13-14 per cent, whereas the WA barley coming off the boat might be more like 9pc, so the local grain is better if grain’s what you’re feeding."

The crop of Planet barley growing in the Birchip district of Victoria has above-average yield potential.

“In the new-crop market, the consumer is active, and it’s all being priced out of WA. New-crop is up because the market is fearful of dry weather in Southern NSW.”

Trade sources said they believed major feedlots were covered to October or November. Temora trader Bill Preston said crops Temora on the outer southwest slopes and plains needed a drink to preserve yield potential.

“We definitely need some good rain because getting 5-6 millimetres here and there like we’ve been getting won’t carry the crop through August if it’s dry and windy. We’re on a seesaw at the moment,” he said.

Mr Preston said current-crop grain prices appeared to have weakened marginally in the past week, but volume traded had been minimal. “A lot of farmers wait till after June to sell, and we’ve seen some of that."

“Also, demand has gone off because stock numbers are down, and because a lot of sheep are on crops all up into the hill country."

“Maybe when they comes out of those paddocks, we might see the demand for grain pick up."

“We’re a couple of weeks short of where the market peaked last year, and it was $100/t above where it is now.” In the prompt market on the south-west slopes, barley on-farm is available at $350-$360/t, while delivered wheat is $370-$380/t."

Short on fibre

Lack of fibre availability has become a driver of decisions, and traders said the supply of palm-kernel meal, a major imported source of fibre to cattle feeders, was tight through August and September.

Traders also said the chronic shortage of fibre for animal feeders was looming in growers’ minds, and any cereal crops with lacklustre yield potential profitably could be cut for hay, even in Central Queensland.

Cottonseed offer prices were reported $10/t firmer than last week, based on lack of offers and on demand associated with the continuation of dry weather. The Southern Queensland and northern NSW gin sites would be expected to complete ginning this year by mid-August.

A shortage of water for irrigation means NSW operators continue to face the looming threat of a 2019 cotton crop of barely 1 million bales, and this is likely to prompt sellers to lift their offers.

ASX firmer

Wheat and barley Australian new crop futures logged significant gains. ASX eastern wheat (WM) January 2020 futures traded $8/t firmer over the week. The contract settled on Wednesday 24 July at the week high $331/t. Volume traded during the week was 545 lots and open interest on Wednesday, at 10047 lots, was below the week’s high of 10362 lots on Friday 19 July.

ASX feed barley (UB) January 2020 traded almost $15/t firmer this week. The contract settled on Wednesday 24 July at the week high $290/t. It traded 345 lots this week and open interest on Wednesday had risen to 835 lots.

Feed Wheat Comparison

Feed Barley Comparison

World Update

The outlook for world total grains (wheat and coarse grains) production in 2019/20 is lowered by 8m t m/m (month-on-month), to 2,148m, with downgrades for wheat (including for the EU, Russia and Canada), maize (China) and sorghum (USA). Adjustments to consumption (mostly for wheat, maize and sorghum) take nearly 3m t off projected demand, but use is still projected to climb by 1% y/y (year-on-year) to a fresh peak of 2,184m t. The world stocks forecast (aggregate of respective local marketing years) is down by 3m t m/m, as a reduction for wheat is partly offset by an increase for maize. At 370m t (+1% y/y), the trade projection is little changed m/m; a decreased figure for wheat shipments is broadly balanced by an upgrade for maize.

With a slower pace of deliveries to China, the Council’s forecast for global soyabean trade in 2018/19 is cut slightly, to 150m t, a 2% y/y fall. Reflecting an adjustment for the US, the projection of world output in 2019/20 is marginally lower m/m, at 348m t (-4% y/y). And with consumption placed higher than before, stocks are trimmed to 44.0m t (-20% y/y), including major exporters’ inventories at 26.7m (-26%). Global import demand is tentatively predicted to edge up to 151m t.

The global rice supply and demand situation in 2018/19 is little-changed m/m, with production, use and stocks seen at new peaks. A slightly reduced outlook for India’s main (kharif) crop is mostly offset by adjustments elsewhere, leaving the projection of 2019/20 world production broadly steady m/m, at 503m t, up by 4m y/y. With consumption trimmed fractionally, global carryovers are maintained at a high of 162m t (157m), including 99m in China.

Despite some uncertainties about the outlook for global markets, the IGC Grains and Oilseeds Index (GOI) weakened by 2% since the last GMR, pressured by seasonally rising supplies.

Overview

After this month’s downgrade, world total grains (wheat and coarse grains) production in 2019/20 is expected to be only modestly bigger y/y at 2,148m t. Nevertheless, the global wheat outturn is seen at a record, while maize is placed at the second largest ever and barley at the highest in a decade. Because of smaller stocks at the start of the season, overall grains supplies are predicted to be a four-year low. Consumption is seen reaching a new high of 2,184m t (+1% y/y), including gains for food, feed and industrial uses. A third successive contraction of global stocks is forecast at the end of 2019/20, with the rate of drawdown accelerating to 36m t. This entirely reflects tightening maize inventories (-50m t y/y), while carryovers of other grains are forecast to expand, including of wheat (+9m) and barley (+3m). The anticipated drop in maize stocks is centred on China (-26m t y/y), for which supply and demand assumptions are highly tentative. Of more note to the global market, the US maize carryover is projected to shrink by 18m t y/y, to a six-year low. World grains trade is projected to climb by 1% y/y; shipments of wheat, barley, sorghum and oats are expected to rise, but the first fall in maize trade in 11 years is foreseen, led by reduced buying by the EU.

With heavier crops in Argentina and the US in particular, world soyabean production reached a record of 363m t in 2018/19, a y/y gain of 22m. Despite reduced use in China, increases elsewhere should propel consumption to a new high, while stocks are seen rising sharply, to a peak of 55m t, as depressed export demand results in sizeable accumulation in the US. Global trade is anticipated to fall to 150m t (-2%) as a drop in dispatches to China outweighs bigger purchases by others. Mostly on expectations for a smaller US harvest, world output is tentatively seen down by 4% y/y in 2019/20, at 348m t. With uptake likely to increase further, albeit at a below-trend rate, carryovers could fall markedly, to 44m t (-20%), mainly on a contraction in the major exporters. Trade is predicted to increase marginally y/y, to 151m t.

Tied to gains in Asia, the 2018/19 global rice outturn is estimated at a peak of 499m t, a 4m y/y increase, with consumption advancing amid plentiful supplies and population growth. However, trade is expected to fall in 2019 as buyers in Asia secure less, with China’s arrivals potentially contracting by 20% y/y, to a six-year low. Output is provisionally placed at a high of 503m t in 2019/20 on expanded acreage in Asia, with the increase in supplies channelled to record use and stocks. Traded volumes may recover in 2020 on growth in shipments to Africa.

Market Summary

After three successive monthly gains, the IGC GOI dipped by 2% in July, pressured by a seasonal increase in supplies and strong competition for exports.

Weighed by seasonal harvest pressure and overall lacklustre demand, the IGC GOI wheat sub-Index dropped by 5% since the last GMR.

Amid slack overseas buying interest and ample South American spot availabilities, the IGC GOI maize sub-Index fell by 4% m/m.

The IGC GOI rice sub-Index rose by 1% since late-June, with markets in Vietnam and the US lightly buoyed by recent export business.

The IGC GOI soyabean sub-Index edged lower on bearish supply and demand fundamentals, led by weakness at South American origins.