Growers are selling down their current-crop stocks as hopes for a price rally in the near term evaporate, and yield prospects consolidate in most parts of the nation’s grainbelt.
Harvest has started in pockets of Queensland as export interest in current-crop H2 wheat picks up and growers meet the market.
Recent rain, and more on the forecast, has improved yield prospects for southern regions, but flatter parts of the southern half of New South Wales need rain to stave off a widespread cutting of crops for hay.
On new-crop, northern growers are advancing sales, but Victorian and South Australian growers are unlikely to book volume unless they see some good rain this month.
Northern harvest starts
The winter-crop harvest has started in Queensland with chickpeas in the state’s north-west. The earliest wheat crops, according to Digital Agriculture Services, are being harvested in Central Qld’s Gindie district. Trade sources say wheat is also coming off in the Taroom district, between the western Downs and CQ.
Consumers are continuing to book loads of wheat and barley to tide them over to new crop as offerings from growers reduce as they get ready to plant sorghum and harvest winter crops. “Anyone with bunkers will carry wheat, and all the desperate sellers are gone now,” one trader said. “There are no homes now until harvest, although there are a few trade shorts.
“We’ve hit a bit of a sidewards movement this week.”
Growers in southern Qld and northern NSW are forward selling wheat on multigrade contracts, and barley too, ahead of harvest.
Chickpeas appear to be the No. 1 cash sell for the northern grower, followed by canola for those that have it, and barley. “We’re seeing a lot of barley inquiry; the grower seems to be more interested in selling barley rather than wheat off the header.”
The new-crop sorghum market is shaping up at lower levels, and traders have reported some bulk export business to China being done for March shipment onwards.
In a global wheat market reflecting big Northern Hemisphere crops, Australian H2 wheat has found some bulk demand at around $15/t over ASW.
On the rainfall front, hardly any rain fell in graingrowing areas of Qld and northern NSW, and it is now too late for most crops that could have done with a drink to capitalise on possible September rain.
South-west NSW in strife
Wheat cargoes are still being loaded at Newcastle and Port Kembla, with H2 delivered southern ports trading at around $350-$355/t, around $12/t above ASW. “Any dramas in Northern Hemisphere production didn’t eventuate, and the Northern Hemisphere crop is a big one; there’s ample European wheat, and a record US corn crop,” Delta Grain Marketing general manager Mick Parry said.
“September is usually the turning point of harvest pressure, and we normally get a bit of a respite before the Southern Hemisphere harvest starts ramping up in late November. “I’m not seeing a lot of export demand for Australian wheat for old or new crop and…barley is softening.”
“People are forward selling canola…but southern growers haven’t had the ability to forward sell because they’ve been so worried about production risk.
“If this big rain comes next week, that will probably bring out some selling.”
Wilken Grain trader Andrew Kelso said recent rain in Vic and southern and central NSW has been “okay in some areas and disappointing in others”.
As reports filter through about some moisture-stressed crops in south-western NSW being cut for hay, growers will be weighing up the economics of hay versus grain returns. “Hay prices are falling, but not as fast as barley,” Mr Kelso said. The trade generally sees carry-out of barley as limited, and Mr Kelso said growers had little interest in forward selling barley because of the low prices, and because of yield uncertainty.
“I’m not sure growers are going to rush to sell at $300 track, or $270 up-country depot; that’s as low as it’s been for a while.”
He said canola, chickpeas, and lentils looked like being this harvest’s cash crops. “The big thing to monitor for western NSW is how much will be cut for hay.
“The livestock sector’s not going to run out of fibre, and hay exporters haven’t done anything for six months.”
Key Agri Forbes-based director Warren Lander said growers west of a line roughly from Tottenham to Narrandera will be looking at cutting for hay if next week is a dry one and yield potential is so low that harvest is hard justify. “If they don’t get rain this weekend, I’d be very surprised if they make 1t/ha,” Mr Lander said.
However, rain in the coming week or two should lift yield potential to around 2t/ha. For moisture-stressed canola, yields could be as low as 0.5-1t/ha. “The state is cut into two; from Parkes up, it’s not a problem.”
Subsoil moisture reserves are limited for crops in Vic’s Mallee and Wimmera regions, and into SA’s Murray-Mallee and Mid North and surrounds.
South-west NSW crops are in the same boat, but can expect an earlier arrival of warmer temperatures, and therefore have a more urgent need for rain. However, some pockets from north-east of Condobolin to the Murray River have jagged rain over winter and are looking at producing decent grain crops. “Conditions are so variable from location to location.”
The Bureau of Meteorology has forecast above-average rainfall for eastern states into November. That boosts the likelihood of growers in harvesting weather-damaged wheat, and the discount for SFW on multigrade contracts could be $60/t. “Pricing isn’t making the grower forward sell.”
Based on an APW price of $300/t delivered depot in the Forbes district, plus docking for downgrading, and $20/t road freight, Mr Lander said growers could be looking at $220/t for their wheat.
“I will not let a client sell at that.”
On the rain front, many cropping districts in SA have had 5-20mm, and more in places in the past week, with Coulta on 34mm and Melrose on 28mm among the higher registrations. Less locations in Vic’s Mallee and Wimmera got rain, but some had handy falls, with higher registrations including Dimboola on 17mm and Horsham on 17mm.