Northern prices have tumbled this week as further rain has brightened the region’s production prospects, and demand from graziers has fallen away. Heaviest rain fell near to well east of the Newell Highway in central and northern New South Wales. While it will not spark a full-scale planting program on the plains, it has brightened the yield and area outlook for crops on the slopes.
Southern markets dropped a few dollars to reflect consolidating production prospects after more patchy rain this week, a level of coverage with which most consumers are comfortable, and a softening in export values.
North flips from import to export parity
Armidale-based Broun & Co director Charlie Coventry said rain this week’s wheat and barley price drops reflect the impact of rain on the northern feed market. “It has caused markets to retreat very quickly, and it’s creating this two-market environment where the larger Darling Downs market has dropped like a stone, and the ex-farm market is struggling to adjust to that reality,” Mr Coventry said.
“The northern market has gone away from trading at import parity into Brisbane for wheat, when it was considered that vessels had been booked to come around from South Australia.
“Now we’re actually getting back to export parity, and it’s transitioned from import to export parity in the space of four weeks.”
The evaporation of grazier demand is among the bearish factors at play in the northern market following two weeks of patchy rain, enough to kill the likelihood of one or more cargoes of wheat arriving in Brisbane from South or Western Australia. It reflects the extent of destocking programs, either through sale of livestock, or through agistment.
“This rain introduces more agistment opportunities and other ways to solve the balance of the drought problem.”
At Warialda, Stewart Grain trader Robert Quinn estimates growers are at least halfway through their winter-crop sowing programs. “A lot of people have dry-sown already; they took the punt on the last rain, and this forecast has given them plenty of notice,” Mr Quinn said.
Bids are now well below where most growers are prepared to sell. “The grower was a seller at $400 ex farm; offers are there, and if the grower won’t sell, the trade will.”
Mr Stewart said Downs feedlots appear to have extended coverage when grain was dearer and cattle were cheaper. “Now the cattle have gone up and the feed’s gone down.”
In this last week of autumn, temperatures are mild enough to allow some pasture and grazing-crop growth, but Mr Quinn said it has been the reduction in stock numbers that has shrunk grazier demand for grain. “Drought feeders have slowed down their buying.
“There’s been a massive destocking out of the New England.”
Woodside Commodities managing director Hamish Steele-Park said cottonseed values have fallen sharply after better-than-expected rain across central and northern NSW over the past 10 days.
Higher registrations for the week to 9am today include: Coonamble 39mm; Dubbo 86mm; Grenfell 22mm; Manildra 88mm; Moree 63mm; Mungindi 16mm; Narrabri 43mm; Pallamallawa 88mm; Parkes 48mm, Trangie 24mm; Walgett 20mm, and Warialda 45mm.
“Grazier and supplementary feed demand that was fuelling the market has backed off,” Mr Steele-Park said.
Prompt cottonseed ex northern NSW gin was quoted at $600/t in mid-May and now sits at $510-$515/t ex Gwydir Valley gin, $490-$500/t in the Macquarie Valley, and $500/t in the Riverina.
In Qld, rainfall registrations in the week to 9am today include: Dalby 26mm; Jondaryan 25mm; Macalister 31mm; Miles 27mm; Roma 36mm, and Surat 29mm.
In the 24 hours to 9am today, registrations included: Goondiwindi 59mm and Lundavra 56mm.
SA gets best of southern rain
Most growers in southern NSW, Victoria, and South Australia are on track for at least average yields as the strong and early start for winter crops consolidates.
Growers remain reluctant sellers of wheat stored on farm, but are selling into spikes in the export market, as well as outturning to domestic consumers. Barley continues to attract steady export demand, and limited stocks are supporting values.
Peters Commodities Wagga Wagga-based trader Peter Gerhardy said many farms in southern NSW had only single-digit rainfall in the past week. “They’ve still got this feeling things could get dry in the back of the year,” Mr Gerhardy said of the southern NSW grower.
Mr Gerhardy estimates around 95 percent of the region’s crops have been planted. “A lot of urea is going out, and there is stock on grazing crops.”
In Victoria, higher registrations include: Jeparit 14mm; Rupanyup 17mm; Swan Hill 18mm, and Walpeup 19mm.
SA received generally heavier and more widespread rain, and registrations for the week include: Alawoona 55mm; Brinkworth 50mm; Cummins 19mm; Elliston 26mm; Maitland 43mm, and Pinnaroo 21mm.