Feed grains in focus: Prices fall due to offshore activities

Feed grain prices have fallen by as much as $25 a tonne in the past week as world markets collapse under the weight of the new Northern Hemisphere crop.

Combined with ongoing concerns about the general lack of rainfall across much of South Australia, Victoria and far southern New South Wales, low prices have dampened growers' interest in selling farm-gate, stock and new crop grain.

In the north, the season promises limitless potential and, according to trade sources, some consumers are beginning to look for deliveries in September or October to hedge their bets before the new crop hits the market in bulk.

Table 1: Indicative prices in Australian dollars per tonne.

Buying interest increases in the north

Northern market early barley saw the smallest price decline of any winter grain quoted this week, with tight stocks and some spot demand from the beef and dairy industries supporting the market.

“Barley stocks are really tight and some of the smaller farms are living from hand to mouth; they also buy dairy products,” said a trader.

Feed mills and larger fattening farms are also already waiting for deliveries in September, as the gentle end of the growing season in Central Queensland and Maranoa means less grain from the new harvest is coming onto the market.

“There are some spot buyers out there.”

There has been only sporadic rain in Queensland over the past week, which is no cause for concern. There has been little rain in northern New South Wales, with Quirindi recording the highest total on record at 11mm.

In central and southern NSW, 10–20 mm were recorded at the following locations: Temora 18 mm, Trangie 12 mm, Dubbo and West Wyalong 15 mm and Young 19 mm.

Weaker market stimulates demand in the south

Managing Director of Clear Grain Exchange Trent Raucher He said demand was expected in a weaker market, with ASW1 wheat trading at $310/tonne (Melbourne port equivalent) this week (down from $327/tonne the previous week) and BAR1 at $300/tonne (down $15/tonne).

“Published bid prices and trade values ​​generally continued to decline this week, although buyer interest in purchasing grain remains strong,” Smoker said.

“In general, trading volumes are modest as sellers hold on to their price expectations while buyers actively seek to purchase grains.

According to Smoker, 40 buyers actively bid on CGX this week for stored grain and farm gate grain, and in some cases sellers' bids met asking prices.

“For example, BAR1 barley traded yesterday at USD 320/t (Adelaide port equivalent), USD 20 above the best published bid.”

Managing Director of Watsons Bulk Logistics Joel Watson said conditions in the northern Mallee were still relatively dry and isolated small amounts of rain were supporting yield potential for now.

Showers are forecast for Vic in the coming days, but Mr Watson says the crop remains at risk due to its late establishment.

“In the Wimmera, the harvests down there are about four weeks behind and they need a good finish,” Watson said.

With grain markets falling, mixed farming farmers are considering their options for selling potentially low-yielding grains into low-price markets at a time when the lamb market is comparatively stronger.

Mr Watson said the lack of biomass in many crops could be the reason they hold out until harvest.

“In many areas, the plant density is not high enough to convert into hay.”

Seasonal concerns and falling prices for the nearby and new crops have made it difficult to find offers from producers.

“The producers have gone into hiding.”

“They don’t like the prices and there’s a pretty big question mark hanging over the new harvest.”

Mr Watson said that while average rainfall in the final months of the growing season could provide Victorian farmers with an average crop, dry conditions limited yield potential.

In SA, Pinion Advisory Commodity Risk Manager Chris Heinjus said much of the state's crops were in just as precarious a situation as Vic's.

“We are on a knife edge,” said Mr Heinjus.

“We've had a little bit of rain… and that's given us another week, but we're three or four weeks behind where we should be.

“Our production risk is still quite real and there are some areas that are unlikely to make it.”

While some plants are spreading quite well in South Africa, Mr Heinjus said the overall harvest will be nothing special.

“There will be a harvest, but I very much doubt it will be even average.”

Some growers in southeast Australia were expecting plenty of rain last week, but those who missed the rains are keeping their fingers crossed for what was forecast.

In Vic, higher recordings for the week ending 9am today were: Dimboola 17mm; Goroke 43mm; Murrayville 8mm; Nhill 14mm; Rupanyup and St Arnaud 27mm and Woomelang 9mm.

In SA, some gauges failed to produce any drops last week, but others recorded manageable falls including: Clare 31mm; Cummins 15mm; Coulta 20mm; Keith 25mm; Maitland 27mm; Roseworthy Ag 16mm and Snowtown North 22mm.