We are all now looking towards the next rain event as a turn much warmer and windier this week will rapidly eat in to the benefits of the good showers last week. While last week’s rains at least ensured growers will be harvesting something this season, a few more weeks of the weather we are expecting this week will be the difference between a decent crop and an ordinary crop for many growers. Prices have remained relatively steady over the last week after weakening leading in to the rain event. Much of the loss in value was a result of a weakening basis with buyers now looking at a much more secure outlook for sourcing grain this season out of Southern grower areas. A stronger Aussie dollar has also played a role in falling values. While growers in the South are now expected to be getting decent crops off this year, the outlook for northern growing areas is still by no means certain, with substantial crop loss already locked in for many. The question is to what degree prices are supported, and possibly improve, arising from shortages in to domestic feed markets. Newcastle and Brisbane lines already attract a premium of $15-$20 over Port Kembla line prices.
With harvest now a matter of weeks away, we are still offering ha contracts for early canola crops that come off, with a premium for movement in the first half of October. Faba Beans, another early crop, are also holding steady with values delivered in to Goondiwindi or Narrabri still at $400. Also the rains last week will see summer crop planting begin of sorghum and cotton for many growers. New crop sorghum prices, while they have softened over the last few weeks still represent a good selling opportunity over where sorghum prices have been in the past. Please call the office with enquiries.
AgVantage Commodities pre-harvest meetings continue this week, with meetings in Wee Waa on Wednesday at the Wee Waa Motel at 8am, the Coonamble RSL on Thursday at 8am and at the Moree Golf Club at 9am of Friday. The meetings will go over the outlook for the coming harvest, along with an overview of on farm storage solutions, to help you maximise the return from your grain. Please call the office if you are interested in coming along.
Was great to see some water falling out of the sky yesterday, we had begun to forget what it looked like. The Namoi and Liverpool Plains areas generally received around 20-25 ml. Even the Western guys managed to get some this time, with Walgett recorded as receiving over an inch. It starts to thin out further North, with Moree receiving around an inch but Goondiwindi only getting 5-10 ml. The central west and South of NSW were the big winners, with the Macquarie looking at upwards of 2 inches, and Dubbo recording over 70 ml, however there have been some reports of hail. The southern half of the state are now looking at securing a large crop with around 2 inches of rainfall, with the timing meaning yield losses from the run of dryness will not have been extensive. While the rain is welcome for all growers, it has come too late in the north and especially out west with reduced production and quality issues already locked in. The biggest benefit may be securing moisture for planting of summer crops, however again growers in the west are still facing of moisture deficit that will require 3-4 inches before a summer crop becomes an option.
The widespread rains has resulted in a further weakening of Australian basis which has had a sharp fall over the past week. ASX Jan 14 Wheat values dropped $7 yesterday to $264/mt. US futures markets have taken a negative feel to them also following what was largely perceived as a bearish USDA report for grains, however wheat and corn futures managed to remain stable overnight. Rainfall in soybean growing areas in the states has also seen canola numbers soften after the USDA report spurred a short term rally in prices. Buyers are turning their focus to securing new crop out of Port Kembla which is running at a discount to the Newcastle line, with purchases taking place in the mid $270s for new crop multigrades. Production concerns for crop coming out of the NNSW and QLD should see northern feed markets support values to a degree.
AgVantage are hosting a series of pre-harvest meetings this week, giving an update on the prospects for the coming harvest along with discussing options available for on-farm storage solutions. We will be at Spring Ridge on Thursday morning and Bellata in the afternoon, before heading to Narromine Friday morning and Coonamble in the afternoon. Please give the office a call for more details.
Market Report 12/9/2013
ABARES released their September Crop Report this week, and as was expected Australian production estimates have been cut. The national wheat harvest has been pegged down 2% to 24.5mmt, down from 25.4mmt in June. This figure is still 2.4mmt higher than production for last year, and in line with the five year average. The severe dryness experienced in NSW and Qld has seen cuts to production outlooks, with NSW dropping from 7.6mmt to 7.2mmt, with the persistent dryness in the North of the state and pushing in to the Central West being the driver or yield loss, while Qld has been reduced from 1.8mmt to 1.7mmt. On the other hand ideal conditions in South Australia has seen their forecast improve by 1.1mmt over the June estimate to hold at 5.2mmt, a figure which if realised would be the second largest crop grown in the state. Exports have been trimmed by 100kmt to 19.5mmt, which is still an historically large number and partially stems from strong demand from China, whose own crop suffered harvest time rains. The USDA will release their monthly WASDE report tonight, with futures markets holding steady across the board in anticipation. The big ones to watch will be revisions to corn and soybeans, with the market expecting cuts in yields for the commodities. Whether these numbers come in line with market sentiments will be a large determinant of the direction prices are likely to take over the next few weeks.
ABARES made the obvious statement that production forecasts hinge on sufficient and timely rainfall for practically all growing areas in the country, especially for us here in the North. Hopes are forecasts for widespread rains for the start of next week will come through with enough moisture to push crops through to harvest. Basis for new crop prices has weakened in the last week, in some part due to the expected rain, however it would need to be a significant amount to have much of an impact for many growers.
A reminder that AgVantage will be running a series of pre-harvest meetings starting this Friday at Garah and Croppa Creek and going on in to next week. The meetings will include discussions on Grain Analysing equipment we are providing through Next Instruments, Kwik-Kleen Grain Cleaners and Superior Silos storage systems, along with a run through on market outlooks for the coming season. The first meetings on Friday will be at Garah Pub at 8am with bacon and eggs followed by Croppa Creek store at 5pm with beer and pizza.
Market Comment – 10/9/2013
US grain markets lost gains made over the weekend, with soybeans in particular having another disappointing session. Australian canola prices have been on a steady decline after rallying above $560 Newcastle track several weeks ago to now be holding around $500. While the effects of the recent frost will see production reduced in the port zone, not to mention the impact of the continued run of dryness on yield, canola prices have been taking their lead from international markets, with expected large crops in Canada and soybean crops in South America putting pressure on prices. There is still potential for values to rebound with the US crop by no means a certainty and a tilt to dryer weather in growing regions continuing volatility in futures. Early US Corn crops have also begun to be harvested, with respectable yields pressuring futures markets. Wheat futures are being supported by continued international demand, with Egypt releasing another tender recently.
Also of note is the release of production estimates this week, with ABARES releasing their quarterly estimates today and the USDA releasing their monthly WASDE report on Friday morning Australian time. It is widely expected that ABARES will be reducing their Australian crop estimate to below 25 mmt, with persistent dryness in Northern NSW and QLD far outweighing a good season for Southern growing areas.
Windrowing of canola crops north of Moree will begin in the next fortnight, with the earliest crops being harvested by the end of the month. The majority of harvesting will have commenced by mid-October. AgVantage Commodities will be hosting pre-harvest meetings starting this Friday and going in to next week with a focus on on-farm solutions. We will be hosting speakers from Next Instruments running through their grain analysing equipment, Superior Silos with their range of storage systems and a demonstration of Kwik-Kleen Grain Cleaners. Please call the office for more information on these events.
While it has been as dry as it has there has been very little new crop business being traded. Of note we have an option for prompt movement of new crop canola in the first half of October, and are able to price on a hectare basis. Prices are around $510 ex farm north of Moree. Please call if this is of interest.
Market Report 5/9/2013
Weather is once again the main driver of futures movements, with wheat and corn taking a back seat to a large drop in soybean values overnight. Traders in the states are extremely sensitive to any change in the forecasts, and the possibility of a turn slightly wetter in growing regions over the next week is enough to see selling taking place en masse, with the new crop contract losing 34 USc/bu. The large volatility seen recently in all futures markets could see these losses made up very quickly with a tilt to drier conditions in the future. Losses for wheat and corn were only marginal, which reflects the advanced state of these crops, with potential yield becoming more certain. The progress of the Australian crop is beginning to take a more prominent role as well, with traders coming to grips with what local growers have known for some time now, that production estimates of up to 26 million mt are significantly overestimating the true state of affairs. The continued dryness, along with frost damage which is becoming more apparent as the weeks go on, has seen the likes of CBA, Cargill and Rabobank make downgrades to their earlier estimates, with Rabobank claiming a 2.5 mmt overestimation. ABARES will release their estimate of Australian production later next week, with the total likely to be closer to 23 mmt.
The conflict in Syria is also having some impact on markets, most directly on the movements of the Aussie Dollar. If the US eventually make a military strike against the Syrian regime we would expect an strengthening US dollar, putting pressure on the local currency. At the moment it is holding above 0.915.
With no substantial rain in the forecasts in the next couple of weeks, basis is remaining very firm for grain in the Newcastle and Brisbane lines, particularly with support coming from domestic feed markets in the North. Newcastle track values have pushed above $305 for Northern sites, while Brisbane track numbers are now pushing up to $315. While canola prices have softened over the last fortnight after reaching $563 last week, we currently have a hectare contract available for early movement, if this is of interest please give the office a call. Faba Beans and Chickpeas are now pricing at pretty similar levels, with $400 delivered Narrabri being available for both commodities. Strength in fabas has been held from domestic demand, with reports of Australian faba beans being up to $100 over what would be achieved in export destinations, while chickpeas is still reliant on export markets which are already well supplied with the pulse. There is still an expectation that India will come to the market at some point, but the tonnage they will require will be limited and their demand may be shortlived.
There is a very important contest on this weekend, and at the risk of alienating some of our client base I am going to make my allegiance known. Moree Bulls are facing off against the Narrabri Blue Boars this Saturday in what should be a cracker. Go the Blue Boars!!
Futures markets have remained unchanged due to the Labor Day long weekend in the U.S. and Canada. Weather in corn and soybean growing regions in the states continues to be the driving factor of market movements. Some beneficial rain was received in the Midwest over the weekend, however another tilt to dryer and hot weather this week will raise concerns over further deterioration of crop conditions. While adverse weather continues to play such a large role we can expect the volatility of recent weeks in futures values to continue.
Continued dryness in Northern NSW and QLD will result in yield loss, with crops in Western regions already being abandoned. Growers who were more fortunate with rain earlier in the season will be able to hold on for another few weeks however like everyone else are looking for a few inches as soon as possible. The trade is coming to the realisation of a reduced crop in this region, with basis in the Newcastle and Brisbane zones remaining strong, while feed markets in the North will also provide support to the market.
New crop pricing remains firm for wheat, with track numbers above $300 in the Newcastle zone, while sites in the North can expect a premium over this number. Brisbane line has been holding above $315. 70/10 style contracts are also continuing to provide value over track contracts, with prices above $260 ex farm north of Moree. Durum values have held around $345 – $350 for DR1 multigrade contracts over the last week. The first canola crops will be windrowed later this month, with harvest beginning by the last week of September. Canola prices are being more affected by volatility in futures markets, falling from $563 last week to now hold in the $540s. Faba bean prices have been holding steady for a while now at $400 delivered either Goondiwindi or Narrabri, while Chickpea prices have managed some modest gains to now be sitting at similar levels to faba prices.