It’s beginning to feel a lot like Summer… The month of December has certainly heated up with rainfall becoming more sporadic and rarely having more than a few millimeters compared with the showers over November. Large areas of NSW and Qld are still suffering from severe drought and the quantities of rain needed to relieve these areas are nowhere in sight. This continues to be the major factor in price movements for both remaining grain stocks and new crop sorghum in the ground. Feed buyers are facing a situation of having to continue to purchase feed for the months ahead, with stocks available to them already tight and little chance of sufficient quantities of summer grains to replenish stocks. This has been the driving concern throughout harvest and the reason Newcastle and Brisbane zones remain insulated from the weakening in global grain prices.
With most of the harvest having been completed by the beginning of December, focus turned to the question of whether to market or hold remaining stocks. There has been a steady pace of selling throughout the month, with growers particularly active on selling stocks in the system before the first warehousing fees kick in at the end of December. Sites north of Narrabri have benefitted from the demand for feed grains moving north with premiums above generic bids being available in these sites. Most other Newcastle sites have been trading in a pretty tight range of a few dollars movement, with APW fluctuating between $300 and $306 over the last few weeks. Growers with stocks on farm are more proud owners with an eye to pricing in the new year with many growers holding the view that prices will continue to improve as remaining stocks tighten. $300 on farm prices for 70/10 have pushed south of the border and creeping up to $290 around Moree, while feed users have become more active on the Liverpool Plains also. There are still buyers chasing protein wheat specifically, particularly in to Narrabri packers, with prices holding around $300 delivered Narrabri for APH wheat, however high protein further north has been priced directly in to feed, while demand delivered to Newcastle port has been having difficulty competing with feed prices also. Of other remaining stocks, barley has also had a steady increase throughout the month for the same reasons as driving wheat, while the pulse markets have come right off the boil with demand evaporating. One of the best performers of the last month has been durum, with prices first pushing above $300 for stocks in the system early in the month. Given the length of time it took to reach this level many growers took the opportunity to quit stocks at this time, however prices had one more push in them and the limited stocks still available were looking at site prices of above $320.
For many growers focus has now turned to summer crop, with planting of sorghum taking place on the Liverpool Plains due to decent showers throughout November. There were many more areas which would have gone in to sorghum north of Boggabri and around Narrabri but are unlikely to be planted now unless there are several inches before the new year. Prices have improved through the month with strong demand coming from export destinations as well as domestic feed users. Many growers planting on the Liverpool Plains have taken cover for up to a quarter of the crop in the ground. Prices for Newcastle have been over $310 as the track number, or pricing on farm has been up to $316 delivered Newcastle port, in to Tamworth at $290 or in to Narrabri at $270. Prices in to Brisbane have been even stronger, with track prices up to $320 and delivered to Brisbane port at $330, however production is far less certain for stocks that can feed in to these markets and selling more limited. That being said, more acreage can potentially go in in Queensland, with the window for planting able to stretch in to the New Year, however there would need to be several inches to see this happen.
Cotton also was a surprise with their most encouraging move for several months. Solid gains in futures markets were matched by a falling Aussie dollar pushing below 0.90USD, which saw gains of over $30 dollars in the space of a week as cash prices burst out of the trading range of several months. Prices had been struggling to exceed $470 after coming off several months ago, with some prices pushing up to $500 in the back end of December. Growers have become re-engaged with the cotton market and further sales have been made around the $500 level. Those growers who were not confident enough to lock prices in prior to planting when it hit $500/bale have now taken the opportunity, with most growers looking to at least have 50% of their crop priced at these levels.
So, what can we expect in the new year? To state the obvious, we need rain. Everywhere. And a lot of it. Winter crop planting may be some time away but a dry few months ahead is a major concern, while there are many growers in the west who are looking down the barrel of consecutive seasons with no production. Over the next few months this dryness will support prices for remaining winter crop stocks in the north, and potentially push further south to source stocks if dryness persists, while also being a major support to those who managed to get sorghum in the ground. Harvesting of summer crops will be next up, with the first sorghum crops coming off around Moree by the start of March and cotton picking not long after that.
The team at AgVantage would like to thank all our growers for their support throughout what has been a challenging season. Merry Christmas, and here is to a happy, prosperous, and hopefully wet 2014.
The big news out of the states is the announcement that the US Fed has – finally – begun tapering of their Quantitative Easing program. This will see the massive US$85 billion/month bond purchasing reduced, to US$75 billion. Still an enormous amount but is the first step after months of speculation over when the tapering would begin. The Aussie dollar has been steadily declining in anticipation of the announcement, but still managed to push below its support of 0.89 following the announcement to hold this morning at 0.885. The falling AUD has come at a fortuitous time, as wheat futures dropped overnight to touch 18 month lows. Wheat markets have been reacting to current global stocks predictions holding at comfortable levels, with 10 of the last 11 sessions finishing in the negative. That being said, Northern NSW and Southern Queensland prices continue to be insulated from global markets due to domestic pressures, with the enduring dryness and likelihood of a reduced sorghum crop in Queensland this season supporting prices in to feed destinations. Cotton has also been a major beneficiary of the falling dollar, with growers reengaging with the market after cash values have closed around $500.
As mentioned above, the continuing dryness in Queensland and North NSW is providing support for grain prices for movement in to Northern feed markets. Prices for stocks being held on farm have slowly been improving throughout the week as buyers look to secure stocks through January and later. 70/10 or ASW prices are now above $280 ex farm for Moree north, reaching upwards of $290 north of Goondiwindi. These prices cover grades right up to APH2, with only a slight premium currently being offered over feed values for high protein. This reflects the strength of the feed markets matching protein values, as opposed to weakness in protein markets. Similarly, barley stocks are in high demand for movement in the new year, with on farm parcels up to $265 around Moree, and stocks in the system at Moree priced at $250 site. Liverpool Plains feed markets have also been supporting prices for grain that feeds in to this area, with strong demand barley and SFW stocks for movement in the new year. Wheat stocks in the system haven’t been seeing the same solid gains as being seen for stocks on farm, with the exception being sites Narrabri north. Most other sites in the Newcastle zone have been trading in a range of only a few dollars difference over much of the past month, with APW in the system making some gains with Newcastle track prices up to $309.
For those growers lucky enough to get their crop in the ground, sorghum has been a strong performer over the last few weeks. Both ex farm and track values have made gains recently, with demand from both exporters and domestic users providing support to his market. Brisbane track is currently bid at $318, while Newcastle at $312. Stocks able to be held on farm have several options for movement, with delivered markets in to Brisbane currently at $330, to Newcastle port $316, Narrabri packers at $270 or Tamworth up to $290. Please call with any enquiries.
APH2 $280 Del Moree
APH2 $280 XF
HPS1 $245 Del Gurley
SFW1 XF $253 – 285
AUH2 $250.70 – 261.50 Del Narrabri
AUH2 $268 Del Gunnedah
APW1 $311 Track Newcastle
APW1 $269 Del Gilgandra
APW1 $263 Del Gurley
ASW1 $296 Del Gurley
ASW1 $249 Del Premer
DR1 $300 Del Edgeroi
DR1 $303 Del Emerald Hill
DR1 $318 Del Gunnedah
DR2 $284 Del Emerald Hill
DR3 $280.10 Del Emerald Hill
CAN $455 XF Lower Namoi
FB1 $297.75 Newcastle Track
Feed $360 XF Walgett
CSP 5.3.1 XF $370 – $405 Walgett
SOR1 $256 – 288 XF Upper Namoi
The wheat and corn markets remain pressured by the healthy international supply for the 13/14 season, whilst the oilseed market gained on continuing strength in export demand and domestic crush requirements in the US. Canola has hopefully stemmed the losses of the last few sessions on the back of the stronger soybean market. Basis for Aussie wheat should remain firm, with our wheat recent priced into an Iraqi tender at $20 cheaper than US and Canadian origin grain. The corn market remains pressured by the Chinese cargo saga, and the US senate discussions with regards to the ethanol mandate.
Cotton put on a handful of points on the front month, but the gains on the May and July contracts have decreased the invert from the March contract. The most notable invert is the July to December now at some 559 points or approx $30/bale, later delivered bales may have some discount caveats built into these purchases. China also made some import tariff changes , making the importing of cotton directly by mills more difficult, and significantly more expensive than the current prices which would be being offered.
The Aussie dollar is poised at the 0.8950 level for the information from the US Fed meeting to be released on Thursday morning, to give the most clear direction for our currency. The December RBA meeting minutes will be released this afternoon, but its doubtful that many surprises will be in there today.
The domestic market has remained strong, with good numbers being bid for grain in the system as well as ex-farm. North of Moree has seen $280 and better for the 70/10 market, whilst barley on farm and in the system is also attracting some attention in the marketplace for those still holding onto tonnes . The durum market remains at the strongest numbers for the season, and we would welcome the chance to make an offer on your behalf to our buyers. The sorghum market has held onto the $300+ numbers delivered Newcastle and Brisbane market zones, helped by stronger basis and the fall in the dollar. With the second plant window open for growers north of Narrabri, more hectares could be going in if we receive some reasonable rainfall events, but that crop will be late, and have to compete against sorghum out of Central Queensland..
Australia has 20 million hectares of land cropped to grain. It sounds like a lot, but on the world stage the industry is still a relatively small player.
Australia doesn’t have a big domestic appetite for grains and so a large portion of what is produced is exported.
SOURCE: ABC News
Any farmer knows that good soil is the foundation on which to build a productive business and farmers are increasingly teaming up with scientists to improve the profile of their soils.
Donna Lucas is a senior consultant with RM Consulting Group. She’s working with landowners to increase both farm production and profitability.
SOURCE: ABC News
North western New South Wales is in the grip of one of the worst droughts on record, less than two years after the area was covered in floodwaters.
The region has hardly received a drop of rain this year and livestock has been sold off or moved south while farmers wait for rain.
SOURCE: ABC News
Despite a dry start to the cotton season most regions have still planted an average amount of cotton.
Growers who plant the genetically-modified Bollgard cotton have to plant within a certain timeframe to reduce the possibility of insect resistance.
SOURCE: ABC News
Grain market analysts are tipping prices will increase in the weeks ahead.
Mecardo’s Angus Brown says a lack of snow in the US could further drive up prices for Australian wheat.
SOURCE: ABC News