There has been a lot more selling activity from the grower over the past week. Although the Easter weekend slowed things, growers looked to capture the higher market. And luckily they did as Ag futures eroded nearly all the weeks` gains in the Wednesday night trading session to sit lower today. Chicago Corn and Wheat futures had made a steady climb on the back of news of drier conditions in the US, all to be ripped away in one go in Wednesdays session, falling US6c/bushel and US12c/bushel respectively.
Sorghum has traded pretty much sideways this week, with more selling coming from the Liverpool plains growers rather than the NNSW and Darling Downs growers
High protein wheat grades have found some support with H2 bid in the system at $266/mt NTP Newcastle and APH2 at $280/mt, showing a significant premium to other bids in the market for similar grades. Barley ex farm has moved higher also, NNSW bids have been around $200/mt ex farm, but grower engagement is hard to find at these levels
The SFW market is very quiet, with little demand and sellers reluctant to place parcels in this market. Bids delivered NNSW and Darling Downs are around $245-55/mt delivered. With not too much changing week on week.
Cotton picking has well and truly ramped up, with many of the early growers finishing already. This has done nothing to get the cotton merchants excited, with basis falling another 50 points this week. Bids for current crop have floated between $410-20 a bale. Chickpeas remain bullish, and seemed to have deflected the Australian dollar rise, moving higher today. New crop faba beans are very quiet from the buyer side. Egyptian monetary worries continue to impact that market, with numbers in the low $300’s quoted as levels where buyers would look to price them.
Agricultural commodity markets have remained fairly flat over the past week. Any news of weather concerns has speculators nervy, which is good for growers looking to capture spikes in the market. More and more growers are now looking to meet the market as sowing is just around the corner and cash flow issues are creeping in. Although many growers are coming to the realisation that globally there is ample supply and that isn’t forecast to change inside the next six months.
Capturing spikes is the key for marketing success in the current climate. Rather than being a forced seller, growers should choose the spikes in the market.
Eastern Liverpool plains sorghum has traded at $200/MT ex farm through the week, and that continues to remain a sell point for the grower. Although starkly different to 12 months ago, is certainty not the low we have seen in previous years’.
Chickpea demand remains consistent with bid prices for new crop floating either side of $800/MT delivered for most areas. Although it doesn’t seem the best time to market your new crop chickpeas with India currently mid harvest and not completely in the market, and large areas of the Australian growing area still needed a drink before any crop is planted. Hectare contracts still remain attractive, and minimise risk.
Cotton harvest has kicked off in most areas on the early crop, with a few options to growers in terms of their marketing, they shouldn’t just take the cash price on the day if they view the market tracking higher.
Demand for APH2 and AUH2 wheat in the system has increased this week, and may be worthy at looking into marketing before growers are charged with April storage costs.
Temperatures have eased somewhat this week and a few showers have been seen in the area, as we enter the last watering stages for most cotton producers, with picking not too far away. Markets have been fairly benign, although week on week we have ended higher for all Ags on the futures market. This has been supressed by the fact that at times we have seen the Australian dollar rallying over US$0.76, and currently sitting at US$0.7555 at the time of writing.
Sorghum demand and prices have increased this week, $195/mt delivered Narrabri and $230 NTP NTL was bid on Wednesday, but many growers are still reluctant to engage. Sorghum delivered Newcastle is bid at $230/mt, meaning that many growers on the LPP are able to get $200/mt ex farm. There is still no news of any export demand, meaning that the majority of sorghum is being used in the domestic feed markets. Speaking with the end users the AgVantage team have come to the conclusion that they seem very well covered and prompt homes will disappear as we move forward. F1 barley and SFW wheat have been well and truly flat, buyers don’t seem too interested in looking at parcels and if they do, the majority of growers seem content to sit. Growers shouldn’t be forced sellers and should still look to take spikes in the market. Especially APH1 ex farm, there have been spikes in that market that are worthy of capturing. Old crop chickpeas are continuing to sell for record levels, with new crop peas rallying again this week, even on the back of a higher Australian dollar. Delivered packer for October has risen to $800+ once again, as out of season rains affect Indian chickpea harvest.
Faba bean market remains lacking export buyer interest for both old and new crop. Buyer interest remains for domestic feed interest, with the current weather conditions increasing feed buyer inquiry.
Cotton values have picked up a little, with bids over $420 in the market mid week. Growers are close to picking and may be forced to sell.
The USDA released the March World Agricultural Supply and Demand Estimates overnight. To summarise, they were largely benign. The market was expecting the USDA to increase global stocks of wheat & corn slightly, so the fact that this did not happen could be seen as slightly bullish. Having said this, we need to keep the macro picture of the global grain complex in perspective, & the facts are there is a surplus supply of grain both domestically & globally. The theme from the report continues in that global stocks for wheat, corn, soybeans and cotton are all surplus to needs and production is again going to out way consumption. Production stocks for wheat were trimmed by 1Mmt, which saw wheat futures rally. Production was brought back due to less optimistic estimates from Indian and Australian crops. Corn production was also cut, down 1.8Mmt, although this caused the futures to drop slightly, as current stocks are still very high. Cotton futures again fell overnight despite Indian and Pakistan production being lowered by 1m bales and 200k bales respectively. Another important factor to keep in mind is that Australian growers are largely unsold – we estimate 50% in northern NSW. This is playing into the hands of the exporters who have been bleeding money over the last few years through buying up the crop at harvest &/or buying expensive shipping slots, then not being able to make sales. This year, they have been happy for the grower to carry the crop & come in & buy when they have made a sale. This means the grower is paying the cost of carry which includes financing the crop.
Domestically, we have seen another week of lacklustre demand & hence limited selling from the growers. New crop selling has all but vanished as temperatures have held above 35 degrees for most cropping areas on the east coast. Listing to the BOM this morning, we’ve experienced 43 days of these temperatures in a row with no moisture relief. Bids have continued to decline on wheat, barley & sorghum. Old crop chickpeas have remained steady, with new crop being influenced to the downside by a firming AUD/USD. The AUD has really squashed any rallies in commodity futures markets, as it hit $0.75 on Wednesday night against the US.
This week saw another sell off of Ag commodities due to burdensome global & domestic supply, & buyers taking a hand to mouth acquisition strategy. It seems, no matter where we look, whether grains, or cotton, prices have been on the slide for some time now. Pulses are the shining light, & we remain bullish on new & old crop chickpeas due to our belief that the Sub Continent will be short again this year . Faba beans might be a different story due to the continuation of the Egyptian economic wows, but it is normal at this time of year for this market to be less transparent. The domestic feed grain complex is weaker by the day, due to reduced cattle numbers, sorghum harvest, & the lack of Chinese demand to keep sorghum out of the domestic ration and minimise the oversupply of barley. The fact that growers are holding on to large amounts of old crop grain is also playing into buyers hands. This makes on farm storage a good investment! Whilst most grain futures contracts have record sold positions at the moment which has the potential to result in a “short” covering rally, we really don’t see anything other than a major weather issue in the Northern hemisphere changing the direction of these markets. Even with this assistance, it will need to be major to impact the current stocks position, therefore, watch closely for, & sell into any rallies – they will most likely be short lived! In the current market, growers should look to meet market prices, instead of offering above bids and consider offering early in the day, as bids have been fading during the day as the small demand for tonnes gets booked. Sorghum homes for prompt are quickly dwindling, and there is no sign of more space opening up.