AgVantage Commodities Market Report 28/09/2017

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Fact of the Day – Juices and soft drinks like Coca-Cola and Pepsi contain corn sweeteners. A bushel of corn can sweeten up to 400 cans of soft drink.

As we have touched on weather conditions locally over the past couple of months, there is really not much new that can be commented on without sounding like a broken record. The September heat along with its above average temperatures continue as we near the start of daylight savings over the Labour Day long weekend (clocks go forward by 1 hour this Sunday). The same aspects temperature wise are also being faced across the Midwest and North East parts of the United States. Where oppositely there is wide-ranging rains along the plains, this brings a slight sense of uneasiness as winter Wheat sowing commences across the central and southern parts of the country.

As the 2017/18 harvest has commenced north of the boarder, we start looking south towards the conditions of crops and the market across North West New South Wales. When looking back on last year’s season, the feed market was at a low of around $200/mt domestically due to the production rally seen throughout the northern hemisphere. Fast forward to July of this year where the prices delivered in to the Darling Downs jumped up to $335/mt. This increase was fuelled by the USDA’s world estimate report (WASDE) that the projected yield was set to be much lower than first expected due to many impacting factors, this then drove the market internationally and domestically  much higher. Now as harvest looms closer at home and the weather conditions being faced across the east coast worsen, prices continue firm as feed wheat sits at $358/mt delivered Downs for January delivery.

The Chicago Board of Trade (CBOT) December Wheat futures are trading currently at 452.2USc/bu, traders equate this to roughly a 210USc/bu basis value. This basis, with incorporating the weakened Aussie dollar and bushels to tonnes equals to an APW1 Newcastle NTP price of $315/mt and a $350 Brisbane. In July of this year December Wheat futures had a high of 574.25USc/bu, this provided the market with a significant rally. This is paralleled with December Hard Spring Wheat futures which today are at 646USc/bu. Looking back on July’s rally, due to the production uncertainty in the market the futures in December sat tall at 850USc/bu, this high was then translated through prices playing around the $380 mark for high protein Wheat. This fluctuation portrays how the production levels internationally impacted prices domestically, though it is clear that the market gap is thinning just within the past couple of months. With the doubt of yields stateside as well as here locally, the December futures will continue to paint a picture of the markets firmness.

When looking at the export protein market against the domestic feed market, the spread between the two is narrowing. From our perspective, the premiums seen in the protein market earlier in the year have very much shrunk and now would be the best time to be offloading tonnages of protein Wheat left on farm and/or in the system. Whereas holding on to the bulk of feed Wheat parcels is definitely the safest option for now as the demand and local conditions are the driving forces behind increasing prices.

Barley and Sorghum continue their strengths across the market. F1 Barley is pricing at around the $340 mark for October & $345 delivered Downs for January 2018. Sorghum trails at $310 for October 2017, & $305 for March to May 2018 delivered Downs on the back of supply uncertainty for the summer crop. Faba Bean demand continues domestically of course due to need across the livestock industry but also the nutritious benefits provided by the pulse especially for piggeries and poultry farms around the region. Ex-Farm prices are at $265 subject to location around the North West & remains illiquid on the demand side.

Chickpeas, as commented on recently, the demand is definitely set to increase as harvest begins to slowly move south from Central Queensland. As new crop becomes more desirable come October and November, the risk of continuing to hold on to old crop stock for premiums heightens – the inverse between the two is clear! Delivery for new crop prices in to the Gladstone and Mackay port zones are at $935/mt and for the Darling Downs, prices for October at around the $910 mark with Narrabri $20-30 less (at time of writing). Whilst chickpeas prices are not at their highs compared to recent seasons, we believe growers should be capturing current values, as from a long term average point of view, they are still very good & in the higher percentile. The risk of holding is that the sub-continent have a good season forcing Australian growers to carry into 2018.

The Cotton futures market has been fluctuating only on a miniscule scale and still steady in wake of the next WASDE report and the U.S. season ahead. Bale prices are reasonably unchanged this week with 2018 cotton at $490 and 2019 cotton just below at the $475 mark. The Aussie dollar has faced a low since flirting with the $0.80 mark this month, the dollar today sits at just below the $0.79 mark (at time of writing).

AgVantage Commodities Market Report 21/09/2017

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Fact of the Day – Soybeans are an important ingredient for the production of crayons. In fact, one acre of soybeans can produce roughly 82,368 crayons.

With the weekend ahead forecasting above average temperatures of around 40 degrees in North Western New South Wales, it is quite difficult for many to find a silver lining for the 2017/18 season ahead. The heat matched with the burning winds throughout the days have been working their way west to east, which is continuing to take an extensive toll on crops across the region. This is also matched with the frosts that have been wreaking havoc on paddocks across the Central West as well. Internationally, the weather across the ocean is also one to watch with dryness seeming to ease with Argentina and Brazil to face some predicted wet weather.

New crop feed Wheat for January delivered in to the Downs is up and firm at just above $340 with current crop for October delivery at $335/mt. There continues to be moderate to strong demand for Barley and Sorghum which we have seen trending over the past weeks as prices also rise. Feed Barley delivered Downs for 16/17 season sits firm and just up on last weeks commented price today at $325, with 17/18 crop for January up as well for delivery in to the Downs priced at $330. Sorghum lingers just on the $305 mark for September and October delivery period in to the Darling Downs, where 17/18 Sorghum crop delivered Brisbane sits equally at $305.

For September in to early October, delivery for new crop prices in to the Gladstone and Mackay port zones have had a slight increase of $5 up to $960/mt. The premium for early delivery of new crop Chickpeas has enticed many growers in Central Queensland to offload some tonnage fresh off the header much like last season. The more southern delivery points such as the Darling Downs are priced for Oct/Nov at around the $900 (at time of writing) mark. Faba Beans as touched on last week are definitely coming to the forefront of most buyers and growers minds. With the season ahead struggling thus far, demand domestically as well as product suited for export is on the rise and prices will follow as well. Prices are still remaining at $255-70 Ex-Farm for now depending location from the Liverpool Plains heading north through Narrabri up in to the Downs in Southern Queensland.

The Cotton futures market came under only a little bit of pressure earlier this week, though this will not have a detrimental impact in the long run, especially with the focus on the upcoming US season. As we touched on last week, Cotton is still steady as the estimates released last week are pointing towards a higher yielding season compared to previous years. Bale prices are fluctuating only on a small degree as of late and are reasonably unchanged this week with 2018 cotton at $475 and 2019 cotton just below at the $450 mark. The Aussie dollar since last week’s comment has been quite uneventful with not too much to report (at time of writing today) the dollar sits at just above $0.80.

AgVantage Commodities Market Report 14/09/2017

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Fact of the Day – Livestock farming feeds billions and employs over 1.3 billion people. That means about 1 in 5 people on Earth work in some aspect of the livestock farming.

As we hit the middle of September, spring is starting to show what’s in store for the coming months. Although there is still low temperatures forecasted for the remainder of the month, the low thirty degree days here and there are not helping the already dry season faced across the north western parts of the state. Hurricane has definitely been the word of the month so far with the US being battered from every angle for the past fortnight. The weather events have affected most parts of the commodity market up until yesterday when the World Agricultural Supply and Demand Estimates (WASDE) were delivered. The data brought a much more improved yield estimate for global Soy Beans and Corn, though Wheat was projected to decrease more than first thought which pushed values slightly higher at the markets finish. Cotton was affected by the WASDE report with production elevated to a five year increase in yield.

The dry heat, cold frosty mornings and as well the strong windy days, we have been facing all the elements the past few weeks except for the most vital one, the WET!! With September spring rain being such a crucial element pre harvest, the market is being driven by what is expected from the crops quantity and quality wise. New crop feed Wheat for January delivered in to the Downs is up and firm at $335 with current crop for October delivery at $330/mt. Barley and Sorghum continue to be much more popular across the board with buyers in the domestic market. Feed Barley delivered Downs for 16/17 season sits strong and firm today at $320, with 17/18 crop for January delivery Downs priced at $325. Sorghum continues at just over the $300 mark for a September and October delivery period in to the Darling Downs.

As we have stated previously, harvest around the Central Queensland region has kicked off. For the time being we are yet to see any information in regards to quality and yield data, we expect that to slowly trickle out as more and more Chickpeas stumble across the many receival sites north of the border. For September in to early October, delivery for new crop prices in to Gladstone and Mackay port zones sit at $955/mt. The more southern delivery points such as the Darling Downs are priced for Oct/Nov at the $900 mark. Faba Beans are going hand in mouth with the current weather as graziers are seeking tonnage for feedlots and general paddocked stock for the continued dry period ahead. Prices are at $255-65 Ex-Farm depending location from the Plains heading north up in to the Downs, where export prices have been a lot quieter compared to previous weeks we have been seeing.

As touched on earlier, the WASDE report impacted the Cotton market through the expectations that the upcoming season would have an increased yield. Prices did take a tumble due to the world estimates but as well through the already heightened premiums seen due to the great unknown earlier this week (Hurricane Irma). These contributing factors have lanced bale prices down to $480 for 2018 cotton and 2019 cotton is twenty dollars below at around the $460 mark. The Australian dollar over the past week since our last comment has been slightly eventful with its jump north of the 81c mark for the first time in many years, but (at time of writing today) sits in the same position at $0.803.

AgVantage Commodities Market Report 7/09/2017

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Fact of the Day – If all of the Cotton produced annually in the U.S. was used to make one product, such as blue jeans, it would be enough to produce around 5 billion pairs.

With September bringing forth a cool start to Spring, we are still yet to see any changes on the horizon for another wet September much like the one we experienced last year. Across North West New South Wales (NNSW) the conditions continue to dry out planted crops and impact the domestic market. Internationally, weather is proving to be more of a nuisance than anything else. Russia is set to have a promising yield in regards to their Wheat, though climate conditions could prove to impact export logistics throughout their bitter winter months. As we move across the globe, the United States have copped the brunt of Hurricane Harvey, though there is no respite in sight with Irma following closely behind. Even if Hurricane Irma does not make landfall, it still has the potential to damage one of the largest producing Cotton areas in the country with its torrential rain. How this effects prices will be told over the next 24 hours.

Demand across the grain markets has slowly been on the climb over the past few months now, mostly spurred on by weather conditions domestically and the harvest ahead. New crop feed Wheat for January delivered in to the Downs is up and firm at $335 with current crop for October delivery at $317. As of late there has been continuous notice in F1 Barley through the region seeing bids of $310 Downs for current and new crop. Sorghum is bidding at the $300 mark in to the Downs, though there is also demand for Ex-Farm options as well depending location for September and October – Buyers Call.

As Central Queensland growers have started to get the headers in to the paddock, we will start to see more of a demand for new crop chickpeas over the 16/17 season’s peas. This is due to the lighter colour and the lighter grain that is more sought after overseas when fresh from the paddock. Current crop 16/17 is fluctuating as of late with prices delivered Narrabri for September at $900. For September in to October delivery for new crop prices, Gladstone and Mackay port zones sit at $935/mt. Where more southern delivery points such as the Darling Downs are priced for Oct/Nov at the $900 mark. Faba Beans have been a bit quieter as of late, even though the dry weather will push the price, at the moment there is not a large amount of demand for September with buyers looking to spread tonnages over Sept/Oct/Nov with carry costs. Prices are floating at the $240-50 ex-Farm conditional on location and quality. Export bids have re-emerged at $260 delivered Narrabri for No.1 less $20 for No.2, this will in fact continue to drive the domestic demand and be more competitive at $250 ex-farm for No.3’s with a much lesser quality risk.

The market has been closely effected by international factors, especially in regards to the detrimental weather conditions around the U.S. The futures market across the board for Cotton have been excited due to the Hurricanes inevitable impact from Cuba towards the Mid-South states and this has pushed prices to sit at $510/bale for 2018 cotton and 2019 cotton is twenty dollars below at around the $490 mark. The Aussie dollar has also climbed back to its high and started the day at $0.804 (at time of writing).

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