Farm Tender

AWB - Australian grain market looking buoyant

By James Massina - AWB

For the majority of New South Wales and the country generally, it is looking like an above average harvest and despite the challenges for many in securing staff, this is fantastic for regional Australia. Big crops bring so much activity, employment and economic benefit to our country towns which in these challenging times, is a very welcome positive.

Weather is going to play a key factor across the entire grain belt over the short term with areas like South Australia and Victoria still in a position to benefit from a drop of rain, whereas northern Western Australia and Queensland preferring some clear harvesting weather. A fair amount of variation across New South Wales with patches of the state set to start in the next fortnight but generally the feeling is for a late October, early November start as you move further south. The forecast continues to jump around but temperatures tending to warm up across the country.

Plenty of questions remain around the crop’s profile with expectations for a somewhat normal spread of protein and with the global supply situation for high protein wheat in deficit, those that produce prime hard should see reasonable premiums. Through Queensland and Northern New South Wales prime hard is fetching $15-$20/mt over the base grade for wheat.

The canola market continues to attract plenty of interest with prices firmly in the top decile and offering excellent marketing opportunities for those in a position to capture those prices. With production prospects for that commodity as impressive as they are, it is almost hard to believe that some are in the vicinity of hitting $900/mt at their local depot. This has seen forward sold percentages at historically high levels for this time of year. And with many in the industry forecasting a canola crop over five million tonnes, the Australian canola grower is benefitting immensely from a shortened supply from Canada and a global demand picture for oils that continues to march on.

The old crop market for cereals had been tracking sideways for some time however an increase in grower selling from those looking to clear on farm storages before harvest has seen some recent softening. As is often the case for this time of year, the domestic consumer had been on the sidelines as they looked forward to new crop and making do with existing coverage, whilst the grower is facing the challenge of finding the necessary space to store what should be another solid crop.

New crop barley markets had largely been tracking wheat for some time without much impetus either way. Values had been caught between a lack of engagement from both the buyer and seller and with some selling of old crop to clear storages, values had been felling a little shaky. This appears to have changed with new crop delivered values into Victorian ports nearing $300/mt. Premiums being shown for malting barley are at or near historic norms however there is much to play out in this space as demand from Asia struggling due to lockdowns, supply from Canada reduced due to drought, and Europe’s demand increasing as that continent rebounds from restrictions. With a big barley crop on the cards, expect to see some action on premiums over the coming weeks and months.