Grower confidence rises on recent rain

Grower confidence rises on recent rain


Grains
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Activity on grain markets is building after recent good rains through much of WA's Wheatbelt have provided more confidence in the season for growers.

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ACTIVITY on grain markets is building after recent good rains through much of WA's Wheatbelt have provided more confidence in the season for growers.

And on the buying side, Clear Grain Exchange managing director Nathan Cattle said there were plenty of buyers in the market wanting WA grain.

"Some of these will be executing to eastern Australia, however there are plenty of buyers looking to move grain to other demand locations as well," Mr Cattle said.

"A total of 32 different buyers have purchased WA grain through Clear Grain Exchange since the beginning of October 2018.

"The range of buyers have included those participating in bulk exports to traditional markets, exports via containers, demand from eastern Australia, strong domestic demand in WA and opportunistic traders.

"Hence there has been a healthy demand profile for WA grain."

Mr Cattle said it was probable that grain traded in the future would continue to move east given the drier start to the year in northern New South Wales and Queensland, and the supply chain routes are well established now.

"In terms of quality, demand seen on the exchange has been broad with wheat, barley, canola, oats and lupins all trading at strong values," he said.

"Almost every grade of these commodities have traded.

"Demand from eastern Australia is likely to be across all grades with reasonable domestic demand for milling wheat, maltsters and feeders, although generally millers and maltsters are more active in accumulating requirements at harvest or near the harvest months when supply is more available for those grades.

"Recent trade activity shows higher protein milling wheat grades continue to attract some premiums over lower wheat grades, although barley is basically barley with no real difference in price between feed and malt grades anymore, suggesting it is likely being used for feed."

Mr Cattle said generally demand for grain strengthened through May, resulting in stronger values, and values have been maintained or improved in June.

He said last week APW1 wheat traded at $340 a tonne FIS Kwinana, H1 wheat traded at $360/t, feed barley traded at $320/t, lupins at $390/t and oats at $400/t FIS Kwinana.

AWB Kwinana zone manager Ben Cotsford said there was a bit of action from growers following recent rains.

"Given where prices currently are, growers would be starting to chip out a bit of grain at the moment," he said.

"There has been a good rally in Chicago in the past three or four weeks with the US being a bit too wet for corn plantings and when there is a rally on corn, that generally translates back into wheat as well."

Mr Cotsford said from a cash price perspective prices for wheat were sitting at around $315 to $320 for new crop.

"There has been some recovery in parts of the Eastern States, old crop demand is still there though, which is holding old crop values up more than new crop," he said.

"Growers would probably be selling wheat at current values, but no subsoil moisture is what I am hearing from growers, so they are hoping the rains will keep coming steadily to keep crops going."

According to Rabobank, the US weather continues to be key for US wheat quality, as spring wheat develops and winter wheat is

harvested.

In its recently released Agri-Commodity Markets Research report it said that the winter wheat harvest was well underway, albeit slowing as persistent rainfall in June has held it back.

Currently at 15 per cent complete, this was well behind last year's 39pc and the five-year average of 31pc," Rabobank said.

The report said the outlook was notably drier towards the end of the week, with the 30-day forecast showing relatively normal/light precipitation and average/warm temperatures for most of the US.

"This should provide farmers the opportunity to harvest the remainder of the winter wheat crop in July and support adequate development for spring wheat in North Dakota and Minnesota," it said.

"Excellent hard red winter wheat crop ratings - despite heavy rainfall over Kansas - combined with large stocks of HRW wheat, have caused the Kansas-Chicago spread to decline further, reaching record lows (available data 1970) in June for the rolling front month contract (currently July) of around USc -73.5/bu and contract lows for the December spread of around USc -55/bu.

"The harvest will continue throughout July and should pick up pace.

"Continuous rainy weather increases the chance of mycotoxin contamination and presents a quality risk which may help the spread recover.

"US winter wheat will struggle to compete on the export market at current prices with offers of USD +25/mt above Black Sea Region offers, underpinning somewhat our bearish forecast."

Rabobank said the forecast was for record heat in the EU and also hot weather in the Black Sea Regions, going into July.

"But we doubt a few hot days in Europe will affect the wheat yield at this stage of development," it said.

"The Black Sea continues to set the floor of FOB prices, suggesting there is no shortage of wheat there despite marginally lowered production and export estimates recently.

"Russian spring wheat yields can still be impacted by weather, but for now the crop is in good shape."

Rabobank said Australian wheat production was expected to come in below average estimates, and it estimated a total production of only 18mmt, although there was still plenty of time for a recovery.

"The drought in WA looks set to be broken as rain is in the forecast for much of the area providing key moisture to parched fields," it said.

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