Grain demand continues to spread

Dryness in China and the United States continue to be monitored with expected downgrades being priced into markets.

There is some helpful moisture expected in Ukraine and Russia, but uncertainty remains over spring plantings, disruption to supply chains, and whether anyone will buy grain from Russia even if it was available.

Before the start of April, CBOT forward futures (Dec 22 and Mar 23 delivery) were trading at a discount to the spot month (May 22) as the market expected there would be more wheat in the world by the end of 2022.

That's no longer the case with forward futures now trading at similar levels to the spot month reflecting the growing uncertainty over northern hemisphere supply.

In Australia, demand for grain continued to spread last week with 39 different buyers purchasing grain on Clear Grain Exchange (CGX) and more searching grain offered for sale.

Aussie grain continues to price competitively into international markets and the number of buyers purchasing grain on CGX each week has continued to climb over the past four weeks.

This fact along with the increased breadth of grades, commodities and locations trading recently can indicate demand strengthening and spreading across parcels of grain available for sale.

Aussie grain is being pulled between higher paying international markets and domestic use with local supply chains working hard to move the grain offshore.

Wheat remains in demand in almost all locations across Australia with most grades attracting interest.

The price differences across port zones continue to range significantly reflecting the localised supply and demand factors having a large impact on price such as quality and supply chain capacity.

As a guide, ASW1 traded $385/t FIS Kwinana, $430/t Geraldton, $410/t track Pt Adelaide and Pt Giles, $388/t Geelong and $373/t Newcastle.

Higher protein milling grades attracted significant premiums over ASW1, while the spread to lower grades such as AGP1 and SFW1 is quite tight in many cases (i.e. zero to $10/t).

SA continued to lead the charge in barley prices. Pt Adelaide and Pt Lincoln traded $400/t port, while Brisbane and Geelong were $365-368/t levels and Kwinana $344/t FIS.

All canola grades are still getting good interest over $1000/t + oil bonifications when it's offered. Oats, lupins, lentils, peas and sorghum were also strongly bid when offered for sale.

There are often many more buyers than you may realise who want your grain.