Grain Wrap | Frost damage hits pricing

Frost damage hits pricing


If you bundle the dry weather and frost damage suffered throughout August, it paints an alarming picture for crops along the east coast.


ANOTHER week without rain and the extent of frost damage will become evident over the coming days, if it hasn’t already. 

The dry conditions in Queensland and Northern NSW have been felt for some time, now the dry weather concerns are spreading further south into Central and Southern NSW. 

If you bundle this dry weather and frost damage suffered throughout August, it paints an alarming picture for crops along the east coast. 

With the current way the season is developing, it’s looking more and more likely that grain will be pulled from as far south as Victoria into Queensland.

The Australian basis is doing all the work in terms of pricing this year with traders increasingly likely to lift basis to secure some production leading into the new season’s crop, which officially ticks over at the end of this month. 

We remain on track to carry-over a combined nine million tonnes of wheat and barley, and with the weather situation, it looks like many growers will not be penalised for carrying this over.

This is because pricing into the feed markets remains strong. 

Prices for wheat and barley into Queensland’s Darling Downs have consistently traded over $300 a tonne, and Australian Premium White (APW1) has risen as high as $330/t over the past fortnight.

If we take a step back and look at what is happening globally, the huge Russian crop has been well announced and should already be factored into futures prices. 

The weather in Australia, Argentina and dry conditions in Brazil are starting to garner some attention. 

The market currently has chosen not to address these production problems, assuming the Russian crop will make up the difference which is partly true. 

But, if the market has already factored in the large Russian crop, then the question is where should prices go from here? 

If we stay dry during the course of September, we will see prices continue to firm and spreads will become particularly important as grain could get pulled from Victoria and South Australia if pricing allows. 

In short, a change of theme seems to be on its way headed by the two A’s, (Australia and Argentina) and the export troubles out of Texas as a result of Hurricane Harvey. 

The world needed a drought somewhere to cure low prices, just a shame it was in our backyard this year.


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