Grain Watch: Rain brings optimism for winter crops

Scattered storms have already delivered welcome rain across parts of the North West, Liverpool Plains and Central West, with forecasters saying more heavy rain is on the way.

Any rain comes too late for northern sorghum crops with the North West harvest close to finished and the Liverpool Plains harvest is just starting.

But autumn rain will boost hopes for winter crop plantings across the North West where widespread soaking rain is needed to replenish depleted soil moisture reserves after enduring drought conditions through much of 2013.

New crop wheat values have tumbled on forecasts for good rain across the northern half of NSW this week.

ASX NSW wheat futures for a January delivery fell by $13 a tonne to $313/t when the forecasts for widespread rain first emerged but have since recovered some of these losses.

Growers across the North West are relieved to see the promising forecasts but know that any rain received this week will need to be followed by subsequent similar falls if they are to proceed with a normal sized winter crop planting.

Soaking rain across the central west and southern parts of the state would provide an ideal start for the 2014 canola crop.

The dry start to autumn in 2013 prevented canola plantings in the Riverina and growers are looking for an early break this year to permit a timely planting.

Canadian canola prices tumbled by five per cent last week on concern a major importer has cancelled purchase contracts. Unconfirmed talk late last week that China had cancelled some Canadian purchases saw futures end the week lower for the first time in five weeks.

Local canola prices have paid limited attention to the nearby Canadian canola values over the past months which have been plagued by the logistical problems that have restricted shifting this year's massive crops.

International wheat prices rallied sharply with benchmark US Hard Red Winter wheat jumping $15 a tonne to $350/t (free on board).

Smaller increases were seen in the other US wheat grades with Soft Red Winter (SRW) wheat, where crop conditions are seen as mostly favourable, only increased by $4/t to $297/t FOB.

Ongoing dry weather is pushing US Hard Red Winter (HRW) wheat prices higher against other wheat grades and origins as concerns mount for the countries major wheat production region.

The US HRW wheat crop accounts around 40 per cent of the US wheat crop and is an import source of hard milling wheat for international buyers' wheat it compete with Australian Premium White (APW) wheat.

Wheat crops across Oklahoma and Texas are in the jointing stage and are desperately in need of rain to avoid substantial yield penalties.

However, signs are appearing that strong US wheat prices may start to curb export demand.

Reports emerged last week that Brazil, a major destination for US HRW wheat exports this year as a result of the poor Argentine crop, was looking at importing Russian wheat at the expense of the US milling wheat.

US HRW wheat has jumped to more than a $50/t premium to Russian wheat, which has importers doing the sums on alternative origins as a means to keep purchase prices down.

With the exception of the US HRW crop, northern hemisphere winter wheat conditions are seen as mostly favourable and in better shape than this time last year.

Local grain prices continued to firm last week with stronger international prices and tight local supplies.

Exporter interest in wheat prices is waning at current levels but domestic buyers continue to aggressively seek supplies.

Delivered prices into northern NSW, Newcastle and the Riverina were all sharply higher last week on the back of strong demand from feed grain buyers.

Stockfeed wheat delivered into Newcastle jumped by $15/t to $338/t delivered.

Barley values on the north increased by $5/t to $7/t a tonne but are losing favour with many feed grain users at these levels.