Grain Wrap | Market direction still unclear

Market direction still unclear

Grains
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With the much-anticipated US Department of Agriculture reports finally surfacing on Friday night, they contained little to create fireworks or write home about

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WITH the much-anticipated US Department of Agriculture reports finally surfacing on Friday night, they contained little to create fireworks or write home about. 

Winter wheat seeding acres aligned fairly closely with market expectations, as did ending stocks. 

However, with March 1 looming, there is concern that the US and China may not reach a deal on trade tariffs before the deadline, a sentiment which saw Chicago Board of Trade wheat lower last week.

World Agriculture Supply Demand Estimates report came out with Australian exports lowered by 0.5 million tonnes on the back of a slow pace, which is to be expected considering the tough conditions on the east coast and the strong pull of grain from the west to service this market. 

Current imports from WA and SA into Brisbane, Newcastle and Port Kembla ports sit at 1.8 million tonnes. 

The increase of nautical traffic, after a slow January due to port congestion at origin, has seen the feed market soften into February. 

Darling Downs and Liverpool Plains delivered bids have dropped in the region of $20 a tonne during the past fortnight, with the Griffith zone also losing about $15/t. It would seem that the weather extremes are determined to continue, with flooding in northern Queensland causing extensive stock losses. 

While northern NSW remains dry and crispy, there was respite for some in the south of the state with patchy storms producing solid rainfall which could spur the early planting of grazing crops.

Meanwhile the sorghum crop size remains under pressure with both yields and quality generally disappointing thus far in northern parts of the state. 

Reports suggest a large amount of SOR2 has come off between Moree and the Queensland border, a trend which seems the be carrying down to early crops across the Liverpool Plains. 

There is also chatter of growers in this region choosing to bale their grain sorghum in pursuit of good dry matter yields. 

It will soon be crunch time for planting oats and if rains don’t look kindly on this then there will be a lot of hungry mouths in the paddock to feed, particularly in the dry New England area. 

However with sorghum still an expensive ingredient in the ration and a narrowing spread to wheat, end users may choose to revert to the latter - posing a potential cap for the sorghum market.

Newcastle track values for sorghum have been trading at about a $30/t to $35/t premium to Brisbane, with the Downs market coming under pressure last week, however delivered bids into both Moree and Narrabri remain steady in the region of $355/t. 

With the bulk of the Downs crop due for harvest in the next week, it should provide some more clarity around what is now expected to be a smaller crop than early estimates suggested.

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