Local Grain Focus | Feed grain demand remains strong

Feed grain demand remains strong


Analysis
Despite the modest decline in cattle on feed, there was 1,110,689 head on feed at the end of the year.

Despite the modest decline in cattle on feed, there was 1,110,689 head on feed at the end of the year.

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Northern grain markets remained soft in the early stages of last week but firmed towards the end of the week.

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East coast domestic grain usage is proving to be extremely robust, despite the ongoing grain production problems. Grain usage continues unabated, despite the ongoing weather woes.

Australia’s cattle on feed declined by 15,977 head, or 1.4pc, in the September to December 2018 quarter, which is modestly below the record high set in the previous quarter, according to the latest results from the Australian Lot Feeder’s Association (ALFA) survey.

Despite the modest decline in cattle on feed, there was 1,110,689 head on feed at the end of the year.

It’s the fourth consecutive quarterly survey when there have been more than one million head of cattle on feed, which is looking like the new norm.

Queensland and NSW feedlots recorded small declines, but these were partially offset by larger numbers in Victoria, South Australia and Western Australia, ALFA said.

Feedlot numbers are expected to remain strong now as margins improve with declines in cattle and grain prices.

Beef exports from feedlots for the 2018 calendar year were record high on strong demand from Asian for quality Australian beef.

Meat and Livestock Australia said grain feed beef exports for 2018 exceeded 300,000 tonnes shipped weight for the first time in a calendar year.

Strength in the underlying demand for stockfeed was a catalyst in Sunrice’s decision to covert its Coleambally rice mill to a ruminant stockfeed plant under the business’s CopRice brand.

The decision was also partly due to the downturn in rice production in the Riverina but its also a reflection of the increasing demand for stockfeed in the region.

Sunrise said the move will make the Coleambally one of Australia’s largest ruminant stockfeed mills.

Local grain markets posted a modest recovery last week.

Northern grain markets remained soft in the early stages of last week but firmed towards the end of the week.

Stock feed wheat finished the week $5/t to $10/t higher at $415/t delivered Darling Downs markets with barley up to $360/t delivered.

Trader bids for stock feed wheat into Melbourne finished the week $5/t to $10/t off the recent lows. SFW was nominally quoted at $410/t delivered Melbourne and feed barley at $365.

International grain markets continued to soften as investors focus on favourable crop conditions in the northern hemisphere which is expected to result in larger global wheat supplies. US wheat futures fell by a further 5pc to 7pc last week.

The US Department of Agriculture released its March world supply and demand estimates report last week, that was viewed as bearish wheat. US wheat exports were lowered, with the USDA citing stronger than expected competition for some grades, despite major droughts through much of Europe and Australia’s east coast.

Monthly government data showed that Australia exported 895,000 tonnes of wheat in January up from 719,000 tonnes in December.

Indonesia, typically our largest importer, only took 66,000 tonnes of Australian wheat in January.

Australian barley exports for January fell to 414,300 tonnes, down from more than one million tonnes in December. China remains the major destination for Australia’s barley exports.

Canola exports for January were strong at 460,000 tonnes. Most of the canola exports are destine for European crushers.

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