Industry stakeholders convene as canola succumbs to relentless wet weather

Headers are finally rolling in all states with a vast array of commodities and quality all hitting the bins at the same time.

The delayed start to harvest, variable quality, labour and fuel shortages, and weather hold-ups are well and truly stretching the supply chain from farm gate to port.

The evidence of quality issues through much of NSW and into Victoria reached its peak last week as industry stakeholders convened to determine how to manage out-of-spec canola due to the presence of mould in the sample.

For those in the north of the state, the issue seemingly hasn't been as widespread with stacks north of the Liverpool Plains, excluding the Gilgandra to Coonamble line, largely being deemed as maintaining CAN1 specifications.

The initial response from the vast majority of the trade has been to value the new higher mould canola at evens to CAN1.

For the time being, and until the extent of this higher mould count is quantified, the majority of canola through the Port Kembla and Victorian port zones are being graded as CANS.

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Unfortunately, it hasn't only been canola that has succumbed to the weather and seen quality issues.

From Queensland right through NSW and into Victoria, there are reports of almost every grade of wheat imaginable, as well as the full array of barley.

Similar to canola, however, it seems that the north of NSW was able to produce a reasonable volume of malting barley, which has found its way to market recently.

With current spreads to feed barley, in some cases in excess of $150 a tonne, it's difficult to ignore this opportunity.

And with reports that at least one vessel has been booked to sail from Western Australia into the east coast to satisfy domestic demand, this should put a lid on prices for malt barley for the time being.

From a wheat perspective, prices still remain at historically high levels despite pulling back from their record highs seen earlier this year.

Unsurprisingly, spreads between milling and feed grades have widened further as we move through harvest and the profile of the crop is better understood.

Domestic feed consumers have been somewhat absent from the market for some time as the amount of lower grade wheat (and barley for that matter) has continued to grow, thereby in no rush to take a lot of cover at this time.

With ASX peaking earlier this month, the question remains whether those shorts are now covered and what will happen in January when that contract goes into delivery.

Reportedly there hasn't been a significant amount of milling wheat sold to export markets out of NSW ports to date, so time will tell what happens to those spreads from here.