Grain – Hay Report – 6 March 2014

International & National Summary – Grain:

• Grain news has been dominated this week by the civil unrest in Ukraine and pro Russian militia rolling into the Sevastopol airport in the Ukrainian peninsula state of Crimea. While the conflict does not impact global grain supply and demand fundamentals, it has the potential to significantly impact the movement of grain in the region. As a result the uncertainty surrounding the Ukraine situation has unfortunately seen global wheat prices jump significantly this week as traders look to gain exposure at current levels. CBOT wheat futures increased in value for the third consecutive week to finish up A$5/t from last week to close at A$258/t on Tuesday night. There are two likely outcomes from this unexpected crisis and its impact on grain values. If the matter is resolved quickly the risk premiums in the market will most likely recede and prices should return to reflecting the fundamentals suggesting lower prices. Alternatively if the crisis continues to escalate the Black Sea market may become restricted or even unavailable. This could force regions such as the Middle East and Europe to source from other origins including Australia. This possible reduction in supply has the potential to significantly increase Australian grain values. Feed grains such as Australian wheat and barley will be impacted the greatest if this scenario eventuates.
• Perhaps more concerning is the current condition of the US winter wheat crop. Reports continue to circulate that freezing conditions are causing winterkill in a number of areas. These reports continue to become more prevalent and could have a significant impact on supply and demand fundamentals. The potential deterioration of the US crop is not good news for end users and could see prices increase from current levels.
• Following the trend of recent weeks both Australian old and new crop increased slightly but didn’t fully mirror the gains seen in international values. This reflects the Australian basis weakening after sitting at historically high levels over the harvest period. Analysts are predicting little upside in Australian basis with values to be more directly dictated by international market movements.
• The feed markets continue to be separated through two key regions. The north Australian feed market again saw increases on the back of international values. Until large portions of rain are received and production is relatively certain feed prices will maintain current levels. If dry conditions continue prices will be forced higher to allow grain to flow from southern NSW. Recent rains have not been enough to give confidence for the winter crop but if adequate rains are received prices will drop rapidly.
• In southern markets inclusive of the export states of VIC, SA and WA the differentiation between wheat and feed barley prices has narrowed. Prices are now in a more traditional price range on the back of increasing barley values in recent weeks. Anecdotal reports suggest domestic purchases are down as many are reluctant to lock in supply at current levels. End users seem happy to sit on the sidelines. With the current price volatility it would seem unwise to commit to new season contracts. Early rain events across the country could see prices return to more desirable prices for end users.

National Summary – Hay:

• There will not be a hay report this week. The next hay update will take place on Friday March 14^th.

This report has been commissioned by Dairy Australia to provide an independent and timely assessment of grain and hay markets in each dairying region. It should be remembered that actual prices may vary for quality or other reasons. All prices are quoted are exclusive of GST.

The information in this report is collected and disseminated with due care and attention to its accuracy, but Dairy Australia accepts no liability if, for any reason, the information is inaccurate, incomplete or out of date.

• Mareeba March rainfall: 1.8mm (Ave: 173.5mm).
• YTD: 265.6mm (Ave: 664.7). This time last year the tablelands had received 497.2mm.
• The area continues to get weekly rains, which has allowed for favourable growing conditions.
• Wheat: $ +0 ($385 to $395). Wheat prices are steady and with tension in the Ukraine, they are unlikely to ease back in prices in short term.
• Barley: $ +8 ($475 to $485). Feed barley is still being purchased, as buyers believe that containment feeding won’t be required for much longer.
• Corn prices $ +0 ($310 to $320). Corn prices are based on tablelands availability.
• Sorghum: $ +0 ($347 to $357). Some limited supplies of sorghum are expected from Central Queensland in April. There have been forward sales of sorghum to both exporters and domestic consumers. There is a strong possibility that due to a lack of soil moisture, grain sorghum may be too light in weight to reach the lowest export standard.

• Toowoomba March Rainfall: 1.8mm (Ave: 66.7mm).
• YTD: 25.8mm (Ave: 294.2mm), compared to 670.2mm last year.
• The limited rains are not enough to support croppers at this stage.
• Wheat: $ +0 ($361 to $371). Wheat prices are steady due to a combination of subdued domestic buying and some sale of wheat in containers to Pacific Island markets. Domestically, all grades of wheat except APH2 are trading at the same price.
• Feed Barley: $ +8 ($361 to $371). Strong jump in barley price this week. It is mainly used for containment feeding of beef breeding stock.
• Corn $ +0 ($377 to $387). Corn supplies are now improved as more of the Downs corn crops are being stripped. The ‘shortage factor’ has now been removed from the pricing of corn.
• Sorghum: $ -6 ($328 to $338). Some areas have had good rains for sown sorghum, but most are still in drought. Sorghum from irrigation and some selected farm locations are due to be stripped this month.

• Lismore March rainfall total: 8.4mm (Ave: 138.6mm).
• YTD: 112.4mm (Ave: 458.1mm), compared to 699.6mm this time last year.
• The mid north coast region had rainfalls within the range of 40 to 100 millimetres.
• SFW Wheat: $ +0 ($395 to $405). Wheat prices are steady due to a combination of subdued domestic buying and some sale of wheat in containers to Pacific Island markets. Domestically, all grades of wheat except APH2 are trading at the same price.
• Feed Barley: $ +8 ($396 to $496). Strong jump in barley price this week. It is mainly used for containment feeding of beef breeding stock.
• Corn $ +0 ($372 to $382). Corn supplies are now improved as more of the Downs corn crops are being stripped. The ‘shortage factor’ has now been removed from the pricing of corn.
• Sorghum: $ -6 ($346 to $356). Some cropping areas had good rains for sown sorghum, but most areas are still in drought. Sorghum from irrigation and some selected Downs and Breeza plains locations are due to be stripped this month.

• Forbes March rainfall: 62mm (Ave: 46.7mm).
• YTD: 158mm (Ave: 126.9mm), compared to 146.4mm this time last year.
• An encouraging amount of rain this week. Summer drought still lingers in northern inland areas.
• SFW Wheat: $ -2 ($259 to $269). Some very useful rain in the Central West this last week. It improves the outlook for a timely sowing for the region. However, in the key grain areas there were just some isolated storms.
• F1 Barley: $ +2 ($244 to $254). Feedlots in the north are still buying barley.
• Corn $ -10 ($400 to $410). Corn prices are down as more crops are stripped from irrigation country and to a lesser extent in the northern areas from dryland crops.
• Sorghum $ -10 ($362 to $372). Sorghum prices are down on useful rains in some summer rainfall areas two weeks ago. This price is based on a northern purchased and then trucked to Forbes.
• Too early to sow any dryland crops on this recent rain.

• Bega March rainfall total: 4.4mm (Ave: 78.3mm).
• YTD: 45.2mm (Ave: 229.2mm), compared to 152.2mm this time last year.
• Good rains in central west bode well for 2014 winter crops.
• SFW Wheat $ -2 ($273 to $283). Export buyers are watching the developments in the Ukraine to gauge if any strong upward movement of wheat prices will occur.
• Feed barley $ +0 ($258 to $268). Barley from southern New South Wales and Victoria is in strong demand from northern New South Wales feed lots.
• Triticale $ +0 ($266 to $276). Triticale maintains a small discount to feed wheat. But still growers holding this commodity are waiting for winter before offering grain out of silos.
• Oats: $ +4 ($260 to $270). Growers are holding oats as seasonal conditions are uncertain and livestock numbers are high.

• Tatura March Rainfall total: 0mm (Avg: 35.3mm)
• YTD: 21mm (Ave: 102.9mm), compared to 49.1mm this time last year.
• Wheat: $ +0 ($257 to $267). Wheat prices are likely to rise with increasing tension in the Ukraine. But for the present, Victoria wheat prices are steady and awaiting future direction. Good rains in central west New South Wales bode well for early sowings.
• F1 Barley: $ +2 ($233 to $243). Feed barley prices are now up $28 a tonne since early January. Exporters are seeking feed barley for the Middle East. Domestic demand still strong from feedlots and graziers in northern New South Wales.
• Triticale: $ +0 ($250 to $260). Triticale price remaining steady. Usually trades a few dollars less than wheat.
• Feed Oats: $ +3 ($213 to $223). Feed oat prices have risen $25 a tonne since early January. There is strong demand due to the drought in northern New South Wales and talk of an approaching El Nino for southeast Australia.

• Sale March rainfall: 0mm (Ave: 49.5mm).
• YTD: 35.8mm (Ave: 137.6mm), compared to 63.4mm this time last year.
• Useful rains this week in East Gippsland but no rain in West Gippsland.
• SFW Wheat: $ +0 ($307 to $317). Wheat prices were set to rise sharply as tensions increased in the Ukraine. However, prices are steady as there are now fewer concerns of Russian expansionism. Prices could slip in the short term with some good rains in the central west of New South Wales.
• Barley: $ +2 ($285 to $295). Barley continues to trade within it’s traditional discount to feed wheat.
• Triticale: $ +0 ($297 to $307). Triticale prices are currently mirroring the delivered wheat prices. It is expected that demand will pick up in winter as conditions become colder and wetter.
• Feed Oats: $ +3 ($238 to $248). Feed oat prices have risen $25 a tonne since early January. There is strong demand due to the drought in northern New South Wales and talk of an approaching El Nino for southeast Australia.

• Port Fairy March rainfall: 0mm (Ave: 37.8mm).
• YTD: 26.4mm (Ave: 104mm), compared to 33.4 mm this time last year.
• No rain this past week and it would be very helpful at this stage.
• SFW1 Wheat: $ +0 ($253 to $263). Wheat prices are likely to rise with increasing tension in the Ukraine. But for the present, Victoria wheat prices are steady and awaiting future direction. Good rains in central west New South Wales bode well for early sowings.
• Feed Barley: $ +2 ($233 to $243). Feed barley prices have risen $28 a tonne since early January. Local barley supplies are still available and trading within the traditional discount range to wheat.
• Triticale $ +0 ($247 to $257). Triticale is trading at a small discount to feed wheat.
• Feed oats $ +3 ($222 to $232). Demand is coming from graziers for use as reserves in the next Western District drought.

• Mount Gambier March rainfall: 0mm (Ave: 35.2mm).
• YTD: 50.2mm (Ave: 87.6mm), compared to 24.4mm this time last year.
• Wheat $ +5 ($281 to $291). Exporters are now bidding $7 a tonne more for wheat out of South Australian ports this week, compared to last week. However, bids for wheat exports out of Geelong, Melbourne and Portland are unchanged until the Ukrainian position is clarified.
• Feed barley $ +3 ($259 to $269). Export bidders out of Port Adelaide have increased their bids by $5 a tonne this week, compared to only $2 a tonne in Victoria. This brings Victorian west Wimmera grain sources in to a better light now for delivery into the southeast South Australia region.
• Triticale $ +5 ($265 to $275).
• Oats $ +0 ($212 to $222). There is steady buying of oats east of Port Augusta to accumulate for an export shipment. Oat prices are rising in Victoria and New South Wales as drought conditions continue in northern New South Wales.

• Murray Bridge March rainfall: 0mm (Ave: 20.4mm).
• YTD: 90.2mm (Ave: 31mm). 53.3mm this time last year.
• It has now been three weeks since the heavy rains that caused some flooding. There has been no rains since and quite hot weather.
• Wheat $ +7 ($258 to $268). There is very strong buyer interest for South Australian wheat to go to the Middle East. This is following concerns about the reliability of wheat exports out of the Black Sea terminals, due to the events in the Ukraine. Because of the high quality of the recent South Australian wheat crop, domestic buyers of lower grades of wheat are being caught up in this.
• Feed barley $ +5 ($238 to $248). Another strong price rise this week. The discount to wheat in early January was $35 a tonne. Prices for both commodities have risen since then and the discount has eroded to $20.
• Triticale $ +5 ($245 to $255). Triticale pricing is not easy to monitor at this time of year. Holders of the grain are holding for winter sale, when they expect demand to increase.
• Feed Oats $ +0 ($183 to $193). There has been some interest in oats for potential export but the grade of feed oat is not an export grade.

• Bunbury March rainfall: 0mm (Ave: 15.5mm).
• YTD: 0.4mm (Ave: 34mm), Compared to 3.4mm this time last year.
• Hot and dry conditions with higher temperatures are expected this weekend.
• Wheat $ +10 ($305 to $315). The eastern states wheat markets have been tentative on wheat prices. However, there are stronger buying bids from exporters in Western Australia as a direct result of tensions in the Ukraine.
• Feed barley $ +0 ($285 to $295). The price kick in wheat has not been matched in barley. This has put feed barley back within its traditional discount range to wheat.
• Triticale $ +0 ($265 to $275). There is quiet trading between growers and the major buyer in Perth with prices unchanged. Triticale will have more appeal in winter.
• Oats $ +0 ($190 to $200). Some demand for oats within the Port of Geraldton grain delivery zone.

• Smithton March rainfall: 0mm (Ave: 50.8mm).
• YTD: 69.8mm (Ave: 124.9mm), Compared to 33.8mm this time last year.
• There has been no rain this week anywhere.
• Wheat $ +0 ($335 to $345). Local wheats are currently being stripped under ideal harvesting conditions.
• Feed barley $ +0 ($315 to $325). Barley crops in the Midlands are mostly stripped now. Northern crops are also coming off as they ripen.
• Triticale prices $ +0 ($323 to $333). Triticale is mainly a mainland crop. It is not currently exported overseas but takes its pricing parameters from the lowest grade of wheat available for stockfeed use. Holders of triticale on the mainland will not offer their grain until winter conditions arrive.
• Oats prices $ +3 ($298 to $308). With drought conditions prevailing in northern New South Wales and Queensland, feed oats have been in stronger demand.