Wow, what a difference a month can make!
From early June to now we have seen the market rally across the majority of cereal crops by over $60/MT. As each day passes without rain we lose valuable new crop yield potential, and growers are becoming wary of any type of marketing commitments.
It begs the question around the sustainability of our domestic prices and how much of a premium is warranted in what will become an increasingly competitive export market over the coming months when northern hemisphere production hits export channels. In reality our domestic values are really reacting to what the grower does, and the liquidity (or lack thereof) they bring to the current market.
Grower behavior is ultimately dependent on what the weather does, so without anything solid currently predicted on the medium term forecast it would be safe to presume the standoff will continue.
CBOT eased off its mid-week highs heading into Friday last week (7th July 2017), as the recent USDA report was still bearish in nature, causing another round of fund selling.
We saw track values rise to seasonal highs last week with old crop H2 being bid at $330/MT track Newcastle, APW1 $320/MT and ASW1 $312/MT – all being met without offer. F1 barley was bid at $272/MT delivered into the Liverpool plains market with no offer received.
Chick peas appear to have taken a breather last week with new crop hectare contract CNSW packer bids being revised from $750/MT down to $700/MT by the close of the week.
But as per the old crop course grain complex, growers are far from excited about taking on any new crop production risk, even at today’s current premiums. The farm to farm trade market is continuing to build momentum as graziers look to supplement stock as winter rainfall has been a bit of a non-event up until now.
Every day we are receiving more farm to farm style enquiries, with a broad range of interest for off grade barley, defective feed, albus lupins and even sub quality grades from a few years ago. It seems if it can go down a sheep’s throat, there is a buyer for it!