Australia: Grain prices continue to chop around amid declining prospects for winter crop
Northern Australias grain markets continue to chop around in a tussle of tight nearby supplies and hopes for an easing in prices once harvest activity picks up in south eastern Australia and Western Australia, the Queensland Country Life reported on October 14.
Darling Downs prices have been holding in a A$420 to A$440 range for stockfeed wheat for the past three weeks. Buyers have been lifting bids to the higher end of the range when they need to secure some coverage and then edging lower afterwards. Barley prices fell A$15 to A$20 late last week to A$405 to A$410 on trader selling ahead of the Western Australias harvest.
Prospects for Australia's 2019 winter crop harvest continue to decline. Some private estimates have the national wheat crop slipping below 16 million tonnes and the barley harvest falling below 8 mln tonnes. Last week the USDA lowered its forecast for Australia's wheat crop by a further 1 mln tonnes to 18 mln tonnes while leaving barley unchanged at 8.6 mln tonnes.
If the lowball forecasts are realised, it would be Australia's smallest winter crop since the 2007 drought when the national wheat crop was just 13.6 mln tonnes.
However, Australia's shrinking crop size may not mean that grain prices continue to climb. High prices over the past 18 months have slashed export demand even more rapidly than production has fallen. The perennial question is what happens to the excess volumes in Western Australia, South Australia and Victoria that aren't needed by domestic markets.
The USDA's world supply and demand report for October was viewed as neutral for global wheat prices. USDA raised its forecasts raised European Union wheat production while leaving Russia's wheat crop unchanged at 72.5 mln tonnes.
US wheat futures were close to unchanged on the report but rallied 3-4 per cent on October 11 on a potential breakthrough in the US/China trade war.
It's shaping up as a slow start to Australia's 2019 winter crop harvest because of the limited production in the northern cropping zones. Southern Queensland harvest is under way, but volumes will be the smallest in more than a decade.
SA received its first harvest last week in the Port Pirie region, but it will be another two to three weeks before the broader picks up.
Weekend storms across southern Queensland proved disappointing for grain farmers. Stanthorpe and Texas received a patchy 20-30mm from the storms but there was nothing in the Darling Downs where farmers need soaking rain to plant sorghum.
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