Gusty hot winds that swept across Southern Queensland last week may have been the final straw for some grain crops, as they continue to struggle with the drought conditions.
Temperatures hovered in the mid to high 20s for much of last week but it was the warm, gusty winds that hurt remaining cereal crops. Winds gusts of 30 to 40km/h sapped remaining moisture out of crops, which will further decrease yields.
Feedlots and other end users who have seen new season’s grain supply prospects deteriorate significantly in recent weeks have been forced to look further afield for grain supplies in the coming months. Grain buyers who had been expecting to secure wheat and barley from grain farmers in the western Darling Downs are now rethinking these plans.
The Darling Downs has been drawing wheat and barley from most of the NSW western cropping areas since June. More recently, some grain is starting to be trucked up from the Victorian Mallee.
Markets as far south as Melbourne are now being driven by the strength in the Darling Downs grain prices. New season’s APW wheat jumped by $15 to $265 a tonne Melbourne, which is reflective of the expanding drawing arch by southern Queensland end users because of the northern drought.
Eastern Australian wheat prices are becoming further detached from global markets as crop expectations continue to slide. US futures ended last week modestly higher but the Australian dollar soared to a two-and-a-half year high of 81 cents. Nonetheless, domestic values continued to rally as crop prospects dwindle.
Reports that damage from recent frosts through southern Queensland and NSW were also seen as supportive for local grain prices last week.
Stockfeed wheat prices gained $10 to $330 delivered Darling Downs while feed barley gained $10 to $315. New season’s sorghum bids into the Darling Downs continue to firm with the strength in the white grains.
ABARES is expected to cut its forecasts for Australia’s 2017 winter grain crops when they release the September crop estimates this week. Traders will also be looking to see if they lower the size of last year’s harvest following a large downward revision of the 2015 Australian wheat harvest revealed in the ABS Census.
ABS trade data released last week showed that 1.9 million tonnes of wheat was exported from Australia in July taking the total October/July exports to 19.7mt with just two months remaining in the marketing year. Barley exports remain very strong with 793,000 shipped in July taking the October to July shipments to a massive 8.2mt.
Queensland is on track to export close to 1mt of wheat in the 2016/17 season. It would be the first time that Queensland’s annual wheat exports have topped 1mt since 2012/13. A further 69,000t of wheat was exported from Queensland in July taking the total October/July exports to around 930,000t.