Southern Queensland feed grain users are bracing for several tough months as prices rally towards record highs.
Grain prices continued to push higher last week amid the scarcity of sellers. And we are still at least six months away from the earliest new crop supplies.
Wheat, barley and sorghum bids into the demand intensive Darling Downs gained $5 to $8 a tonne in the past week. Stockfeed wheat bids are now edging towards the mid $360’s and are rapidly approaching the record highs of 2014.
Soaring prices reflects the lack of grain supplies in Queensland and much of NSW.
Increasingly, northern grain buyers are having to compete with drought feeding through large parts of NSW as they struggle to access grain supplies. Drought conditions in NSW has forced sheep farmers through central and southern parts of the state to buy in barley from other farmers to feed livestock. This has seen on-farm feed barley prices through NSW spike in recent weeks as farmers step into the market as they gazump northern feed grain buyers.
Grain feeders are struggling with the spiralling prices and the absence of sellers. Traders are reporting that feedlots are hurting with the difficult trading conditions where feeding margins remain deep in the red.
Recent declines in cattle prices has helped ease some of the pain from the high grain prices. Some feedlots have already slashed cattle numbers while others are contemplating significant reductions amid the absence of rain and likelihood that grain supplies will remain scarce for some time.
Farmers have seen little to no rain in April and near-term forecasts remain dry. The extended outlook forecast released by the Bureau of Meteorology last week showed the drier than normal pattern continuing into May before easing in June.
United States wheat futures moved sharply higher last week, paring back losses in the previous ten days. Traders are nervous about what this week’s annual Kansas crop tour will reveal where farmers have endured months of drought. Crop conditions across the state are the worst in more than a decade and anecdotal reports indicate that yields have already suffered significantly.
Growing concerns over the lack of planting rain in Australia was also supportive. Dry weather concerns are also starting to surface in parts of the Black Sea. Much of southern Russia, which is an important region for the country’s export supplies, and Ukraine has seen limited rain through April and traders are becoming concerned about the dry outlook.
It’s still early days for Black Sea wheat crops, which are sitting on good moisture following a wet winter. Global markets are edgy on expectations this year’s harvest will be well down on last year’s record large harvest of 85 million tonnes.
Last week the International Grains Council lowered its forecast for the world 2017/18 wheat crop by 2 million tonnes to 739 million tonnes. They projected that world wheat ending stocks would decline by 6 million tonnes in 2018/19, which would be the first annual decline in five seasons.
