Wheat and barley prices surged higher last week as grain buyers become increasingly concerned about the 2018 wheat crop as farmers wait for planting rain.
Old crop grain prices have been achieving big premiums above southern markets for several months after drought cut the Queensland and NSW 2017 winter crop to the smallest in a decade. Supply concerns have been largely quarantined to last year’s harvest but buyers are becoming more and more anxious about the 2018 harvest.
Until recently, grain buyers have been reasonably relaxed about the 2018 as there is still plenty of time to plant winter crops and most of southern Queensland is sitting on good soil moisture. Although grain prices remained firm for the old crop months but the new crop delivery months were reflecting big discounts.
But rapidly rising new crop grain prices indicates supply concerns are now pushing across into the new crop months. New crop wheat traded at $355 delivered into the Darling Downs last week while deliveries prior to October are now fetching around $370 a tonne.
Markets eased towards the end of last week as some weather models predicted an improved chance of isolated storms across southern Queensland and northern NSW. Grain prices are expected to remain volatile for several months as buyers monitor weather developments and hope for some much-needed widespread soaking rain.
Prices for alternative feed grain sources are climbing as farmers wait for a break to the season. Demand for hay, cottonseed and other proteins sources has as rocketed in recent weeks as graziers are forced to feed livestock.
Livestock feeding as offered support for cottonseed prices which have jumped by $50 to $60 a tonne. However, cottonseed remains a cheaper alternative than feed barley which is fetching $300 to $320 on farm through NSW.
On farm feeding demand for feed barley is expected to cool cotton picking picks up speed. Cottonseed picking is underway in all areas of NSW. Cotton seed supplies will be well up on last year. Cotton Australia is reporting at southern NSW plantings were 55 per cent higher than last year and early yield reports have been exceptional.
Global influences on the domestic grain markets continue to offer underlying support for prices.
US wheat futures pushed sharply higher for a second consecutive week as the annual Kansas crop tour confirmed drought has punished yields. Benchmark US wheat futures have now rallied by around A$20 a tonne in the past two weeks.
The much talked about Kansas crop tour confirmed that months of drought has taken a heavy toll on US HRW wheat yields, which is expected to result in the smallest harvest since 1989.
Unfavourable weather in Australia and the Black Sea was also supportive for US wheat futures last week. Hot and dry weather was also prevailing in central and eastern Europe, notably in Ukrainian and Russian regions around the Black Sea. Hot, dry weather is already eroding wheat yields in eastern Europe with forecasting cutting yields in Poland and Romania.
