Southern Queensland feedlots and other intensive grain users are preparing themselves for another year of large interstate grain flows to make up for another small northern grain harvest.
Darling Downs wheat and barley crops continue to deteriorate with no end in sight to the current dry, warm conditions. Temperatures are expected to climb into the high 20s in the western Downs late this week, but no rain.
It's estimated that southern Queensland feedlots and other grain buyers are consuming 120,000 to 150,000 tonnes of WA barley a month. This is unlikely to change in the coming months given the dismal outlook for the Queensland and northern NSW barley crop.
Large volumes of interstate wheat from WA and SA are also being discharged into Brisbane each month. Total wheat usage is well down from the levels seen in early 2019 as barley prices has become a more attractive option. Nonetheless, interstate movements remain large and are likely to remain significant into next year.
Southern Queensland feedlots are expected to absorb most of the Central Queensland wheat harvest as it becomes available in late September and October. But this won't be enough to satisfy the ravenous appetite of the southern Queensland demand. Other suppliers, including WA, will be critical when the CQ supplies are gone.
Questions linger if the southern Queensland grain demand will continue at the current levels, or if the sustained high prices will eventually take a toll on livestock numbers. Anecdotally, feedlots remain at capacity levels and operators are keen to keep it this way. Investment by many feedlots to expanded capacity over the past 18 months is a sign that most don't intend to cut back.
Tightening cattle supplies remain a major worry for feedlots, particularly with the good pastures in parts of northern Queensland.
ALFA is expected to release the results of its latest quarterly survey in the coming weeks.
It was a quiet week for the domestic markets with a lot of traders at the annual grain conference in Melbourne.
Darling Downs grain prices remain firm with the dry outlook. New crop wheat into the Darling Downs was up $5 for the week to $390 a tonne. New crop barley was unchanged at $355/t delivered into Downs feedlots.
New crop ASX wheat futures were $3 higher at $340/t.
