Northern 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 WA.
Darling Downs prices have been holding in a $420 to $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 $15 to $20 late last week to $405 to $410 on trader selling ahead of the WA 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 8mt. Last week the USDA lowered its forecast for Australia's wheat crop by a further 1mt to 18mt while leaving barley unchanged at 8.6mt.
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 13.6mt.
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 WA, SA 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 72.5mt.
US wheat futures were close to unchanged on the report but rallied 3-4 per cent on Friday 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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