Grain supply concerns ease with rain

Grain supply concerns ease with rain

Agribusiness
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Grain prices have fallen in the past week as grain supply concerns ease.

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What a difference rain has made.! Grain prices continued fall in the past week as grain supply concerns ease and the focus turns to an expected large winter crop planting in the autumn.

Stockfeed wheat prices into the Darling Downs fell $15 last week to $450 a tonne with barley down $5 to $383. Only three weeks ago, wheat bids into the Darling Downs reached $470 which exceeded the highs in late 2018.

Recent declines in feed grain prices have been limited by the tight supply situation across southern Queensland and NSW after more than two years of drought.

Saturating rains of the past six weeks across Queensland and northern NSW won't make any more grain until the wheat and barley harvest which is still some eight months off. But the improved weather fortunes have noticeably changed the market sentiment as the endless paddocks of dust transform into a sea of green.

Pasture starved farmers in southern Queensland and NSW have stopped buying in grain to keep livestock alive, which has put the brakes on barley prices. Commercial grain buyers have become more reluctant, while southern farmers have become more anxious to sell more of last year's harvest.

Table 1: Queensland grain prices. Source: Lloyd George.

Table 1: Queensland grain prices. Source: Lloyd George.

A softer tone in global wheat prices is also weighing on local prices. Export quotes for Russian wheat have fallen by around $16/t in the past two weeks as farmers step up efforts to sell old crop supplies before the new crop harvest in July. WA wheat prices have followed the Black Sea prices lower, which is also pressuring southern Queensland values.

Grain demand across southern Queensland remains robust, as seen in last week's October to December cattle on feed survey results. Cattle on feed finished 2019 at a record high of 1,239,563 head for the final quarter, according to the ALFA and MLA survey.

Queensland cattle on feed numbers increased by 59,786 head or 9 per cent on the previous quarter to a record large 720,055 head. ALFA said the cattle on feed numbers had been above 1 million head for the past eight quarters, culminating in the record high 1.2 million head at the end of 2019 with feedlot utilisation of 90pc.

Dramatic rises in the cattle prices after the rain will put the pressure on feedlot margins. Some categories of feeder cattle have lifted by 20-25pc since the start of the year as restockers and lotfeeders chase limited cattle supplies.

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