Grains higher with dry start to spring and lower dollar

Stockfeed wheat for January delivery was $3 higher at $290 delivered into the Darling Downs. Similar increases were seen in the southern markets with the ASX east coast wheat contract for January delivery, reflective of the Melbourne / Geelong market, finishing the week $7 higher at $292.

A disappointingly dry start to September has put upward pressure on domestic grain values as production estimates start to slide. Dry winter weather had already cut Queensland winter crop production estimates, but NSW and Victorian farmers are anxious for rain to maintain the current above average projected yields.

Farmers in parts of northern NSW are reporting that cracks are starting to reopen in the heavy black soils north west of Moree, signalling that some crops will be starting to run short of moisture.

ABARES will release its September Australian crop report later this week where it is expected to raise production estimates. Winter crop production estimates are unlikely to be as large as what some traders were flagging a few weeks ago. Talk of possible record yields after timely August rainfall and forecasts of above average spring rain have subsided to above average national winter crop.

A 1.5 per cent fall in the value of the Australia dollar was also supportive to grain prices last week.

New crop barley was close to unchanged with traders unwilling to follow wheat higher after China said it had suspended barley imports from CBH, further dampening Australia's 20/21 export outlook. China said the suspension was a result of finding pests in barley imports, but the move is s seen as a thinly disguised move to further restrict trade with Australia.

Australian wheat exports fell to 438,000 tonnes in July down from 1.039 million tonnes in June. About 208,000t of barley exported from Australia in July which including 96,000t to China. Traders are reporting the barley being shipped to China is heading to economic exclusion zones within China that don't have to pay the 80pc import tariff.

The USDA will release its September world supply and demand estimates report late this week. It is expected to raise global wheat production estimates as it factors in larger crops in Russia and Canada.