Dry weather keeps northern grain markets firm

Dry weather keeps northern grain markets firm

ANALYSIS
Agribusiness
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Prices for wheat, barley and sorghum in southern Queensland and northern NSW strengthened last week.

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Northern grain markets continue to edge higher as persistent dry weather stalls farmer selling and casts doubts over the size and timing of new crop plantings. Ongoing strength in US futures and shortages of grain trucks are also supporting prices.

Prices for wheat, barley and sorghum in southern Queensland and northern NSW strengthened last week as traders and end users dealt with the absence of farmer selling and the difficulty in accessing grain trucks. Logistical difficulties have become more acute in recent weeks with the absence of farmer trucks on the road, because they are busy planting winter crops.

Farmers are planting wheat and barley in Queensland and northern NSW and are hoping to see top-up falls this week with forecasts of unsettled weather.

Grain prices into the Darling Downs were $4 to $7 higher for the week. Barley was up $4 at $282 delivered. SFW was up $5 at $312 delivered and barley up $5 at $305. Grain prices strengthened broadly across eastern Australia.

United States grain futures continued to strengthen last week, offering underlying support to wheat and barley prices. US corn and wheat futures have surged in recent weeks to multi-year highs driven by weather concerns and tight old crop supplies. Nearby US wheat futures have rallied by $45 to $50 a tonne in the past two weeks while corn has rocketed $80 higher.

Surging world corn prices are expected to prompt some Asian feed grain importers to incorporate more wheat and barley in feed rations at the expense of corn, with current prices at multi-year highs.

Local grain prices have lagged increases in US futures markets. Exporters are reporting that global buyers are showing no interest in buying Australian wheat after the recent run-up in US futures markets, saying the prices are too expensive.

The International Grains Council released its monthly supply and demand estimates update last week. Forecast global wheat production was left unchanged at 790 million tonnes up from last year's 774mt. Global wheat consumption is set to increase by 19mt to 782mt, it said, including an 8mt lift in wheat feeding to 156mt.

World wheat stocks are set to increase 9mt to 298mt, IGC said, although all the increase will be in non-exporting countries such as India and China. Major exporter wheat stocks are expected to contract by 1mt to 64mt, it said.

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