A sharp decline in the Australian dollar is set to offer additional support for domestic grain prices.
Australia's currency came under further pressure tumbling 2.8 per cent to end the week below 70 cents for the first time in 18 months. The Aussie dollar fell as the US greenback posted its largest weekly rally in seven months after the Federal Reserve flagged likely interest rate rise in March as they move to rein back inflation.
The weaker Australian dollar makes exports more competitive into overseas markets, which is good news after last year's record large national wheat harvest. It's also good news for the current sorghum harvest where southern Queensland farmers are expected to reap the biggest crop in a decade.
Large plantings and well above average early yields are justifying expectations for the big southern Queensland sorghum crop, which traders are saying could exceed 1.2 million tonnes. It's a similar situation in northern NSW where increased plantings and big yields are expected to see a crop top the 700,000 tonnes for the first time in 10 years.
Patchy storms slowed early sorghum harvesting last week on both sides of the Queensland border. Parts of the inner Darling Downs received 10-15 millimetres including Dalby and Oakey. Northern NSW received upwards of 25mm.
Southern Queensland grain prices were mostly steady to firmer for the week. Stockfeed wheat was up $3 at $305 delivered into the Darling Downs with buyers now appearing to be reasonably well covered for nearby requirements. Barley was unchanged at $290 delivered into Downs markets while sorghum was $5 lower under harvest pressure at $297 delivered.
Exporters are anticipating strong demand for Australian sorghum in the coming months, particularly into China, which is seen as favourably priced against other sources of feed grain.
Drought in some of South America's main cropping areas and fears that Russia may invade Ukraine are helping to keep global feed grain prices supported. United States corn futures rallied to a seven-month high late last week as investors become nervous about a further tightening in global feed grain supplies.
Summer crop yields through southern Brazil and northern Argentina have been slashed after dry weather and excessive heat over the past 30-40 days. Global feed grain importers will be concerned about war in Ukraine which is the third largest corn exporter in the world behind the United Sates and Brazil.
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