Tuesday, November 8, 2011

Australian harvest slowly rolling south

Scattered rain up to 20mm through most of SA, VIC and NSW has held up/delayed harvest this week. However the next two fronts that are forecast to cross again on Wed and Sat, will cause the greatest concern for crop quality. With the delayed harvest making it difficult to get a handle on overall quality, malt barley prices have stabilised after declining over the previous four months. Over the last weekend, fine warm weather had helped crops mature, but 90% of the crop in these regions has yet to be harvested.

Fine harvest weather across the Sth QLD, Nth NSW last week will have the crop over 70% done in QLD. Harvest quality has improved with more H2 being delivered. Growers still hold substantial on farm stocks with quality variable, with yields remaining above average, some compensation for the lower prices for the ASW and lower grades.

Track bids are firmer for APH, with grower selling increasing, but buyer depth is lacking at the top end of the bids. H2 has found grower support with recent premiums over APW around $30, as growers look to extend sales.
ASW and lower grade track bids are disappointing to growers, but are supported by the domestic feed market, with delivered bids holding well given the amount of stock available.

Newcastle feed barley bids are back $9 with AWB paying $7 premium for northern sites that traditionally service any QLD shortfall, or work into the northern market on freight differentials. Border feedlots on limited interest from buyers, is bid around $190 delivered. Liverpool Plains and New England markets were void of bids as harvest approaches, with bids considered lower. Riverina feedlots have trade bids for the harvest period at $158, down $4. Delivered markets into Melbourne are arranging from $189 (Viterra) to $206 (AWB).

Malt bids continue to ease slightly harvested volumes increase. Newcastle is lower at $236, Pt Kembla $239 (highest price along the East Coast). Delivered Tamworth is bid $236, which holds a good premium over the track bids. With feed barley forward market averaging close to $230 throughout most of 2011, a lot of grain growers would have taken out forward coverage at these prices. So the trade would have got all their accumulations for the busy harvest shipping periods (Nov – Jan). So growers wouldn’t need to chase the market down any lower, and growers may sustain from the market until the trade needs to tonnage in Feb/May.

WA harvest continues to splutter through the start of harvest, with relatively cool conditions combined with more scattered wet weather over the last couple of days bringing headers back into the sheds. CBH has estimated that less than half a million tones has so far been delivered into the system, vastly below the average receivals expected for this time of year.

APW for the first time in 2011, has had a week of relative steady week, with prices $1 firm. This has broken the previous two months of weekly price declines. As expected, the higher protein grades have strengthened relative to APW2. At the end of October H1 premium was +$21, this has now increased to +$52/t. H2 premium has increased from +$18 to +$32, while the ANW1 premium has improved only +$4 to $9/t. Last months news that Saudi Arabia had included lupins on its animal feed subsidy list, hasn’t yet set the market on fire. Prices are still gradually falling away from highs ($270 FIS) seen in June. Viterra are paying the better money, with AWB and CBH not too far behind. The lower protein grades have held steady during this same period.

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