Wednesday, January 11, 2012

Low protein wheat narrows discounted spread


APW prices are struggling to break their recent trading range, whilst the lower protein grades of ASW and FED spread continues to narrow as strong overseas demand supports higher prices. As what seems to happen every year, the malt premium to feed barley has whittled away. After averaging $50 in late November, it has now declined rapidly to be only a couple of dollars now. Domestic maltsters like to get their tonnage in early, and when they stop buying, so does the premium. Due to strong demand from Saudi Arabia feed barley prices have climbed off the mid Dec lows  and are currently at their highest prices since late October. Further highlighting the strong premium for F1, AWB have even a $5 premium for  for F1 over  APW.

 After rapidly falling $100 from early Nov to December, chickpea prices have stabilised at $440 Brisbane port. Pentag has been on this price since 21st December, with Graincorp and AWB a further $20 behind. There isn’t any more bulk shipments until Gardner Smith is exporting 18k out of Brisbane in April. So at this stage the premium is delivering direct into packer. AWB, Pentag and Viterra are all offering bids. Viterra is offering a $15 premium ($405) over AWB at Goondiwindi, while Pentag are offering $450 at Oakey. Feed grades continue to be at a $100 discount.

After earlier favourable growing conditions, the last three months has been bone-dry conditions in India’s main chickpea production regions. Further exacerbating the issue is above-normal temperatures but they haven’t been extreme. You would assume the dry conditions have already impacted on yields. And although the dryness is staring to get some airplay, domestic prices haven’t moved much. The local Ag department has estimated that chickpea acreage is set to decline by 500,000 hectares (8.72mha) compared to last year. But there are conflicting reports out there, if this is actually the case. Unless weather related issues cause a spike in prices, domestic prices will remain relatively flat.

Over in the west, Grain deliveries in WA have broken through 14mmt, well ahead of the estimated 13-13.5mmt earlier earmarked. Geraldton has largely finished with 3.5mmt. Kwinana 6.5mmt, is expecting a couple of hundred thousand tonnes, and will be pushing close to 7mmt. Albany 2.4mmt, sites are starting to fill, but harvest will continue throughout January. Esperance 1.5mmt, continued wet weather over the last week has continued to drag out the remaining harvest.


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