Monday, March 5, 2012

Send 'er down Huey!

Wow, what a week with the weather gods reigning down on South East Australia. Vast regions had between 200 - 300mm, with blanket coverage of between 40 – 100mm more common on the fringes. Conditions will be looking cherry ripe and the early autumn break will mean growers can take their pick of full rotation options. Canola will be the flavor of the month at current decile 8 levels and at a healthy margin to wheat/barley. Another record crop sown to canola will be highly likely, but growers will be cautious of sowing too early after 2011 earlier sown crops were battered by frosts.

Luckily the wild weather didn’t reach northern sorghum cropping regions. Sorghum values have eased $5 this month, with harvest commencing in previously flooded paddocks. Quality has been mixed, but Graincorp has introduced new segregations (SORS and SORX) to capture better quality suited to the domestic feed market as opposed to export markets, which have tighter restrictions on levels of sprouting. There have been reports that SORX has been quoted at a staggering $50 discount, which seems too steep. Exports are slowing ramping up, after wheat has dominated shipping stem activity.

Chickpea rally continues, with track price gaining another $35 this week for a total gain of $100 since the start of the month. Delivered packers are at more of premium with $555 delivered into Oakey, however this is for May delivery. The sharply lower 2011 acreage is making its presence felt along with aggressive Indian/Pakistan demand, even on the cusp of their harvest.  There must be some long-term demand with AWB posting a $505 (+15 over five year average) new crop price, which may encourage increased planted area.

Looking at new crop pricing, canola continues to be the standout performer. WA values have outperformed east coast prices, gaining $35 in February. Wheat on the other hand has been steady, with current values ($250) exactly the same as the five month average. Malt barley continues to erode in value, -$11 for the month ($242), while the feed leg has bounced $9 ($226). 


Weather conditions continue to remain within the seasonal averages, albeit with much greater soil moisture then this time last year. Canola growers in particular will be hoping for a much earlier autumn rain then last year, when the late break didn’t happen until mid May for central growing regions. Australian Crop Forecasters pegged WA acreage 15% lower last year in lieu of this. With current canola values looking the most attractive and reaching the contract highest price, growers will want full moisture profile as to market their crop with confidence.

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