Chinese demand lifts wheat, barley despite stronger dollar
New-crop wheat and barley prices ride high, futures lift and the corn market is also bullish, coinciding with a weakening US dollar and a bullish corn market.
ELEVATED Chinese wheat demand and a bullish corn market have negated the downward pressures of a higher dollar as new-crop wheat and barley prices opened stronger this week.
Shorts in the US corn market were caught off guard with news of additional corn demand and yield-challenging warm and dry conditions reaching the US mid-west.
Extraordinary wheat demand by China also supported wheat values.
Wheat futures markets of Australia followed those of Chicago, Paris and London, with the January contract lifting $2.50 a tonne. While this may sound a small rise over a week, the rise coincided with a US2c rise in the value of the Australian dollar.
The US dollar crumbled last week when the US Federal Reserve changed the way it would set interest rates.
Crop production estimates remain favourable and some old-crop selling has continued to erode the premium for old crop grain prices.
In the delivered-Melbourne, end-user markets, last week’s $30 a tonne premium for current crop Australian Standard White wheat has closed in to only $15 this week.
This happened with the old-crop prices falling $7 a tonne to $300 and the new-crop ASW price lifting $8 to $285 a tonne.
This same market has the old-crop premium for BAR1 barley trading at only $7 a tonne and the delivered silo prices have now matched the prices for new crop.
Although few barley growers normally consider locking into malting barley contracts before harvest, there is a $7 a tonne premium available in Victoria for malting barley over the base BAR1 grade.
Premiums are $12 a tonne for malting barley in South Australia and $6 to $11 a tonne in Western Australia depending on variety.
Other commodities are weathering the uncompetitive change to the exchange rates.
Early this week, trader bids for canola delivered to the ports of Port Kembla, Melbourne and Geelong were $592 a tonne less freight to local silo.
These prices are back only $3 a tonne after Winnipeg canola futures rose $13.30 a tonne and Chicago soyabean futures surged $22 over the week.
With such a change in the currency, other high-priced commodities would normally respond with a sharp fall in value.
New-crop prices for faba beans are unchanged this week at $425 a tonne, but nugget lentil prices slipped $18 to $622 a tonne delivered to Melbourne packers.
However, new-crop desi chickpeas have rallied $60 a tonne to $560 delivered to container packers in Melbourne.
From last year’s drought-affected crop, national chickpea production is expected to lift by 64 per cent to 773,000 according to Pulse Australia’s latest report.
According to traders, rumours began to circulate last week that India was considering some changes to its tariffs for pulses, making imports more favourable.
These rumours, although unsubstantiated, were enough for other importers to bid up for product and buy a portion of their demand.
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