Stronger Aussie dollar undermines modest gains
Wheat and barley hold steady while pulse prices drift as weaker US currency reduces return to Australian exports.
WHEAT and barley have traded within a relatively tight $7 a tonne range for four weeks despite changes to our currency, but pulse markets are lower this week.
A resurgence in COVID-19 infections in the US and an unexpected rise in the US unemployment rate has led to a weaker US dollar.
The Australian dollar has correspondingly lifted and was trading at 71.2c earlier this week, a 15-month high and US1.35c higher than last week.
The lower US dollar has improved the export competitiveness of a range of commodities priced in US dollars, including wheat and soyabeans.
Chicago wheat futures are $2.45 a tonne higher this week, also supported by some fresh Chinese buying, a dry finish in the later maturing regions of the mid-west and Canada, and continuing concerns over the lower yields of the Russian wheat crop.
These lifts in commodity prices have offset the currency impacts on cereal and canola prices, leaving the rates similar to last week.
New-crop pulse prices, however, have fallen under the weight of a favourable production outlook and the stronger Australian dollar.
On a delivered-Melbourne basis, nugget lentils are down $10 to $660 a tonne and faba beans are down $15 to $455 a tonne.
The recently released lentil variety, PBA Hallmark XT, is now priced $30 a tonne under both nugget and nipper type lentils.
Due to the improved yield, disease resistance and herbicide tolerance features of the variety, there has been a sharp increase in the area sown to hallmark.
In a size-focused market, there has been confusion as to which historical variety or brand should be used to classify hallmark, as it shares characteristics of both nipper and nugget types.
Given there can be as much as $60 to $80 a tonne difference between both types, there has been the potential for contractual disputes.
To avoid confusion, this week the pulse industry has resolved to classify and segregate hallmark as its own grade and reassess the characteristics of the red lentil harvested this year.
The February rain caused a fall in cereal grain prices, but the lack of demand from the graziers of NSW and Queensland has arguably had a greater impact on other feed ingredients.
The ex-farm prices for cereal hay have fallen about $120 a tonne and unmilled almond hulls have fallen $285 to $35 a tonne ex-Millewa works.
Sales of the flour milling co-product mill-run and canola meal are also slow given the favourable east-coast season.
Some traders have found themselves holding inventory of feeds bought at high, pre-February prices and are finding demand sluggish.
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