Well-advanced crops add to pressure on prices

With global stocks of wheat building, buyers are holding back while Chinese market restrictions continue to affect the barley market.

ADVANCING crops around the world are increasing confidence in grain supplies and pressuring prices.

New crop prices for Australian Standard White wheat into the Melbourne domestic market open this week at $286 a tonne with barley at $233 a tonne, each tumbling $12 a tonne from last week’s easier rates.

The winter wheat harvest is moving through the US and analysts estimate that close to 20 per cent has been harvested.

As crops are well advanced, they are moving out of the danger period when weather can restrict grain development.

A similar picture is emerging in the EU and Black Sea region with mainly cool dry and mild conditions sponsoring favourable grain yields.

With many analysts reporting building global stocks of wheat, traders have found few reasons to buy and take long positions at present.

Chicago wheat futures are trading under US$5 a bushel for the first time in seven months. French milling wheat futures are $3.90 a tonne lower this week and Chicago wheat is $11.10 lower.

After trading in a narrow $7 a tonne range for five weeks, the January wheat contract on the ASX fell in accord with Chicago, slipping $11 a tonne to $288, a level not seen in the wheat contract since April 2018.

Favourable growing conditions are also found in most regions in Australia. Healthy rain in northern NSW have caused an uptick in grower selling adding further pressure on new crop values.

The majority of the wheat belt in NSW has had 30-40mm so far this month with areas from Parkes to Griffith and Tocumwal picking up the same rainfall last week.

After a rough start most growers in Western Australia have received at least 25mm so far this month and another 25mm is forecast this week.

Soil moisture levels are generally favourable in Victoria. Many crop sites monitored by Agriculture Victoria indicate a full profile but some Mallee sites are showing a falling trend from the drier conditions. Less than 10mm is forecast to fall in eastern Australia this week.

As unattractive as they are, new crop barley prices are unchanged this week. At $232 delivered port, less freight and GST, many Mallee growers are new crop barley quoted at under $200 a tonne ex farm.

The Chinese market restrictions are having an impact on wheat and barley markets. Without a premium for malting barley, the domestic feed grains industry has additional supply equivalent to the entire production volume of malting barley, usually around 40 per cent of the crop.

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