Wheat futures retreat while lentils enjoy rising market
Grain and pulse sellers are active. See how selling pressure has impacted grain and pulse markets this week.
SUMMER storms are boosting growers’ soil moisture, particularly in central Victoria, but most grain markets are softening after some strong rallies. Sellers are hunting out premiums where they can find them.
Given the generous volumes of grain in on-farm storages and in warehousing, growers and pool managers are active sellers.
Many are aware that they need to participate in the market to ensure they sell grain in an even spread across the first half of the year.
After hitting a three-month high in the last week of January, the ASX wheat futures has slipped $11 a tonne to $294, falling heavily last Friday.
These futures prices reflect the cash markets, with exporter bids falling $3 to $4 a tonne for most wheat and barley grades in Victoria and the Riverina.
Wheat prices in the Port Adelaide zone bucked this trend, with South Australia’s busy shipping program lifting wheat prices $3 to $4 a tonne.
In the US, corn and soyabean prices remain supported by Chinese demand, but wheat values in the US and EU weakened due to a lack of bullish news and profit-takers.
With the softening tone of the cereal grains, lentils have been offering growers some options to sell one of their commodities into a rising market.
In the past three weeks, nugget type lentils have risen $65 a tonne to $700 delivered to container packers in Melbourne and nipper type lentils are achieving premiums of about $20 a tonne higher.
The numerous pulse processors and container packers based in the Wimmera have been active in the market balancing their accumulation programs with their capacity to secure food grade containers for export to the sub-continent.
Nipper-type lentils reached a new high last week of $700 a tonne delivered to Wimmera packers, but eased $20 earlier this week.
Pulse exporters report that lentil prices have rallied despite the appreciating trend of the Australian dollar, the declining access to containers and the lack of access to the substantial Indian market.
There appear to be two likely reasons for this rally in lentil prices.
Although lentil prices of $700 a tonne are sitting at a 10-year decile of seven, the volume of sellers remains low.
Growers are not rushing to sell as they have seen lentils prices rally to $1300 a tonne. Lentils can be stored with little damage from insects and growers are enjoying high gross margins from their major crops of wheat, barley and canola.
A number of bulk vessels are loading lentils and other pulses in South Australia this month. Seven shipments varying from 800 to 15,000 tonnes are scheduled to depart from Port Adelaide, Port Giles, Port Lincoln and Wallaroo.
Similar small shipments are expected to start loading from Portland soon.
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