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Weather driving grain marketsThe Weekly Times THE focus of the grains industry is on Europe at present with extremes of weather adversely affecting crop quality and yield. Drought conditions in Russia and the Black Sea area are forcing local governments to hold back grain exports to ensure their domestic supplies. In Europe, wet weather has lowered grain quality. Barley, wheat and canola crops have been seriously affected. For instance, Durum wheat prices in Europe have risen sharply because of low yields and poor quality. Processors are finding it difficult to locate good milling quality Durum wheat. These European millers are now eyeing off the Australian Durum wheat crop. As a result, the AWB new crop 2007-2008 Durum wheat pool estimates are up by $60/tonne to currently be $320-$330/tonne FOB excluding GST for APDR grade. This compares to past pool values of $240.44/tonne in 2005-2006 and $258/tonne in the 2006-2007 No.1 pool. There are similar weather concerns in the US and Canada. In our local market, the recent Gippsland floods have caused a sudden and urgent demand for grain and fodder to flood-affected dairies. ASW grade old crop wheat from around Swan Hill has reportedly sold for $310/tonne on-farm to supply the Gippsland flood disaster market. Victorian Government grants have assisted in these high prices being paid for grain and fodder. Generally, old crop stockfeed wheat is selling for $280-$290/tonne at local depots and in on-farm sales. New crop wheat and barley multi-grade contract prices continue to rise. APW new crop multi-grade has risen by $49/tonne over the last 10 weeks from $207/tonne Geelong on May 25, to its current rate of $256/tonne. Multi-grade feed barley new crop contracts have gone from $195/tonne on May 21 to $250/tonne on July 30—up $55/tonne. The feed to malt spread, however, has halved from $31/tonne on May 21 to its current $15/tonne. Barley growers taking out new crop contracts are now tending to only lock in the feed leg of the contract and leave the malt leg open. Again with wet weather downgrading European barley quality and causing a malt barley shortage, the feed to malt spread should increase for our domestic malt grain. New crop canola outlook is positive. Current prices are holding at $480-$490/tonne delivered to port.
The 2008-2009 canola prices are approaching $500/tonne delivered to port and could go higher if the surge in biodiesel requirements further accelerates. Winnipeg Futures appear to indicate this trend.
Date: 02.08.2007 Leave your comment
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