COMMODITY UPDATE
Market Observations: April

Planting of the upcoming winter crop will remain the focus of growers across the country, while all other market participants will monitor closely to try and get a gauge on areas planted, and start working on production forecasts. Planting intentions and subsequent actual plantings will be a focus of the market as weather forecasts and general growing conditions play out over the coming months prior to harvest later in the year.

After a recent slide in commodity prices in general across the board, the grower will largely be absent over the coming couple of months with their focus on getting the new season crop in the ground.

Domestically, wheat prices have softened quite considerably since harvest as key exporters remained largely absent from the market, and domestic consumers worked their way through harvest purchases. A relatively subdued market has eventuated with a lack of depth being a constant feature. Growers have turned sellers to meet cash flow requirements and for logistical reasons like back loading fertilizer, but otherwise have not been overly active. All eyes will continue to closely watch Australia’s export pace which will be a key determinant to future pricing domestically. In recent weeks we have seen a small bounce in prices as the grower has stopped selling and shifted their focus to planting.

Barley has not been immune to the drop in pricing but has held up stronger than wheat, with the spread between both commodities narrowing, indicating a tighter barley supply situation. Adding to the bearish tone has been the significant Sorghum crop in Northern NSW and Southern Queensland currently being harvested. This crop has now been forecast to exceed 2Mmt which would have been thought as wishful thinking in spring last year.

Internationally, we have new crop on the doorstep and in general abundant supplies across most key commodities are expected. Russia continues to dominate export markets and has been a key driver of the reduction in pricing in recent months, as their export pricing remains the lowest in the market. From a demand perspective, China have been the headline grabber in recent times with rumours of cancelled purchases of both US and Australia getting attention in the market.

Soil moisture profiles remain quite varied across the country but in general are at better than average levels across much of the east coast. WA remains dry – while this is not uncommon with their rainfall being typically winter dominant, they will certainly be looking for some planting rains and a decent autumn break. Recent rainfall in Northern NSW and Southern Queensland have them in a very strong position for planting, while Southern zones will be looking for a break after a hot and dry run in recent times despite subsoil moisture remaining strong.

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Author

Campbell Sutherland
Commodity Trader