COMMODITY UPDATE
Market Observations: February

With harvest 2023/24 largely finished, we have a better understanding of the quality available to the industry for the coming year. The season has produced some diverse results, but this is primarily due to undesirable harvesting conditions in the Western district, other areas of Vic produced close to the quality Farmers had aimed for.

As an industry, we have the challenge of working through the plethora of varying grades. Low test weights, low falling numbers (again primarily in the South West of VIC), weed seeds in the sample at storage and handling sites will also not be uncommon. A significant portion of the Western district crop was stripped with a high moisture content. The GTA standard is 12.5% and many farmers had to succeed this just to get the crop harvested. Any prevalence of weed seeds was brought about by the perfect growing conditions just prior to the commencement of harvest. Coupled with this was the inability to eradicate the problem due to lack of paddock accessibility; farmers since harvest have been actively spraying in an attempt to control weed problems. In many cases, 3-4 applications of herbicide would be applied to paddocks but consistent down pours of rain continuously created the perfect growing environment for weeds and rain also hindered machinery access to paddocks in order to deal with them. Field fungi also presented in some areas.

Despite all of these issues, the overall National crop was considered to be a success. QLD and parts of NSW was disappointing, but again, in terms of the national crop it received better than a pass mark. While not as big as last season varying estimations have placed the Australian Wheat crop around an average of 28-29 million tonnes. The higher levels of protein was also unexpected in cereal crops.

The Western Australian crop was significant again but this time producing more protein than what is considered normal. That is, traditional ASW and APW grades gave way to a bigger AH2 component in the Silo than usual. The higher AH2 volume in WA makes up for the lack of protein in the traditional growing areas of NSW and QLD. This has resulted in WA focussing on sales into some of the more traditional South East Asian markets normally served from East coast Australia.

South Australian crops followed suit to WA. While overall deemed a success, the South East of SA was exposed to a long drawn out harvest like its Victorian counterparts. East Coast production tonnages indicated by some market commentators seem unlikely. Parts of Victoria and NSW have produced Wheat (and Barley) that is very light which directly affects the overall crop yield. With Wheat expected to test in the high 70’s kg p/hl, the industry has seen quite a bit of low 70’s kg p/hl come to the market. Volume of grain produced is no doubt above average but to produce enough weight in the national Wheat crop to push it into the 30 million’s is unlikely.

Markets have been quite subdued over the last couple of weeks. Growers have concentrated on packing up gear (or even completing harvest in the VIC Western district) after a long and arduous harvest. Grain buyers have largely received their fill for now. As a result, the market is slightly softer with not a lot of volume trading, but prices will naturally move based on how eager the seller or buyer are to come to market at any point in time. We are at basis levels where we are becoming an attractive option for buyers in our traditional export markets versus our competitors from other origins.

With the anticipated reduction in exports this year compared to recent years, the road/rail logistics infrastructure will not be as challenged as we saw in 2022 and 2023. All ports were busy moving the abundant crop unlike this year where freight will be more readily available. This very much assists farmers in having the ability to get their product to their chosen marketing location within the desired contract period without disruption.

The Australian domestic market will continue to be there as a buyer month in, month out regardless of how competitive we are against other growing nations. We look forward to servicing our domestic clients again in 2024.

To increase your livestock farming gains & expert nutritional feeding advice please call 1300 REID FEED or enquire here >

Author

Justin Fay
Commodity Manager