COMMODITY UPDATE
Market Observations: March

At Reid’s, we hope everyone has had a safe and enjoyable summer. We hope in particular our Farming and Transport industries have had the chance to unwind at some point after what has certainly been a very challenging and drawn out harvest.

The long drawn out harvest extended well into February and although the majority of headers have been put away for a well-earned rest, a few stragglers are still finishing off as we move into March. The market has faced many logistical challenges particularly given the solid export program in play. Transport resources have been stretched to the limit in moving what the industry believes to be a record crop. With tight logistics and strong demand from both the export and domestic markets, naturally, prices have fluctuated across the month based on the need for prompt supply.

Wheat markets found some firmness around the middle of the month with short term/prompt demand putting a spike in the delivered markets. Values were lifted in the Geelong/Melbourne markets on the back of supply shorts into Ports where exporters were completing vessel loading and “stemming” for vessels in line to come in. This had a knock on effect into delivered regional markets with some cushioning in price due to tonnes off the header looking for a local home.

The price spike reflects the end of harvest where the exporter four weeks ago could rely on both trade tonnes and off the header tonnes to complete a vessel. With less grower tonnes available and having to rely on more support from the trader to fill their requirements, the market had to pay an incentive to entice the farmer back into sell, but also for the trade supplier to run the gauntlet of a tricky storage and handling system and logistics pitfalls. Conversely, towards the end of February we saw prices ease back locally. This was primarily due to a slight easing in demand for prompt grain requirements which meant more availability of tonnes and transport for the market to access.
Wheat grades have varied significantly even across individual paddocks. It is not usually common to have a large amount of the Feed grade “Fed1” offered up to the market, however as an industry we are seeing a lot more of it this year. In addition, the variances within the grade itself are broad. Low test weights are the common reason for Wheat to be knocked down to Fed1, but also due to high levels of foreign seeds deemed too excessive to achieve a higher grade.

With a much better understanding now of the 2022/23 crop quality, variations in Barley can be best described as a mixed bag. The prime issue has been test weight. With 62.5kg p/hl the minimum standard for B1 Barley, a considerable portion of the crop is falling below into a B2 standard of 60kg p/hl and even further into a B3 category. Unfortunately, once a grain loses its test weight integrity, not only do nutritional qualities such as starch fall away, but the ability to effectively mill such a grain becomes arduous and usually not successful.

While we consider overall the Australian crop to have been a success, it is worth noting while the volume is very good, there is conjecture about the actual overall tonnages because of the lighter test weight issues prevalent in many regions. But with that in mind, we can still be confident there will be an abundance of Australian grain to service our customers both domestically and internationally.

I want to take this opportunity to let you know of our new addition to the Commodities group at Reid Stockfeeds – Campbell Sutherland. Campbell joins the team as our new Commodity Trader. Campbell’s broad experience in grain marketing, accumulation, market relations and trading platform development will hold him in good stead for procuring at the high standards our customers have come to expect.

We wish him all the best in his career at Reid Stockfeeds!

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

Author

Justin Fay
Commodity Manager