Australian Crop Update – Week 16, 2024

As we approach ANZAC day, which is traditionally seen as a time when Australian farmers get out into the paddocks and start planting next seasons crop, the east coast has plentiful soil moisture, South Australia (SA) has plentiful sub soil moisture but limited topsoil moisture, but Western Australia (WA) is dry and still waiting for seasonal break.
 
In terms of the cash market, the last week saw markets firm across all port zones on thin farmer selling. This was seen in pulses more than cereals. Victorian (VIC) lentil bids are $50-60 per metric tonne (/MT) higher in recent weeks.. Export grade faba beans are also $40-50/MT higher over the same period. Cereals were steady to firmer, with the extent of nearby shorts being the major determinant of the gains. Further declines in the AUD, which finished the week down nearly 1% against the USD, offered some support. In short, markets are fickle with the nearby needs dictating most of the price activity.

In discussions with market participants, we sense it is becoming difficult to gather faba beans from the growers in Australia as liquidity in the market is extremely low. ABARES estimates the most recent Australian faba bean harvest yielded 528,000 metric tonne (MT), and something similar is unofficially expected from the upcoming season.
 
Considerable amounts of lentils remain in grower hands. Tightening Canadian stock is allowing Australia to price into the subcontinent despite a firming local price. ABARES estimates Australia’s current lentil crop at 1.4 million metric tonne (MMT), and unofficial estimates say the crop about to planted should be able to equal that.

India's total pulse imports remained very strong according to market commentary. Continued strong imports bode well for the prospect of a possible removal of the 44% duty on Australian chickpeas. Indian stocks of pulses are thinning due to government procurement campaigns. The import of duty free yellow peas has helped India limit local insufficiencies. Expectations are rising for the government to extend its duty free policy further indicating strong continued pulse demand.

2024 / 25 Crop Forecast (Agscienta) & Supply & Demand Sheets:

According to our analyst, the 2024/25 winter crop production estimates and balance sheets have been issued during the week with forecasts showing the 2024/25 Australian wheat crop at 27.5 (MMT), barley at 12.1MMT and canola at 5.0MMT. Overall, the Australian winter crop area is expected to be little changed on last year. This could change with the dry weather in WA, SA and even parts of VIC.

The recent positive sentiment spruiked by owners have now translated into physical gains in the ocean freight market. The Panamax sector was well supported by more cargo and shrinking tonnage lists in the Atlantic, and the Pacific was underpinned by fresh cargo ex Australia and Indonesia. The Atlantic saw sustained interest from the US Gulf and healthy demand from the Continent and Mediterranean, while the South Atlantic saw reasonable levels of fresh enquiry. A steady supply of Indonesian coal demand helped maintain rates from South Asia, while further north, brokers spoke of a healthy volume of NoPac and backhaul business.

The Ultra/Supra market in the Pacific has now jumped back up to 17/18k. Handies in the Pacific found a new sense momentum off the back of more demand appearing from Aussie and NZ as the cargo-to-tonnage balance changed in the owner's favour.

The recent Iran/Israel conflict has yet to deliver any material changes in the shipping market. Most people are now anticipating minimal (if any) new impacts if the situation remains "as is" given the major disruption has already occurred (ie vsl's avoiding the Red Sea/Suez transit).

It’s been a quiet week for shipping stem additions. There was 200 thousand metric tonne (KMT) of wheat added to the stem in the past week. Canola additions were strong at 245KMT.