Australian Crop Update – Week 19, 2024

Australian cash wheat was up by around US$7 while the new crop for January was US$11 FOB higher over the last week as the local market responded to continued dryness in Western Australia (WA) and South Australia (SA) and global weather concerns. The sharpness in the Chicago rally is outpacing the local market which is making the basis look cheap at the moment and may encourage some basis buying. Markets are tight and exporters continue to short covering against sales commitments. More domestic demand has surface as domestic customers become increasingly nervous about the old crop supply outlook.
 
Australia exported 627,353 metric tonnes (MT) of barley and 100,734MT of sorghum in March 2024, according to the latest data from the Australian Bureau of Statistics.
 
Feed barley exports at 390,828MT were down from 415,454MT shipped in February 2024, with China on 384,651MT the destination for 98% of the March 2024 volume.
 
Malting barley exports at 237,055MT more than doubled over the month from the 117,338MT shipped in February 2024. China was also the major destination for malting barley exports on 185,299MT, followed by Vietnam on 21,768MT and Peru on 19,800MT.
 
Sorghum volume also surged, almost doubling from 50,766MT shipped in February 2024, with China on 92,224MT the biggest market, followed by Taiwan on 6,850MT and The Philippines on 1,569MT.

Chickpea prices have jumped to around USD800 per tonne FOB following India’s announcement of an immediate removal of tariffs until March 2025. There are reports that a cargo of Australian chickpeas, which was sailing to other destinations, has been diverted to India. Lupins values have jumped in recent weeks and continue to firm which is reflective in the increased farm feeding with the dry weather. Bids are up to US$400 FOB Melbourne.

There was 332 thousand metric tonne (KMT) of wheat, 210KMT of canola and 70KMT of barley put on to the shipping stem in the past week. Two thirds of the wheat was added in Victoria (VIC). A further 68KMT of wheat was added into Port Kembla in New South Wales (NSW) which will further tighten the NSW supplies. There was also 55KMT added in WA which was a mix of Geraldton and Kwinana. WA accounted for 145KMT of the weekly canola additions.
 
On current pace, Australia’s final 2023/24 wheat exports will exceed 20 million metric tonne (MMT) and barley exports will be around 7MMT. Stem and exporter short covering indicates Australia’s Apr/Jun exports will remain solid and this leaves a relatively easy task to achieve the mentioned targets with more modest shipments in the Q4 (Jul-Sep) quarter expected given northern hemisphere competition.

In terms of ocean freight, the dry bulk market has firmed steadily over the past week, primarily led by strong demand in the Pacific on all sizes. Panamaxes were well supported in the Pacific with significant uptick in demand ex Indonesia which in turn helped lift the rates for Supra/Ultras tonnage in Southeast Asia. By the end of the week, there had been multiple fixtures reported in the mid 20k's for Indonesia rounds on Ultras/Supra. A jump of roughly 4-5kpd week-on-week. This increase started to trickle down to the Handy tonnage who managed to secure 16-17kpd for a Pacific round.

In contrast to the Pacific, the Atlantic was rather subdued throughout the week with rates for Panamax/Ultra/Supras trending sideways and actually lost some ground on Handies. USG market has been quiet while the ECSA market has been steady.

Period enquiry has sprung back to life in the Pacific with Ultramax now fetching 19-20kpd for short/medium period and Handies achieving 16-17kpd for same. Contrary to vessels rate, bunkers have either held or eased slightly over the past week helping stall freight rates climbing too fast.