Australian Crop Update – Week 39, 2024

Domestic grain markets were mostly steady over the past week. Early barley harvest has started in southern Queensland (QLD) which has pressured local markets for harvest deliveries as old and new crop prices merge. Australian wheat basis vs CBOT has come under pressure with the rally in CBOT. This isn’t making it any easier to sell Australian wheat, but it does ask the question of consumers who are sticking with hand to mouth purchases while missiles are flying in the Middle East and dry weather is threating the new crop Black Sea production outlooks through reduced planting.
 
Wheat harvest is still another one to two weeks away from starting. Early yields in southern QLD have been variable ranging from above average to well above average. It’s going to be a large crop in QLD and New South Wales (NSW) with a large export surplus. Exporters are showing no willingness to chase farmer purchases with Asian markets still reluctant buyers. In addition, farmer selling is very limited across the board and values won’t get tested until we get closer to harvest which is still a few weeks away in the main areas. Sentiment seems to suggest that the crop that does come out of South Australia (SA) will be higher protein. Western Australia (WA) is shaping up to be low protein crop, and there is still a lingering concern that the La Nina could lead to downgrades in NSW if the rains come at the wrong times. 
 
There were a couple of other interesting developments during the week. Cargill agreed to sell GrainFlow sites at Maitland, Crystal Brook, Mallala, Pinnaroo and Dimboola in Victoria to Viterra. Cargill also sold its mobile ship loader at Port Adelaide to Viterra. Viterra said they would incorporate the facilities into its existing SA network. The Dimboola site will give Viterra significantly more exposure into Victoria. In addition, the government extended the Wheat Port Code for another two years. The government said the extension to the code would give the industry more time to come up with an alternative framework to replace the code. 

Lentils have jumped USD50 per metric tonne (/MT) in the past three weeks on expectations of significant frost damage particularly to the stressed SA crop. ABARES put the combined Victorian (VIC) and SA lentil output at 1.65 million metric tonne (MMT) in the September Crop Report, but it’s now expected to fall well short of this with losses of over 500,000MT being talked about.

We just spent some time travelling from Adelaide to Melbourne and can report that crops on the SA side of the border are struggling but central and southern western VIC seem to be in better shape from a pulse perspective.

There was 121 thousand metric tonne (KMT) of wheat, 30KMT of barley and 13KMT of canola added to the shipping stem in the past week. Additions are for a late October to early November loading.
 
As expected, the shipping market was active at the start of the week with participants eager to be covered early before tapering off as the Chinese Golden Week neared. 
 
In the Panamaxes we did start to see rates ease after a couple of weeks in the green in both basins as negative sentiment creeped in with the impending holidays. There was a lack of urgency from charterers to engage which caused owners to start revising their offer levels down in the hope of getting booked.
 
The Supramax sector in the Atlantic found support in the USG however the other regions struggled with little fresh cargo appearing to maintain the levels. The Pacific found support early in the week, especially in Southeast Asia, with a notable increase of Indonesian coal which caused rates to improve by 2-3kpd for rounds. But again, by weeks end, this activity slowed and we found rates retract to their initial levels.
 
The Handysize experienced moderate gains over the week with increased levels of fresh cargo appearing in both basins. With China being off this coming week we are expecting fixing activity to slow down for the remainder of the week.