Australian Crop Update – Week 41, 2023

2023/2024 Season (New Crop) – USD FOB

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

New Crop - CFR Container Indications PMT - LH Nov/Dec'23



THE BELOW PRICES ARE INDICATIONS TO THE MAIN CONTAINER DESTINATION, NOT FIRM OFFERS. TO OBTAIN SPECIFIC PRICING FOR SPEICIFIC GRADES AND QUALITIES, PLEASE CONTACT STEVEN FOOTE ON STEVEN@BASISCOMMODITIES.COM. 

Australian Grains Market Update

Australian domestic values were softer last week after the recent rains across Southeast Australia solidified production forecasts. Domestic markets were extremely quiet with buyers pulling bids following the recent rain. Buyers are running hand to mouth as they wait for farmer selling to advance as harvest approaches the southern cropping belts. However, with the prospect of El Nino in the background it feels like grower selling is muted and is behind where it normally is for this time of year. On the demand side, there was talk of up to 700 thousand metric tonne (KMT) wheat purchases from China but none of this could be confirmed.
 
In terms of harvest progress, northern areas are progressing well, mostly barley and canola, but recent rains across the southern half of the country and cooler temperatures have slowed harvest timings by one to two weeks. That said, it will still be a relatively early harvest with southern New South Wales (NSW) and Victoria (VIC) likely to start late October or early November.
 
Harvest is underway in Western Australia (WA), but it is very early days. Early yields have been variable, with some growers reporting crops have come in slightly better than expected. Farmers in WA’s southern cropping regions remain optimistic that they are on track for above-average yields.
 
In terms of exports, Australia exported 359,392 metric tonnes (MT) of canola in August, down 15 percent (pc) from the 424,153MT shipped in July, according to the latest data from the Australian Bureau of Statistics. Japan on 130,411MT followed by France on 124,324MT and the United Arab Emirates on 61,375MT were the three largest markets for August-shipped canola.

Ocean Freight and Export Stem

The stagnant atmosphere from the close of last week has pushed into this week and activity feels subdued. We are seeing a little more tonnage hit the market, although the level of cargo enquiry seems about the same. Monday to Wednesday last week had a very strong feel with cargo interests chasing tonnage and rates pushing quickly, but as of Wednesday afternoon, the activity died away and has not returned. It feels like levels have dropped back to what they were 10 days ago. The Atlantic looks steady - enough enquiry balanced with the tonnage supply - but rates on Panamax have been at slightly lower levels. Stepping back for a moment, it feels like the market is searching for a direction. Notable is the number of stems being quoted from Black Sea ports - more than we have seen for a considerable period of time. The Pacific was very quiet at the back-end of last week and even though coal stems are still being talked up, it feels like everyone is taking a breather. 

There was a little more traction and balance to the shipping stem additions in the past week as more new crop wheat and canola vessels appeared. There was 444KMT of wheat added to the stem with 354KMT coming from WA. Most of the WA wheat additions were new crop. First half November loadings started being put on the stem last week along with 200KMT of canola. More than half of this was WA but there were also cargoes from VIC and NSW. Barley additions slowed to 85KMT in the past week down from an average of 240KMT over the previous three weeks.

WASDE report summary

 Australian Weather 

Cooler temps through October will help crops maximise yield potential instead of having the crop prematurely shut down by extreme heat. This should help the southern cropping zones in particular, which are still green and where most areas had a reasonably favourable growing season.

8 day forecast to 23rd October 2023
Source: http://www.bom.gov.au/ 

AUD - Australian Dollar

The Aussie Dollar touched a weekly low of 0.6289 courtesy of a risk-off sentiment even after the release of negative data from the United States. Australia witnessed a rebound in inflation in August, largely driven by elevated oil prices. This resurgence raises the probability of another interest rate hike by the Reserve Bank of Australia (RBA). The ongoing geopolitical tensions in the Middle East would continue to favour flows toward safe-haven assets, to the detriment of risk-perceived currencies, like the Aussie Dollar. The AUD/USD pair is currently trading around 63 US cents.