Australian Crop Update – Week 44, 2024

Australia’s winter crop harvest started to advance quickly last week. Barley and canola harvest is well underway in all states, but the wheat harvest is yet to start in earnest in Victoria (VIC) or South Australia (SA). Queensland (QLD) harvest is more than 50% complete while the New South Wales (NSW) harvest is around 10% complete and in Western Australia (WA) the harvest started slower than previous years due to the late rain.
 
Despite some bullish cuts to the crop, notably by the USDA and Rabobank last week, we and our analysts AgScientia have been impressed by the wheat yields seen so far. Wheat yields of 4-5 t/ha have been common thus far for wheat and across much of the growing regions with barley yields even higher. Chickpea crops have also performed well with many crops in the 2-3 t/ha range. As a result, our collective inclination is to call the crop above 31 million metric tonne (MMT). That is before we have adjusted WA numbers, which will have benefited from the late rain, so we could move towards 32MMT again in the coming weeks. We are also hearing that VIC is marginally better than expected and certainly a crop tour we carried out a few weeks ago suggested wheat was being relatively resilient, and that canola was most effected by frosts.
 
From a quality perspective it is too early to call any definitive grade spreads, but higher yields suggest a lower protein crop and there is certainly a fair amount of ASW hitting the bin, although AH2 is the dominant crop in NSW at the moment. There is some higher protein wheat, but one trader described receivals as “skinny” at the moment. From a barley perspective, reports are coming in of higher screenings and this might push the feed/malt equation in favour of feed this year. Time will tell.
 
In general, on the cash side we are seeing nothing bullish, and we are starting to see some pressure come into this market as global prices, particularly Russian, turn lower and new domestic supplies come in. However as always with the Australian market it pays to pay attention to logistics. We are seeing, and the market is reporting, that the early stem is filling up with pulse demand from the Indian Subcontinent and Egypt, and canola from Europe. There are also reports China did a sizeable clip of ASW for Feb/March 2024 so logistics for the harvest slots are starting to fill up. Remember, it is not just about wheat in Oz – it is about elevation margins, and so far, wheat is a distant third in that race with pulses and canola in first and second place, on the east coast at least.
 
Regarding pulses, it would seem ABARE have underestimated the NSW fava bean crop with three boats confirmed on the stem and two more talked about. Beans have filled gaps caused by subdued chickpea demand as the Indian Subcontinent looks for better value offers.

The Pacific market again lacked inspiration this week. The Smax and Handy sectors faced another challenging week which was further disrupted by the mid-week holidays in Singapore. Few new orders meant owners were competing for business and therefore putting pressure on spot rates.
 
Handy vessels continue to ballast from India which has put further strain on the Pacific & Aussie market as owners resort to Aussie business to get their ships back to Asia. It was a similar story in the Atlantic whereby market fundamentals eased which in turn saw rates soften in the Cont/Med/USG.
 
Shipping stem additions are gradually increasing for the new season. In the past week there was 262 thousand metric tonne (KMT) of wheat was added to the stem, 127KMT of barley, 110KMT of canola, 100KMT of chickpeas and 30KMT of faba beans.
 
The wheat consisted of 176KMT in WA, as well as 56KMT at Pt Kembla and 30KMT at Melbourne. Most of the WA wheat was Geraldton for a late Nov loading.
 
The barley was also WA dominated with VIC adding 15KMT.
 
The canola was split between Pt Kembla and Geelong.
 
There was 100KMT of chickpea vessels nominated last week split between central QLD, Brisbane and Newcastle.
 
Another 30KMT of faba beans was added to the Newcastle NAT stem.

The monthly breakdown of the stem by ETD shows there is 558KMT of wheat scheduled to be shipped in November (1.1MMT last year), 614KMT of barley (873KMT last year) and 706KMT of canola (543KMT last year). There is also 150KMT of chickpeas scheduled to sail in November.