Australian Crop Update – Week 46, 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 cash prices remained steady over the last week but implied US$ FOB prices were higher as the AUD rebounded back on further expected interest rate rises at a time when the US seems through the worst. Having just come back from a trip to the middle east it seems this AUD strength is making the export task even more difficult. Australian wheat remains comparatively expensive against Russian / Black Sea values landed into Southeast Asia and if it were not for the strong China sales program, I think we would be beginning to see prices pressure lower. 

Barley bids were slightly higher in WA and SA which can be attributed to the underlying China bid at around USD 250 FOB. Queensland (QLD) bids were softer with domestic consumers comfortably covered for their nearby positions and widespread rain in Southern QLD and Northern New South Wales (NSW) has encouraged widespread planting of a summer sorghum crop. 
 
According to industry sources, grower sales of wheat and barley have picked up in the southern market this week, while domestic demand in the north has shrunk as buyers saw the forecast rain depress offer prices.

Traders are confident growers will be pricing more new-crop tonnage to generate near-term cashflow in the coming weeks, with barley likely to be the grain they hold if they deem the bids too low.
 
From a quality perspective and given the mostly dry growing season which normally translates to high protein, the relatively low proportion of H1 and APH1 grain delivered has come as a surprise. That said, more may be held on farm and according to early milling reports the quality does seem to be exceptional.

While domestic flour millers are covered on high-quality new-crop grain, exporters are yet to see the volume they need to start offering higher-protein wheat to the export market comfortably.

Australian Harvest Update:

Australian Pulses Update:

The harvesting of pulses is now fully underway in Australia, with the majority of activity now in Southern NSW, VIC, and SA. The bulk handling sites are now receiving lentils, faba beans, and lupins with significant volumes expected to be seen over the next two to three weeks. Initial estimates indicate a reduction in Australian faba bean production to around 1.6MMT, primarily attributed to a dry finish, resulting in smaller bean sizes. Likewise, lentil production is projected to be lower at approximately 1.2MMT. Grower price expectations remain above export parity however, despite the lack of trading into the sub-continent and the Middle East over the past few weeks.

Ocean Freight & Shipment Stem Update:

 Australian Weather 

We saw good soaking rains for Southern QLD and parts of Northern NSW for this weekend but otherwise the weather has been kind for harvesting.

8 day forecast to 28th November 2023 
Source: http://www.bom.gov.au/ 

AUD - Australian Dollar

The Australian dollar edged higher through trade to close last week pushing back above US$0.65 amid an improvement in the underlying risk narrative. US equities and risk assets advanced as market expectations for a retracement in US rate hikes through the second half of 2024 grow. Falling global bond yields and rising expectations for rate cuts have forced the USD to give up its highs against a basket of currencies won in October, opening the door for the AUD to rally back above US$0.65. The question now is, can the AUD recovery be sustained and extended while the global growth outlook remains unclear and China’s recovery uncertain. The market remains balanced in answering this question.