Australian Crop Update – Week 48, 2024

Domestic markets softened over the past week with declines in global markets and as traders wait to see the impact of widespread rain on unharvested crops across eastern Australia. Globally, US wheat futures were 2% to 6% lower with KC futures the biggest loser. Corn was back 0.6% for the week while Canadian canola futures tumbled 3.5%. Matif rapeseed was only modestly lower for the week.
 
Locally, New South Wales (NSW) and Victoria (VIC) canola bids tumbled by around USD20 per metric tonne (/MT) or 3.5% while Western Australia (WA) Kwinana was only back USD3/MT or 0.6% for the week. Wheat and barley bids were up USD2-5/MT across most port zones as buyers scrambled for nearby supplies, particularly wheat. ASW was up USD6/MT as buyers are to better understand how much wheat was downgraded following the rain. There will be some, but we doubt it will be general across all areas. Weekly rainfall totals were lighter south with 17-25mm and heavier to the north with 50-80mm. 

Meaningful additions to the shipping stem were seen last week with more than 1.1MMT of wheat, barley, canola and pulse nominations seen. This included 440 thousand metric tonne (KMT) of wheat (mostly WA), 300KMT plus of barley and 300KMT of canola. The canola stem is gathering pace with the stem additions climbing to 8 pts w/w to 36% of the export forecast. NSW is the most advanced of the canola exports at 52% of the forecast 600KMT. The 304KMT of barley additions was all WA. This saw the cumulative Oct/Sep stem additions increase to 28% (24% LW) of the forecast 5.5MMT. WA is 1.3MMT which is 38% of the forecast 3.4MMT. National wheat steam additions of 443KMT in the past week lifted the cumulative wheat stem additions to 3.4MMT which is 19% (+3% w/w) of the forecast 22.0MMT. 
 
The ocean freight market began this week with positive sentiment off the back of the momentum at the end of last week. Many thought the pre-Christmas rush was going to eventuate, however by Tuesday it was clear this was incorrect. Momentum and optimism stalled and instead of the anticipated push, rates for Handies and Supra were stabilising. Demand was steady which helped activity levels remain healthy throughout the week, but the tonnage supply kept pace which put a ceiling on rates.
 
Handies on the Australian coast are fixing in the high teens for outbound trips for 37/38kdwt types and 2-3kpd less for smaller units. In Southeast Asia, pac rounds for large handies were concluding around 12500-13500 depending on cargo and redelivery while 28kdwt's have settled at around 10,000 for same. For non-Aussie traders there is a 1-2kpd discount for rounds. Fareast was under pressure again with a lack of fresh cargoes. Nopac rounds for 38kdwt types are fixing 11500/11750 sub spec/dely (abt $500-750 less than last week) while even steel runs to PG/WCI have reduced close to 12000 now.
 
Supras in the Fareast have settled to around 10000-11000 for nopac/pac rounds while in Southeast Asia they could achieve 11000-12000 for Indo or Aussie rounds. The MEG/India region continues to be under pressure with the amount of ships entering the region to discharge. In the Atlantic, we found the market to be active from USG and ESCA prior to the Thanksgiving holiday but ended on a quiet note as expected.
 
The Cont/Med markets struggled on all sizes as a distinct lack of fresh cargo appearing in the market to help stop the downward pressure on rates. Looking forward for the rest of 2024, the general sense is that the market will settle in both basins and likely trend sideways in Christmas.