Australian Crop Update – Week 6, 2024

Australian domestic grain markets fell in all port zones over the week. The biggest declines were seen in the northern areas on the east coast where farmers and traders are struggling for homes within the domestic market and the absence of export demand. The feed wheat market was down USD18 per metric tonne (/MT) for the week as longs finally came down to levels to uncover fresh consumptive interest.
 
Barley was also pressured lower, but not to the same extent as wheat due to northern barley suppliers remaining tight. Exporters have had little interest in buying at these levels from farmers as they struggle to garner export interest. Prices however are falling where we could see more exports. Overall, demand is soft and when it does emerge it's only for nearby needs.

Nearby demand is more intent on swapping supplies to more efficient export execution locations rather than adding to length, which is expected to reflect the lacklustre demand seen from Asian wheat importers. The same is said for barley which had previously been supported by the large China sales and the advanced export pace. 

The recent USDA report from Thursday last week was mixed, but a generally bearish report as any cuts made were less than the market expected. Wheat saw more production (with Australia unchanged) which was matched with a similar increase in consumption, leading to a marginal decrease in stocks. USDA did cut internal US food consumption, so the report was more bearish for the US traders than the global traders.

On the surface, corn was bullish with less production and less stocks than last month. However, the market took the report as bearish since USDA only cut the Brazilian crop by a mere 3 million metric tonne (MMT) which is much less than local analysts there believe. Once again, the US saw a more bearish picture than global traders as domestic US stocks were up.

Beans were a subdued and bearish affair too, even if Brazilian production was cut by another 1MMT, we still saw an increase in ending stocks of 1.4MMT. We did see USDA increase local US crush to record levels which is of interest.

There was 710 thousand metric tonne (KMT) of wheat put onto the stem in the past week. This included 255KMT in Western Australia (WA) and 240KMT in Victoria (VIC). There was also 140KMT added in South Australia (SA) and a further 75KMT in New South Wales (NSW).

There was 135KMT of barley added to the stem in the past week and 96KMT of canola, which was all in Pt Kembla, NSW. Barley exports on the stem are close to 70% of the expected exports for the season of 6.6MMT. It would be 88% of the USDA forecast of 5.7MMT which they raised by 500KMT in the Feb WASDE.

Barley shipping is the most advanced, followed by canola and then wheat.
 
Pressure remains throughout the Red Sea as disruptions to the corridor persist with conflict and the absence of insurance underwriters willing to reinstate the coverage for vessels. There has been an increase in airstrikes within Gaza by Israel and in Iraq by the US which only inflates the conflict within the region. Peace and cease-fire talks appear to be a long way off for Israel and Hamas which will continue to keep freight rates firm and route transits affected to avoid any concerns for transits.