Australian Crop Update – Week 9, 2024

Australian domestic markets continued to grind lower last week and with few exceptions but with little activity. These are difficult markets with demand limited to the nearby positions as buyers surface to cover needs but have limited appetite for deferred positions or significant quantities unless it’s discounted. Equally, farmers are slow sellers with prices now at the lowest levels in 24 months with consequent impact on their gross margins. Selling is limited to nearby positions and usually linked to logistics and growers have little interest in committing to forward sales at current values.
 
A lack of exporter demand in Victoria and South Australia is making wheat feel very heavy while a more advanced export program is offering a little more support in Western Australia (WA) although there is some talk of exporters walking away from deferred slots in the West. Wheat export demand remains sluggish with traders reporting that buyers are pushing some shipments backwards. The wheat markets in Victoria (VIC) and South Australia (SA) were back 2-3% for the week which is tied to the sliding global cash markets and the slow export pace while WA was steady.
 
Barley has found export support in recent weeks with reports of further Chinese sales. There are rumours that China may have bought 300-400 thousand metric tonne (KMT) of Aussie barley at USD255-260 CFR China but we think some, if not all, is optionalised so whether it is shipped against the Australian balance sheet is for avid watchers of the Australian stem! 

The Pacific market has continued to gain after the Chinese New Year. Activity levels remain high and tonnage lists are getting tigher by the day causing headaches for Charterers trying to cover old cargo bookings. Owners are reluctant to register or stand behind offers for long given the fast moving pace of the market this week. In contrast, the Altantic is trending sideways and may have even lost ground this week. This was a direct result of a lack of fresh demand appearing in the market. Period interest remained strong.

There was 505KMT of wheat, 168KMT of barley and 90KMT of canola added to the shipping stem in the past week. The shipping stem is now far enough advanced to assess how the shipping pace is going against forecasts.
 
Barley is the most advanced and wheat is the least advanced. Barley is 75% shipped (~5 million metric tonne (MMT) national) based on the exports for Oct/Mar and this is reasonably consistent across the states. The Australian Bureau of Statistics data shows exports of 2.5MMT Oct/Dec. Forecasters had China pencilled in for 3.0MMT of sales prior to the latest round of buying so it’s possible total sales could 3.5MMT plus after the latest round of purchases but if it is optionalised our sense is it may not be that high.
 
Australia’s Oct/Mar wheat exports are projected at 11.2MMT which includes a projected 7.1MMT in the Jan/Mar. This puts the forecast Oct/Sep exports of 19.4MMT at 58%. New South Wales (NSW) is the most advanced state with 1.1MMT already shipped or on the stem of the projected 1.25MMT. WA is also moving along briskly with 5.4MMT for Oct/Mar which is 64% of the forecast Oct/Sep 8.45MMT. WA only must average ~0.5MMT in the Apr/Jun to achieve the forecast 8.45MMT. SA and VIC export targets will be more of a stretch as both of the states are around 50% of the forecast Oct/Sep which means they will have to maintain the same pace in the second half of the marketing year to achieve the forecast.
 
Australia is on target to ship about 3.1MMT of canola in the Oct/Mar of the forecasted 4.75MMT. WA will be ~1.75MMT by the end of March which is about 50% of the Oct/Sep forecast. Exporters shorts still look to be chasing canola.