US wheat values eased by around $15/mt over the past week driven lower by a shift to a wetter rainfall pattern over the US winter wheat crop (improving crop ratings) and a strengthening US Dollar. Weaker exporter currency in Canada and Black Sea countries also added weight to global wheat selling, with Australia and Argentina harvest pressure and currency devaluations combining to see sharp export price pressure.
The Russian central bank increased its interest rate to 21% last month, incentivising Russian growers to sell their grain stocks and bank the proceeds. A weakening Russian Ruble (against the US dollar) is also improving the export competitiveness of Russian wheat and driving the continuation of a strong export pace, increasing the potential of Russia having to introduce export curbs in Q1 & Q2 of 2025.
The global market is in a significant pressure event right now and we are in the midst of harvest pressure locally.
Rain across Northern NSW has slowed the tail end of harvest. Many growers are reporting record yields with many wheat and barley crops going around 7.0 t/ha and Chickpeas around 6.0 t/ha. Growers continue to focus on out-turning Chickpeas and Faba beans for pending export cargoes. This huge export task is engaging all available long haul trucks at the expense of other crops, with very high freight rates reported in the North of the country.Because of the big volumes being harvested, a large number of growers in northern and central NSW are storing cereals in bunkers, grain bags, or silos and will deliver to consumer or port post harvest. Significant cash flow from Pulses / Oilseeds is seeing fairly low cereal selling pressure across NSW, especially in the North.
In southern NSW and northern Victoria, growers are harvesting, selling and delivering canola, and showing little interest in selling barley, which has created some shorts in the market. Barley yields and quality to date seem very good with reports of 2.5 t/ha crops in the Victorian Mallee.
A significant portion of the barley crop in southern NSW is going Malt whilst early feedback suggests the northern Victorian crop will also produce a decent percentage of malt, which is a surprise to many in the market.
The WA harvest is progressing quickly. As at 18/11/24 CBH (WA) had received 7.2 mmt of grain. Of this, 2.5 mmt of Barley has been delivered of which 15% is Malt. It’s anticipated the Malt selection rate will increase as the WA Barley harvest moves into the Albany district. 2.4 mmt of wheat has been delivered of which 5% is Hard (H1/H2) and 55% is ASW/AWWT, which is a low quality ASW / Feed wheat segregation. This wheat quality profile to date contrasts significantly to last year when the WA wheat crop produced an unusually high amount of Hard wheat. The majority of WA wheat will end up in low quality ASW and Feed wheat markets and as a state WA will offer limited competition on mid to hard grade export markets. With the current weather and forecast, wheat quality profile may continue to decline.
We see a significant weather event rolling through WA early this week, with some big falls already recorded. This is putting some serious quality nerves into markets and seeing prompt milling wheat prices go through the roof, driven by some short term squeezes.
We have forecast rain in NSW, where we are 50-60% through wheat harvest with significant crops yet to come in, especially in irrigated areas. Likewise Victoria still has a lot of wheat yet to harvest. With some Wimmera cropping areas yet to start on Canola even. The same rainfall system has rains for Victoria and NSW from 23/11 – 03/12. Which is sure to mess with the harvest and logistics program and possibly the quality too.
These broad weather issues are likely to reduce the selling pressure on quality wheat export markets, especially higher pro milling wheat, which is what SA has.
Estimated Values this week
Local cash values generally firmed $1-5/mt this week in-line with a softening dollar. Since 30/9/24, the Australian dollar has fallen from 69.10 UScents to a low of 64.36 USc on 14/11/24. The dollar has since rallied to 65.18 USc at the time of writing this update and seems to have formed a decent floor for the meantime.
Continuation of this strengthening is a significant risk to growers holding grain today.
Impact of a Strengthening AUD at current Global wheat values (20/11/24)
| AUD/US Rate (USc) | Decline in Value ($AUD/mt) |
| 70 | 22 |
| 69 | 19 |
| 68 | 14 |
| 67 | 10 |
| 66 | 6 |
At a FOB (Free on Board) level, SA grain values remain the cheapest in Australia today, for the same reasons we have stated in previous updates. Over the last week, we have seen WA pricing push significantly higher on quality wheat and Victoria tick higher, which makes SA look even cheaper relative today.
There is little reason long term why SA wheat or barley will stay cheap relative to other Australian ports, aside from certain circumstances where grain per grade can be stranded in the wrong location and making cargo size can become an issue.
Wheat Values
We see some wheat beginning to change hands in SA and some export sales being made, for part and full cargo. With weather likely to hold back WA and NSW/VIC sellers a bit, there is more opportunity to set cargos ex SA, especially with an open stem.
In general we are seeing healthy wheat demand build, with China back in the market, along with the normal broad Asian demand, from feed – higher quality milling wheat. We have demand across the board.
Barley Values
Barley remains well bid from China, with demand focussed on the lower end of quality rather than high quality and higher price. In general we see continued high shipments for September and October, along with good recent buying and continued bids from Chinese customers. We see no real sign of the import restrictions rumoured in the market in August, with both feed and malt demand present in the market.
Australian remains competitively priced, especially for low to mid grade cargo and malt in containers from the Eastern states. There is significant high grade malt flowing out of Vic and NSW in containers direct from farm and the result is some pressure on Malt spreads locally, which for SA export areas is not an issue as Malt spread was already very poor.
We see some export shorts emerging in WA, with a big program and slower harvest and selling than many were expecting. Also apparent year on year is the significant drop in carry in stocks, which enabled a massive early export program last season.
Malt spreads remain +$5-20 in SA. Remain wary of warehousing Malt in ports.
On the Yorke Peninsula and Mid North, we would avoid putting Malt in Wallaroo and Giles at the moment until the size of the local Malt crop is known and shipments are put on – as it may be stranded in an illiquid environment where it can only be priced as feed, or incur significant costs to outturn from port. Get it into the Adelaide drawing ark or keep it in an upcountry site for the time being where it can be more efficiently executed to domestic markets if necessary.
Grower Bids Expressed in FOB Equivalent Values ($US/mt) as at 20/11/24
| Port | H2 | BAR1 |
| WA | 275 + | 233 |
| Vic/NSW** | 275 | 240 |
| Pt Adelaide* | 260 | 234 |
| Pt Lincoln* | 258 | 225 |
| Lucky Bay* | 261 | 224 |
| Wallaroo* | 254 | 224 |
*SA Ports have a $US3-5/mt freight disadvantage to WA
** NSW/Vic Ports have a $US5-8/mt freight disadvantage to WA
Post Harvest Market Drivers to watch today
- Dwindling Indian wheat supply and potential import demand
- With wheat stocks at 22.3mmt at the start of November (Vs 5 year average of 32.5mmt) the government is not releasing stocks from the state reserves which is causing inflationary pressure with new crop not available until May ‘25.
- India produces around 113mmt of wheat and consumes circa 112mmt.
- Chinese Barley demand moving to East coast quality profile
- With wheat stocks at 22.3mmt at the start of November (Vs 5 year average of 32.5mmt) the government is not releasing stocks from the state reserves which is causing inflationary pressure with new crop not available until May ‘25.
- India produces around 113mmt of wheat and consumes circa 112mmt.
- Risk of strengthening AUD
- Trump’s win has seen a surge in USD strength which has seen major currencies depreciate against it. This is an important consideration for Australian wheat. We are now cheaper in USD which encourages greater export demand.
- Escalating tension in the Ukraine
- Attacks and retaliation intensifies while both countries are pushing out big export numbers. Escalating tension may threaten to disrupt the program and the order flow.
- Poor Black Sea crop conditions
- Russia’s wheat stocks are forecast to drop to a 5 year low this season. Carryout stocks will drop 4.4mmt year on year. Ending stocks vs demand will reach a 20 year low at 8% – 30 days of supply.
- The Russian central bank increased its interest rate to 21% last month, incentivising Russian growers to sell their grain stocks and bank the proceeds.
- The Volga & Central districts represent approx 42% of the total Russian wheat production. The winter wheat crop in these areas have gone into dormancy in pretty bad shape.
Flexi Grain Harvest Tonnage Contracts Now Open – Access Harvest Cash Flow (60% Harvest Advance payable within 7 days of grain transfer) and get exposure to Post Harvest Markets both Export and Domestic whilst managing currency risk.
