SA Market & Collaborative Export Program Update – 14/1/25

Last week’s WASDE report for January  (USDA’s World Agricultural Supply and Demand estimates) cut both US Corn and Soybean production significantly more than expected by the trade resulting in lower 2024/25 US ending stocks for both crops. 5mmt was cut from US Corn carryout. These revised estimates were the trigger for rallies in US Corn, Soybean and Wheat futures.

Increasing global Corn values, including in China, is driving interest in substitution of Corn to Barley and Feed wheat in many feed markets and creating interest amongst global consumers in Australian grain. The relative weakness of the Australian dollar is helping to make Australian grain very competitive into many feed markets.

Chinese demand for Australian barley remains very strong with ABS figures showing 839,000 tonnes of barley exports to China in November. The potential for China to suspend imports of US Sorghum in response to proposed new US import tariffs under the Trump Presidency is very supportive to both Australian barley and sorghum into the Chinese feed market. 

Australian malt barley demand into China is also supported by strained government relations between China and Canada. Chinese malt buyers are nervous over buying Canadian malt barley. Canada is the second largest malt supplier to China.

 Australian barley is seeing plenty of demand at the moment with recent export business into China, Saudi Arabia, South East Asia and South America. 

Due to the high protein content of SA feed barley this harvest, it will struggle to service the FAQ (fair average quality) market in China, but there are still great opportunities for exporting feed and Malt. Malt stands out as a great value proposition, especially for growers in catchments where local spreads are very poor. Current export values suggest Malt barley is worth around US$18 over feed landed in China. Flexi Grain’s Collaborative Export Program provides growers with exposure to export spreads not local cash spreads. For further information on the barley market open the link below. 

Click here to view Flexi Grain’s January 2025 Barley Update

In contrast to barley, the wheat market has been relatively subdued recently, however rallying Corn values and weak Australian dollar are changing this across all grades of wheat. Fundamentally global stocks of wheat remain tight so a cash and call option strategy may be worthy of consideration should a supply shock (Russian crop?) develop.

Currency Management

Since the US election, the Australian dollar has fallen by about 6 US cents. Hedging a portion of your unsold grain may be prudent in the lead up to Donald Trump’s inauguration. Further opportunities may present following his inauguration as well. 

Post Harvest Market Direction?

Flexi Grain’s view of the post harvest wheat and barley markets remains slightly bullish based on the market drivers listed below.

Flexi Grain’s Collaborative Export Program – Open 

This program will export wheat and barley cargoes ex Lucky Bay and Wallaroo in March/April 2025. Participating growers will be fully exposed to export grain values and movements in global wheat and barley prices post harvest. Final Pool returns will be subject to future global market movements and the costs of holding and selling grain. Flexi Grain is actively managing a currency hedging strategy over accumulated grain to manage the risk of AUD currency appreciation. 

Accepted Grades  – All grades of wheat and barley* 

Participating Sites – All T-Ports & Viterra Sites*

*subject to confirmation 

Collaborative Export Program – Harvest Advance Values for week commencing 13/1/25*

*60% Harvest Advance advanced 5 days end of week of transfer. Harvest advance values are based on average weekly prevailing cash values. Note, final pool returns subject to future market movement and costs associated with holding and selling grain. Deferred payment options available.

Collaborative Export Program – Payment Structure Options

Call Sam Grieve for more details.  Don’t miss the boat.