Aug 01, 2023

Australian Crop Update – Week 31, 2023

2022/2023 Season (New Crop) – USD FOB

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Local Australian markets were firmer last week given the news from Ukraine that Russia had started its bombardment of grain storage and port assets. The Australian farmer responded by firming their selling ideas across all port zones and pushing international bids further away from any new business. Some port zones are still showing old crop premiums for wheat where exporters are still chasing some tonnage, but most are reflecting discounts to the new crop bids. New crop APW is about $285-295 FOB equivalent. Barley is around $220-225 FOB with most in the Australian trade expecting the Chinese ban on Barley to be lifted at some point in August.

That said a significant amount of the gains were handed back in the later part of the week with market participants hesitant about pushing ag markets higher without the support of confirmed balance sheet losses or export demand to support the higher prices.

Australian Grains Industry Conference 2023

Last week the annual Australian Grains Industry Conference (AGIC) was held in Melbourne. The overall tone was subdued with continuing concerns about the imminent arrival of El Nino conditions in Australia, a lack of export competitiveness and increased volatility associated with the Black Sea conflict. There was some positive sentiment around hopes for increased grain exports to India and a resumption of barley business to China although these were tempered with phytosanitary/quarantine concerns.

Ocean Freight Market Update

Another week of struggle looms for shipowners. The market remains weaker in the north with fewer trade options, so owners are tending to look south for business where there has been an up-tick in demand. Panamax has traded sideways in the recent past. Yet again it's mostly coal stems and steels/generals backhaul business that are providing the impetus.

Very little cargo interest is evident, and the conclusion of the Black Sea Grain initiative has left a small build-up of tonnage in the eastern Mediterranean. Persian Gulf ships have firmed slightly in line with better numbers out of East Coast Africa but we're not sure it has broken the USD10kpd barrier just yet. Period numbers for modern tonnage remain relatively high but Owner with sub-index tonnage is being more pragmatic. Bunker prices rose about $20pmt last week which caught out a few voyage charterers.

We expect more of the same over the next few weeks - maybe a few minor variations here and there but nothing seismic. For now, we cannot discern any major drivers which will impact the ocean freight market prior to Sept/October.

Australian Weather

Over the last few weeks, dry weather has not helped farmer engagement to sell down their old crop positions. It has been a “dry” July for most cropping regions with most areas only seeing 30-40% of the normal monthly rainfall. The latest normalised difference vegetation index (NDVI) weekly anomalies showed crop conditions are declining in the northern areas of Western Australia and New South Wales and southern Queensland. It is not irreversible, but it will be in two to three weeks for the northern areas without rain, particularly if temperatures start to climb. Crop conditions through Southern New South Wales, Victoria, South Australia and Western Australia are very good. Farmers are saying crop conditions for this time are as good as last year and the data tells a similar story. We are slated to see some showers this week.

8 day forecast to 7th August 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 31st July 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar is slightly weaker to start the week when valued against the USD. Last week, Australian inflation slowed more than expected in the second quarter thanks to falls in the cost of domestic holidays and petrol, suggesting less pressure for another interest rate hike in August and sending the AUD sharply lower.

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Australian Hay Update – Monday 29th April 2024

29 Apr, 2024

The 2024/25 season for Australian Oaten Hay has started with sowing well underway for all growing areas. The initial expectation for the upcoming year is much the same as the current season where we saw a significant increase in acreage planted and a higher than average quality profile. With the return to normal freight rates despite the international pressures and an Australian Dollar that has been well below the 0.700 cent handle for much of the past 12 months, there has never been a better time for exporters of Australian Oaten Hay to develop new markets. Growth in interest has been seen from the Middle Eastern markets with the integration of Oaten Hay to the ration alongside alfalfa with excellent results forthcoming. As part of the Basis Commodities service offering, we like to share our insights and knowledge on our products to better support our customers. Please enjoy this report on the various considerations for Oaten Hay during the growing stage as well as our future reports in the coming months as we head towards new crop which is due for export in October/November 2024. Australian Oaten Hay: Despite the concerns with a drier season for cereal crops, less moisture, particularly at the end of the hay growing season produces a far better product to suit the dairy and livestock industries. In this month’s report, we will explain the reasons why less rainfall can actually benefit an oaten hay crop. Fibre Length and Thickness: Too much moisture during the growth cycle of an oaten hay crop will produce thicker stems and longer fibre lengths which reduces the feed test value. This is due to the nutrients of the plant being spread across a larger fibre length diluting the high levels of water soluble carbohydrates (sugar content important for palatability) and increasing the acid and neutral detergent fibres leading towards poor fibre digestion and absorption rates Lodging: Lodging is defined as the permanent displacement of a stem from a vertical posture. It is often caused by high wind speeds, made worse by wet conditions. It can happen quickly or relatively slowly, with stems initially leaning, then falling under the pressure. If too much water is received on an oaten hay crop, the plant may grow beyond a stable position and fall over. This is because the root system of the plant has not penetrated deeply enough through the soil as it has not had to search too far for moisture. The plant falls and then regrows which renders the crop unusable due to soil contamination.

Basis Commodities expands service offering to soybeans.

18 Apr, 2024

In late 2023, Basis Commodities successfully executed its first shipment of premium non genetically modified soybeans from Romania to Egypt, via two small vessels. Basis has many years of experience managing trade flows and relationships within the Middle East and we were pleased when the opportunity to add a new product – Soybeans – arose out of discussions with our suppliers in Romania and buyers in Egypt. To ensure the safe arrival of the produce, the company worked with several parties to facilitate the execution of this new flow for the company including managing due diligence, testing, insurance and contract execution. Soybeans are a primary source of protein and edible oil, making them essential for human nutrition. The largest producers of soybeans in the world are the United States, Brazil, and Argentina. These countries account for most of the global soybean production. Ukraine is the leading exporter of soybeans in Europe. However, Romania is seeing growth in this market after a long hiatus. This growth can be attributed to various factors including increased demand for soybeans globally, improvements in agricultural technology, and favourable climatic conditions for soybean cultivation in Romania. Egypt is among the top importers of soybeans in the world. The country imports large quantities of soybean, primarily for the production of soybean meal, a key ingredient in animal feed formulations. The country's growing population and expanding livestock sector contribute to the increasing demand for soybeans as a source of protein-rich feed. Basis Commodities General Manager in Dubai, Nader Ahmed said assisting companies making connections in the movement of soft commodities is a speciality of the company “we are committed to fostering international trade partnerships and promoting the exchange of quality agricultural products in the Middle East” and “We’re proud to have played a role in bringing premium soybeans into Egypts market”. For more information on how Basis Commodities and assist your business, reach out to the team on the details below