Aug 16, 2023

Australian Crop Update – Week 33, 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

There were some notable gains in the Australian domestic markets last week, particularly in wheat and barley. East coast Australian grain was higher by USD8-10 per Metric Tonne (MT) while the largest gains were from Western Australia (WA) up USD15/MT for wheat and USD17/MT for barley following the news of China’s decision to reverse the tariff on Australian barley last week. Indeed, China has started booking cargoes of Australian barley. Traders have supposedly booked a number of cargoes however the exact quantity is not known.

New crop prices for wheat remain strong in the north of New South Wales (NSW) where dry weather has resulted in a lower planted area, but prices continue to fall in Southern NSW, Victoria (VIC) and South Australia (SA) where crops are in good condition as we approach spring.

Australia exported 418,075MT of feed barley, 47,807MT of malting barley and 395,370MT of sorghum in June, according to the latest data from the Australian Bureau of Statistics. On feed, the June figure was down 22 percent (pc) from the May total of 534,560MT. Saudi Arabia on 184,000MT, Japan on 155,090MT and Thailand on 32,571MT were the three biggest markets.

On sorghum, volume has dropped 10pc from the May peak of 440,921MT. China on 275,462MT accounted for 70pc of June shipments, with 60,000MT to Kenya and 30,000MT to Sudan the second and third-biggest markets.

USDA Report Recap

The USDA saw some reductions in production with EU, Canada and China each losing 2-3 million metric tonnes (MMT) of production. However, USDA also reduced demand so that stocks to use went up slightly. It is worth noting that Ukraine production was up 3.5MMT however it is unknown know how accessible that grain will be.

There were similar patterns in barley, with crop losses in some of the key producing nations but demand down by close to the same number.

Ocean Freight Market Update

Last week saw the freight market bounce back to life. Sharp rises across all sectors are the consequence of a general increase in demand. We have noticed for almost two weeks that trader activity was increasing across the commodities from fertiliser to scrap metals, especially on the Handymax sizes.

Last week it became apparent that the Atlantic and Southeast Asian markets were suddenly short on tonnage, particularly in spot positions. It was almost like a slow tightening reached a critical tipping point and owners realised they had the ascendency again. As usual, this caused plenty of "waiting for the bottom" cargo interests to jump in as charterers got FOMO (Fear Of Missing Out) on the basement levels of the last three months.

Adding to the sense of urgency for cargo interests has been the rapid rise of bunker prices. Singapore has leaped from the $580's pmt 10 days ago to mid $650's pmt. No one foresaw the fuel prices rising so dramatically and the combined effect of the freight market sparking into life with the fuel rise is causing much uncertainty. We have well and truly broken out of the range-bound mentality although it remains to be seen for how long.

Australian Weather

The weekly rainfall totals show good falls in VIC as well as parts of WA and Southern NSW. The rain in Southern WA came on the back of good rainfall received last week, which was needed given the region received very much below average rainfall from May-July. A small part of SA also saw light showers of less than 10mm during the week. Queensland (QLD) and Northern NSW only saw coastal showers, with cropping areas missing out. Dry season conditions are expected to continue for the northern part of Australia over the next fortnight. There is increasing crop stress in Northern NSW, with concerns that a hot, dry spring could limit yields in both Northern NSW and QLD. For August to October, below median rainfall is likely to very likely (60% to greater than 80% chance) for much of Australia. The northern WA cropping areas are also suffering from lack of water, but this is being offset by the favourable conditions in the southern regions.

8 day forecast to 22nd August 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 14th August 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar continued its downward spiral on Friday, overwhelmed by a stronger US dollar and ongoing Chinese economic uncertainty. US PPI data unexpectedly edged higher, propelling US yields upward as markets prepare for the possibility of one more Fed rate hike. This was in stark contrast to comments from outgoing RBA Governor Philip Lowe. It is clear the RBA hopes it has done enough to control inflation. China data showing a steep decline in bank lending and concerns over potential defaults in the property sector saw the AUD give up 0.3% on the day and 1.1% for the week, sliding below US$0.65 to mark lows at US$0.6486.

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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