Sep 25, 2023

Australian Crop Update – Week 38, 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

An El Niño and a positive Indian Ocean Dipole are underway, according to Australia’s Bureau of Meteorology. Climate models indicate El Niño is likely to persist until at least the end of February. The bureau said in its Climate update El Niño typically leads to reduced spring and early summer rainfall for eastern Australia, and warmer days for the southern two-thirds of the country.

Harvest is underway in Central Queensland (QLD) and wheat quality is reflecting reasonable proteins based on early quality analysis. Southern QLD harvest will start in 10 days moving further south as combines and trucks finish the northern regions. Proteins will be higher, but yields are dropping, and it is likely we will start slipping below 24 million metric tonne (MMT) for wheat as the dry weather scenarios for wheat production kick in. Farmer selling is non-existent, and this is unlikely to change for another month when harvest starts in some of the areas where farmers are still expected to have near-average yields. Farmer selling is expected to remain reserved throughout the season with the smaller crops and mostly favourable balance sheets following three bumper years and the extension of El Nino like conditions. There is some rain in the 14-day forecast for the southern regions, but the north remains resolutely dry.

New crop barley continues to edge higher at US$270 FOB which is above $290 C&F parity to China and a long way from competing into the Middle East.

Wheat additions to the shipping stem have stopped on the East Coast and have slowed significantly in Western Australia (WA) and South Australia (SA). There was 100 thousand metric tonne (KMT) of canola put on the stem in WA last week but that is slow for this time of the year when shippers typically try to get early shipments into the EU.

Barley continues to dominate the shipping stem additions on the back of Chinese sales. There was about 200KMT of barley added to the stem in the past week. There were also a couple of wheat vessels which were switched to barley. This compares to 162KMT of new wheat vessels put onto the stem in the past week. There was 135KMT of barley added in SA and 62KMT in WA.

Australian Pulse Market

Ocean Freight Market Update

This ocean freight market is finely balanced. An already firm market due to grain loading activity in the Atlantic was pushed higher when China came out for it's periodic coal spree from Indonesia. If we follow the pattern from recent history this effect will last 5-10 days and then as the coal demand disappears, we will see the market ease back off to its former levels fairly quickly. This process may be exacerbated by impending Golden Week holidays in North Asia countries - though these are already widely heralded as the next "circuit-breaker" opportunity for the wider global freight market to reset along more negative lines.

Australian Weather

The big question is how much yield has been lost with the dry weather. Weather forecasts remain dry, and it looks like this could continue into October. This will have the harvest coming in one to two weeks earlier than normal. The Normalized Difference Vegetation Index (NDVI) anomaly data continues to show a sharp divide between the north and the south. QLD and Northern New South Wales (NSW) conditions have fallen 11-18% in the past four weeks and 4-8% last week. The declines are reflective of crops that a running out of moisture, rather than a normal maturity and dry down. However, the data shows the southern cropping areas in Southern NSW, Victoria (VIC), Southern WA and parts of SA to a lesser extent are holding. NDVI measurements in these areas are flat to down 4% on the past four weeks despite the heat and dry weather. These crops are still accessing soil moisture. Yields in these crops will fall with the dry weather but they will still have average to above average yields depending on the region.

8 day forecast to 3rd October 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 25th September 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar is slightly stronger to start the week against the USD. The AUD staged a comeback versus the Greenback (USD) on Friday, and it remains set to finish this week with decent gains. Overall US Dollar weakness, along with investors seeking risk, and dropping US Treasury bond yields, are the reasons behind the reaction. Hence, the AUD/USD is posting gains of 0.51%, trading around 0.6450 once the pair bounced off the US 64 cent low.

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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