Dec 06, 2023

Australian Crop Update – Week 48, 2023

2023/2024 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.

New Crop - CFR Container Indications PMT - LH January 24 Shipment

THE BELOW PRICES ARE INDICATIONS TO THE MAIN CONTAINER DESTINATION, NOT FIRM OFFERS. TO OBTAIN SPECIFIC PRICING FOR SPEICIFIC GRADES AND QUALITIES, PLEASE CONTACT STEVEN FOOTE ON STEVEN@BASISCOMMODITIES.COM.

Australian Grains Market Update

Australian domestic markets remained quiet last week as rain interrupted the grain harvest across Victoria (VIC) and New South Wales (NSW). The rain has paralysed markets in southeastern Australia with farmers and buyers waiting to see how the grain quality has been affected. Recent rain in the north is helping to keep the northern markets softer as farmers work on planting a summer crop.

Local cash markets have remained at similar levels for several weeks with exporters having already committed large wheat and barley sales to China. Exporters will be reluctant to make additional sales without improved farmer selling which is not forthcoming at the moment.. The offshore market appears to show an uptick in buying interest from Southeast Asian destinations as northern hemisphere logistics problems grow. Traders are reporting that China is still seeking more Australian barley offers at current values but there is a stand-off with growers who know the export trade is relatively short.

Australian Harvest Update:

It is estimated that the national harvest is approximately 80% complete. VIC is the only state that is behind the harvest pace after a generally favourable season and rain over the past seven days. It is expected that harvest in South Australia (SA) and Western Australia (WA) will finish within the next 7-10 days. Overall, the crop has largely come in as expected however forecasters expect that the national wheat harvest will finish at around 25 million metric tonnes (MMT).

In terms of quality concerns caused by the rain interruptions in the last week, our sense is they are limited. Maybe some test weight issues but nothing major at this stage that will materially affect the overall availability of milling wheat this year.

ABARES Agricultural Outlook:

ABARES released their last quarterly outlook of the year and forecast wheat production to fall by 37% to 25.5MMT, 4% below the 10-year average. This is an upward revision from the September forecast. Barley production is forecast to fall by 24% to 10.8MMT, 4% below the 10-year average. This is an upward revision from the September forecast. Canola production is forecast to fall by 33% to 5.5MMT but remains well above the 10-year average on account of area planted estimated to be the second highest on record. This is an upward revision from the September forecast.

To set in context, the total winter crop production is forecast to be 46.1MMT, which is the fifth largest in history!

Australia's five major winter pulse crops are forecast to produce 3.17MMT. The figure for the crops now being harvested is up 7% from the 2.96MMT forecast in the previous quarterly report released in September. The current crop however is forecast to be 26% smaller than last year’s, with smaller lupin and lentil crops accounting for much of the difference.

Australia’s chickpea, lupin and field pea harvests are pretty much over. Unfortunately, the lentil and faba bean harvests are closer to halfway through and are being affected by the recent rain events. Roughly one-third of faba bean and lentil crops in SA and VIC remain unharvested, and patchy rain, storms and some hail will impact yield and quality in paddocks that were soaked.

Ocean Freight & Shipment Stem Update:

The ocean freight market awoke from its dull and boring mood with global ocean fright rates moving sharply higher in the past two weeks with the Baltic Dry Index 25% reaching an 18-month high. The Atlantic basin is leading the way with the Pacific slightly less impressive, but still firm. The culprits are clear. Strong demand from East Coast South America (ECSA) grain ports and consequent congestion, strong imports of coal to China the ongoing restrictions at the Panama Canal are all reducing the amount of dwt available to be fixed. It's the major bulk commodities that are transported in larger ultramax/panamax and cape tonnage which are the biggest movers and shakers - hence the larger ships are the ones where the effect is most keenly felt. Handies have not taken off to the same extent though. In the Atlantic, they are starting to see substitution demand as larger stems get split/downsized. Tonnage is being drawn from the Middle East and India into the Atlantic basin. The big question is how long this is going to last. Are we seeing the pre-seasonal holidays rush or does this have more solid foundations? Forward paper suggests we have a little way more to go in December, but we are still getting the "shelf" effect for January where numbers tumble.

There was 932 thousdan metric tonne (KMT) of wheat, barley and canola put on the stem in the past week which was similar to the previous week. This included 610KMT of wheat which is the largest in three months. WA accounted for more than half of the weekly wheat additions. It is expected that a lot of the wheat on the stem will be heading to China. There was also 100KMT added in NSW which included 50KMT of durum wheat. There was 205KMT of canola put on the stem in the past week and 117KMT of barley.

Australian Weather:

8 day forecast to 11th December 2023
Source: http://www.bom.gov.a u/

Weekly Rainfall to 4th December 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar (AUD) was slightly stronger to open the week when valued against USD. In Friday's trading session, the AUD found demand against its US counterpart, with the AUD/USD pair making gains and trading at around 0.6650 before falling back yesterday when the Reserve Bank of Australia (RBA) kept interest rates on hold into the New Year on the back of easing inflation data.

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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