Dec 22, 2021

Australian Crop Update – Week 51

FOB replacement values using the Australian track bid/offer (AUD) – not a FOB Indication

Harvest and Weather Update

Domestic wheat prices tumbled last week as New South Wales feed wheat started to hit the market and dragged lower protein milling wheat with it. Traders also pulled back milling wheat bids sharply.

The weather has been kind and harvest has progressed strongly in most areas including most of New South Wales.

In talking with our analysts’, they feel wheat crops in Western Australia and New South Wales will now be larger than forecast prior to harvest and are estimating the crop moving through 35MMT mark, pushing towards 36MMT.

Victoria’s wheat quality is coming off slightly better than average, although the state only accounts for 12% of the national crop. At the same time, the harvest in the larger production states of Western Australia and New South Wales, which together account for more than 70% of the crop, remain dominated by low protein ASW in Western Australia and SFW/AH9 in New South Wales.

In the cash markets, exporters have been forced to cancel or shift milling wheat exports and are now scrambling to switch to feed wheat sales where they can. It seems that 2.5MMT plus of milling wheat and feed wheat has been sold to China. This is expected to include 1.5MMT to 2.0MMT of feed wheat.

We believe logistics constraints and quality will cap Australia’s capacity to export more milling wheat to fill the shortfall left by the flagged Russian export quota. The USDA is already forecasting Australian 2021/22 wheat exports at a record large 25.5MMT which is 7% more than last year. Quality problems means a significant proportion of Australia’s wheat exports can’t be readily used by traditional markets and as such, a significant proportion of the export task will be low protein and feed wheat and this need to be borne in mind when consulting the global balance sheets.

Advanced EU wheat exports together with the small Russian wheat exports will, in our view, create some volatility in Q1 and Q2 of next year as the market starts to refocus on the northern hemisphere new crop where there are already some production flags emerging in North America particularly.

Australian barley remains competitive into most export homes but the bids to the growers are not attractive, and it is struggling to pull stem away from canola, wheat, and feed wheat. For the time being, the barley market seems to be trading around Australia, although there was some talk of Mexico showing interest in malt barley earlier this week.

Ocean Freight

The market was very quiet as it seems a lot of market participants have already squared up their positions ahead of the Christmas holidays.

Currency – AUD

We expect the AUD will remain range-bound through the holiday season, fluctuating between support at 0.70 and resistance at 0.7230. Risks to this outlook remain the evolving Omicron situation.

This will be the last report of 2021 and we would like to use this occasion to wish all our customers, partners and suppliers a healthy and happy festive break – if you are taking one. We hope that 2022 will be a fantastic year for you and your families.

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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