Basis Commodities – Australian Crop Update – Week 25 2022

Market Update

Domestic markets were mixed across commodities and port zones in the past week. Old crop east coast wheat was firmer as traders stepped up efforts to encourage farmer selling. South Australia and Western Australia old crop wheat bids were softer with exporters more comfortable with the old crop positions. East coast feed grain markets were softer across the board. Exporters are still showing strong demand for milling wheat, but the demand for feed grain has mostly disappeared.  Aussie feed grain demand appears to be slowing with South American corn undermining Aussie barley and SFW as the cheapest feed grain in the world.

Drier weather in the east of Australia is allowing farmers to finally catch up with planting. Some of the wettest areas in paddocks may go unplanted, but most of the crop will be seeded. Dry weather forecasts for the next couple of weeks should allow farmers to get most of the intended crop in the ground. 

Unlike the U.S. and Europe, Australia is likely to see a wetter than normal winter crop growing season. BOM said large parts of the eastern two-thirds of mainland Australia could see around two to four times than normal rainfall for July to September (in the top 20% wettest of all past years) despite saying La Niña is officially over – although it may be back in Spring.

Ocean Freight

The freight market remains difficult to read. The market feels firmer but activity levels remain muted. We seem to be stuck in a malaise where both owners and charterers are reluctant to do anything other than what is enforced by contractual or opening dates and therefore kick the can down the road in the hope that a clearer picture emerges. Extreme bunker prices are not helping – they remain stubbornly over $1000/MT in Asia.