Feb 21, 2023

Basis Commodities – Australian Crop Update – Week 8, 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 Market Review

Domestic markets in Australia were generally firmer in the past week as buyers and traders do their best to purchase available farmer offers to cover off nearby export positions. It was another strong week for shipping stem additions within the port zones. Stem data shows that Australian exporters are finding ample international demand for all wheat, barley and canola. Grain exports are running at capacity in most zones.

Australia’s 2022/23 export pace moved into overdrive in December 2022 and shipping stem data indicates the brisk pace will continue through the first quarter of 2023. Australia’s combined monthly wheat, barley and canola exports in December was more than 4.6MMT. This comfortably exceeded the previous monthly major grains exports of 4.2MMT set in February 2022. Improved operations of the existing major grain export terminals as well as the addition of new participants have both contributed to the record large monthly grain exports.

ABARES will updates its Australian crop forecasts in early March, and this will be reflective of the bigger crop on the back of the larger than expected grain receivals in Western Australia and South Australia. We expect they will end up lifting the wheat crop to 38MMT plus and barley to 13.5MMT plus.

Australian Weather

The Australian Bureau of Meteorology said in its latest Climate Drivers Update, La Niña continues in the tropical Pacific Ocean. While oceanic indicators, including sea surface temperatures (SSTs), have weakened to ENSO-neutral values, the atmosphere has been slower to respond and remains La Niña-like. Most of the major models show an increased risk of an El Niño developing in late 2023.

Major models are pointing to drier weather in the coming months. The European 46-day has weather patterns over Australia becoming drier in the coming months as the La Niña influences decay and influences move closer to El Niño. El Niño is predicted to commence in May.

8 day forecast to 28th February 2023
Source: http://www.bom.gov.au/

Ocean Freight

We are seeing positive rates (albeit in small increments) being reported on Supramax and handy indices but can’t see why those particular sizes have improved versus Panamax which has remained subdued. There doesn’t seem to be any significant movement in fundamentals and the general “feel” of the market is still quiet. The Indo-coal shipments have picked up and there is plenty of China controlled tonnage being pushed around the market. The implication is the domestic China freight markets remain unhealthy which should pull the rug from under the market optimists. March and April FFA levels being reported by brokers are at significant premiums to spot physical….BSI 10tc is $7,641 spot physical versus xs $11k for March and nearly $12.5kpd for April. Something significant has to happen soon for these levels to justify themselves. PMX physical spot levels have been steady to slightly negative. Nothing new has happened over the last week and consequently the index drifted off.

AUD – Australian Dollar

The Australian dollar finished the week on a lower note at .6827 against the Greenback after hitting a high of 0.6998 on Wednesday last week. The AUD/USD pair remains under heavy selling pressure driven by the China / Australia relationship remaining tenuous due to historical grievances and a lack of cooperation between the two governments. It is expected that the USD can track higher this week given the recent bout of positive US economic surprises. Eventually US economic outperformance will fade as it shows more strain from the interest rate rises.

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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