basis-commodities

Australian Crop Update – Week 48, 2025

Fri, 28 Nov 2025 02:45:08 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Australian domestic markets remained steady with most growers still focused on the 2025/2026 harvest. Wheat values in the north were little changed in quotes for domestic and international homes alike however premiums for APH13 protein remain firm on exporter demand and what seems to be limited supply. Bulk handlers continue to keep bids elevated into up country storages to encourage farmer deliveries. Harvest pace continues to pick up in the southern zones.

Australian 2025-2026 Harvest Update:

Harvest activity picked up in Western Australia (WA) and New South Wales (VIC) last week while cool, wet weather continues to slow progress in Victoria (VIC) and South Australia (SA). Queensland (QLD) harvest is mostly finished apart from some stragglers. Harvest is underway in Southern NSW where we are hearing mixed yield results. We are hearing of some better-than-expected yield reports in the south, but more have been disappointed. Grain deliveries have also started in VIC where cool, wet weather continues to slow progress. Harvest deliveries in SA started to climb last week, aided by some drier and warmer weather.

The anecdotal early yields support our forecasts that timely in crop rain across VIC, and the late October rain and cool finish will result in average to above average yields for most farmers. Storage operators are saying that farmers are warehousing most deliveries, although this is largely common practice of most farmers now, leaving the marketing decisions until after harvest when they know how much they have got and what quality. Nonetheless, the slow harvest pace in the south and slow farmer selling is keeping the nearby premiums elevated.

Export Stem & Ocean Freight Market Update:

There were 800 thousand metric tonnes (KMT) of wheat and 390KMT of barley added to the shipping stem in the past week. This was the largest week of grain additions since February 2024. Weekly canola stem additions were modest at 60KMT. Most of the additions came from WA including 500KMT of wheat and 235KMT of barley. SA wheat and barley weekly stem additions were solid with 155KMT for both wheat and barley. Most of the additions are for December loadings with CBH starting to put on early January loadings in WA. There was 155KMT of wheat added to the NSW stem in the past week.

Last week’s strong wheat and barley additions added a much needed spark to the shipping pace. Canola and barley monthly additions are moving at the pace needed to move the volumes we have forecast. However, wheat needs to lift its monthly export volumes to keep pace with a large harvest.

Our CFR Matrix analysis suggests Australia is competitive into Asia but not into Africa and the Middle East where Argentinian and Russian originations are cheaper. We expect that Australian wheat monthly shipments can push into the low 2.0 million metric tonne (MMT) range based on Asian competitiveness alone. However, we will struggle to get above 2.5MMT which is needed to shift the forecast 25MMT exports we have in the balance sheet without either improved Chinese imports or a larger slice of the African and Middle East markets.

A largely uneventful week unfolded in the shipping markets. The Panamax index closed slightly higher as the week drew to a close. The Supra/Ultramax sector was largely flat across the board. The Pacific held firm throughout the week and the general sentiment is that we are well-balanced leading into the Christmas period. An interesting point to note was there were a few period fixtures concluded in the Pacific for this sector which could point to a confidence in the market in the short term. The Handysize market was quiet but balanced and rates held on all routes.

Australian Weather:

8 day forecast to 05 December 2025
http://www.bom.gov.au/

Weekly rainfall to 27 November 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The AUD/USD pair traded lower to close out the week based on a stronger US market and a return from the government shutdown. The AUD was down nearly a full cent week on week closing at .6450 at the end of last Friday’s trade. The AUD/USD has been range bound for the past few months with most forecasters still expecting the AUD to strengthen as we move into the new year.

The full monthly CPI inflation has been released. The data has shown the underlying inflation pulse remains sticky with annual CPI running around the upper end of the RBA’s 2-3% target band. This result could, in our opinion, reinforce the view that the RBA may not cut interest rates again this cycle. Markets are only discounting ~1/2 a RBA rate reduction by mid-2026. In the near-term, we believe more bursts of data driven AUD volatility are possible. But barring a sharp sustained deterioration in risk sentiment we feel the underlying improvement in US/China trade relations, more favourable yield spreads between Australia and other nations, and/or a pickup in growth momentum in China as stimulus measures gain traction should help the AUD claw back lost ground over coming months and see a move back towards 70 cents.

Australian Crop Update – Week 47, 2025

Thu, 20 Nov 2025 02:41:31 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Local markets remained depressed for most of the week with the mix of big crops, low global prices, slow farmer selling, strong export competition (particularly from South America) all influencing a slow start to the marketing campaign. There are plenty of bids below the market, but not too many sellers. Some of the malaise may also have been influenced by the USDA’s first reports since the federal government shut down ended, so plenty of data to catch up on and digest. Bulls may now wish that the US government would go back into a shutdown as the market is reminded of its bearish fundamentals across corn, wheat and beans. Sell the fact as they say.

Southern markets were little changed week on week. Southern barley markets are fickle, with the bids climbing against slow farmer selling. Western Australia (WA) wheat and barley was little changed for the week, highlighting the growing spread between export offers between the west and east.

Australian 2025-2026 Harvest Update:

Grain harvesting is beginning to advance more quickly across Australia’s cropping zones this week. The Queensland (QLD) harvest is mostly finished with Northern New South Wales (NSW) harvest also well advanced. The Victorian (VIC) barley harvest is estimated at 33% complete with South Australia (SA) and WA also picking up the pace in the past week for barley and canola at least.

Ag Scientia Balance Sheet Updates:

We released changes to Australia’s 2024/25 and 2025/26 balance sheet. The main changes this month are the finalisation of the 2024/25 marketing year exports following the release of the ABS Sep-25 exports. Australia’s 2024/25 wheat exports were 23.5 million metric tonne (MMT), barley exports were 8.25MMT and canola exports 5.4MMT. The most notable part of the finalisation of 2024/25 was that NSW and QLD’s quarter 4 exports were the largest wheat export quarter for the 2024/25 marketing year - who would of thought it. Whereas quarter 3 was the largest wheat export quarter for VIC, SA and WA. The point of this is that it tightens the 2024/25 ending stocks in QLD and Northern NSW from the anticipated heavy stocks that were being talked about just a few months earlier.

We haven’t made many changes to the new crop numbers, although our bias, based on a cool finish, is that we will see an increase in production numbers over the coming month. Total wheat production is conservatively forecast at 35.0MMT, barley 15.4MMT and canola 7.0MMT. WA is expected to see record crops which should see CBH receivals of ~26MMT. Late rain in SA and Vic will benefit late crops in these states. NSW is very good in the north but poor in the south. The northern harvest is advanced, and yields have been strong. Harvest activity is now focused on the Central West and just cranking up in the Riverina. We are working on below average yields in Southern NSW.

It’s going to be an interesting season.

h ttps://www.agscientia.com.au/

Export Stem & Ocean Freight Market Update:

It was a leaner week for shipping stem additions this week with ~750 thousand metric tonne (KMT) of grains, canola and pulses added down from ~1.4MMT in the previous week. This included 55KMT from Newcastle and 100KMT VIC as well as 25KMT in SA and 160KMT in WA. A further 130KMT of barley was added to the stem in the past week, the smallest in four weeks. However, pulse additions were stronger with 130KMT of chickpeas, 108KMT of lentils and 20KMT of faba beans

In the world of ocean freight, little has changed except to say owners have expectations of a firmer than usual start to 2026 - well they would, wouldn’t they.

Australian Weather:

Storms hit QLD and Northern NSW, last week but this will have limited impact on the harvest with most of the crop off in these areas. The storms are beneficial for summer crops in Central QLD, Southern QLD and Northern NSW.

Elsewhere dry weather saw the headers working around the clock.

8 day forecast to 27 November 2025
http://www.bom.gov.au/

Weekly rainfall to 19 November 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The AUD/USD pair traded higher on Friday, hovering near 0.6530 and marking a gain of around 0.30% for the day. The move reflects renewed demand for the Australian Dollar (AUD), supported by solid economic data from both Australia and China, while the US Dollar (USD) continues to face a cloud of uncertainty. Together, these factors have encouraged investors to adopt a slightly more optimistic stance toward the AUD as they headed into the weekend.

Markets have largely abandoned the idea of an RBA cut this year, not because policymakers are hawkish, but because the data isn’t giving them room to ease. With no major domestic releases this week, the Australian dollar will take its direction from the US as agencies begin clearing the backlog of delayed reports following the government shutdown there.

Australian Crop Update – Week 46, 2025

Tue, 11 Nov 2025 02:37:50 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Domestic markets remained sluggish through last week with limited changes to the cash bids/offers. On the East Coast slow farmer selling is very thin and is putting some upward pressure on domestic buyers with signs that domestic feeders are stepping up for purchases in the nearby slots - the first to blink. Northern wheat and barley bids were firmer as the Queensland (QLD) harvest draws to a close with higher protein wheat grades especially well sought. Part of the increase in the wheat market in the north has been from exporters trying to encourage grain deliveries into the up-country sites. Canola is being sought in all port zones by crushers and exporters with purchases being made at levels above the published bids. South Australia (SA) bids were little changed. Western Australia (WA) wheat was $1 per metric tonne (/MT) to $3/MT higher, barley and canola steady.

Internationally Australia took out some feed wheat tenders in the Philippines at a widely reported level of 260 - close to 240 FOB and a look at the stem confirms that barley, canola and chickpeas dominate the export stem up until Christmas. However, unless the grower blinks and starts selling wheat, we seem destined for a very slow start to milling wheat exports given where replacement levels are versus international competition and consumers ideas on value.

Australian 2025-2026 Harvest Update:

Unsettled weather is slowing Australia’s harvest pace although it hasn’t been wet enough to cause any significant quality concerns. Patchy storms delivered heavy rains in parts of Southern QLD and Northern New South Wales (NSW), but they weren’t widespread. Some areas in Western NSW recorded upwards of 60mm while areas in Victoria (VIC) were around 10-15mm. Yields have been generally coming in at or above expectations. Barley yields of 4-5 metric tonne per hectare (MT/ha) have been the norm with some farmers achieving better. WA wheat yields have generally been 2.5 MT/ha or better with early harvest to the east higher than last year. Premiums for high quality milling wheat are climbing with wheat protein levels generally coming in 0.5 to 1.0-pc below expectations. Most of the wheat deliveries are making APW and ASW, and Noodle wheat with smaller volumes of AH11.5. Little wheat has been coming in above protein so far. Farmer selling remains slow and reserves with many opting to hold back in hope of higher prices. Wheat harvest in QLD and Northern NSW is 80-90% complete. Wheat harvesting in the western areas of Northern NSW is seen as ~50% while the eastern areas are still in the early stages. Harvest is just starting in the western parts of the NSW Central West while canola and barley is well-underway. It’s still very early in the WA, VIC and SA harvest as can be seen by the BHC deliveries. It is also still relatively cool which will be good for yield but means this harvest will have a long tail.

Export Statistics – September 2025

Australia exported 1.92 million metric tonne (MMT) of wheat in September, modestly higher than the 1.86MMT in August. This lifted Australia’s FY 25 wheat exports to 23.5MMT. Indonesia was the largest destination with 4.5MMT followed by the Philippines with 3.5MMT, then Thailand and Vietnam both taking around 1.6MMT. South Korea was next with 1.5MMT, then Japan with 1.15MMt and then China and Malaysia with a tad over 1.0MMT. China’s exports tumbled from 3.75MMT in 23/24 to 1.05MMT in 24/25. Exports to Africa nearly tripled year on year to 2.37MMT. Most of this was when Russia’s export quota came into effect in Q2 and Q3 2025.

Barley exports for Sep were 309.6 thousand metric tonne (KMT). This puts Australia’s FY 25 barley exports at 8.3MMT. WA has exported 5.5MMT of barley for 24/25, VIC 1.2MMT and 0.74MMT from both NSW and SA. China was the dominant destination with ~6.0MMT which was similar to 23/24. Japan was the next largest with ~0.6MMT and then Saudi with ~0.4MMT. A bit over 0.4MMT of malting barley was exported to Latin America.

Australia’s canola exports for FY 25 were 5.4MMT down from 6.1MMT in 23/24. WA accounted for 2.9MMT of the canola exports followed by VIC with ~1.3MMT, NSW 0.92MMT and SA with 0.38MMT. Europe was the major destination with 3.7MMT, then 0.62MMT to the UAE, Pakistan ~0.5MMT and 0.28MMT to Japan.

Chickpea FY25 exports were 2.1MMT, lentils 1.05MMT down from ~1.5MMT in 23/24 with the smaller crops in SA and Vic. Faba bean exports were 0.65MMT.

Export Stem & Ocean Freight Market Update:

It was a strong week for shipping stem additions. This included ~660KMT of wheat, 360KMT of barley and 360KMT of canola. Most of the wheat was put on in WA but there was also ~200KMT put onto the stem in SA. SA also added 215KMT of barley for the week. The monthly split of the stem shows that 900KMT of barley is forecast to be shipped in November with ~450KMT already on the stem for December. There is also 860KMT of wheat scheduled to be shipped in November and 660KMT of canola.

The ocean freight market is still struggling to find its next direction as we edge closer to the Christmas period. Rates are holding flat for the most part however there are signs for softening or firming depending which sector you study. The Panamax sector was subdued in the early part of the week as prompt ships struggled to find cover. However, by Friday, the sentiment had turned. In the Atlantic more demand appearing from South America was enough to give owners hope while in the Pacific, owners welcomed the sight of fresh coal demand coming from Indonesia and East Australia. These factors were enough for this sector to close higher on the index than the previous week.

The Supramax/Ultramax treaded water in the Pacific as the market is being described as "positional". Ultras are still trading at a 2-3kpd premium to Supras but without a fresh bout of cargoes we would expect to see rates contract. On the near term outlook owners are holding onto hope rates should hold (and possibly firm) going into Q1 as the expectations of a bumper Australian grain harvest grow. The Atlantic was a lackluster affair for the Supramax/Ultramaxes throughout the week as all areas conceded ground until Friday when the USG suddenly sprung into action with fresh cargoes leading to the index to jump 1000 points on the USG fronthaul route.

The Handy sector was quiet all week in both basins as the market struggled with sluggish activity and rates slipping below last done levels.

Australian Weather:

Southeast Australia will see unsettled weather over the weekend and extending into next week. This is likely to include showers over the weekend with the chance of thunderstorms next week.

8 day forecast to 18 November 2025
http://www.bom.gov.au/

Weekly rainfall to 10 November 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian Dollar (AUD) showed steady strength to close last week, with the AUD/USD pair trading above a key support level at 0.6450. The currency’s resilience reflects growing investor confidence that an improvement in Australian labour market conditions should reinforce views that the RBA will remain on a different interest rate path to its peers. We think the mix of sticky Australian core inflation, a resilient jobs market, and signs of improvement in growth momentum may mean the RBA doesn’t cut interest rates again this cycle. Markets don't move in straight lines and more bouts of headline/data driven volatility should be anticipated. But on net, we continue to project the AUD to make gains into year-end and over early-2026 because of improvement in US/China trade relations, diverging policy trends between the RBA and other central banks such as the US Fed, more favourable yield spreads, and/or firmer growth in China as its stimulus push gains traction.

Australian Crop Update – Week 45, 2025

Thu, 06 Nov 2025 02:34:52 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

The cash markets remained focused on the harvest this week with limited grower selling keeping exporters on the defensive commitment wise until they see grower selling increase. Pricing is being driven by the harvest pace, harvest quality and old crop shorts. The combination of this is making local prices regionally focused, choppy and broadly illiquid. Even so, it appears to be easier to sell barley and canola. Faba beans and chickpeas were also firmer as an exporter short covering was seen in the northern markets. Canola bids remain firm on the back of a below average production outlook for the Southern New South Wales (NSW and Victorian (VIC) market where a lot of the domestic crush is located.

Australian 2025-2026 Harvest Update:

Harvest is progressing across all areas of Australia now. Harvest receivals continue to climb as the northern harvest advanced in Queensland (QLD) and NSW. The Western Australia (WA) harvest is progressing quickly helped by warm, dry days. Record high vegetation index levels indicate bumper yields that should see a bigger crop than last year.

Preliminary yields are aligning with expectations of a near-record crop across these areas, and although soil moisture levels had become very low in some areas prior to the rain, crop quality has held up well.

It is too early to be making any calls on quality, but the East Coast wheat proteins do seem to be lower than expected and hence the protein premiums could possibly widen if this trend continues. There have also been some higher screenings in the wheat coming off in western and southwestern QLD and northwestern NSW, but this is finding heathy demand (blending). It’s too early to make quality comments on the WA wheat crop as very little wheat has been received but the big yields lean to an ASW dominated harvest and 60 pct of receivals to date (only 200 thousand metric tonne (KMT)) have been ASW.

Export Stem & Ocean Freight Market Update:

There was 230KMT of barley, 184KMT of wheat, 90KMT of chickpeas and 55KMT of canola put onto the shipping stem in the past week. It should be noted that close to 1 million metric tonne (MMT) of barley has already been put onto the stem. Most of the barley additions are in WA but there are also some in South Australia (SA) and VIC. In talking to some of the exporters, all of this demand seems to be China and Japan related with SA and VIC getting some premiums for fair average quality sales.

The physical ocean freight market is still slowly easing but levels overall remain relatively firm. Forward curves are flattening at levels above prior expectation - suggestive that the traditional Q1 dip will not be as pronounced. The market is moving beyond January as the forecast low point - probably now more like mid-February in line with stereotype profile of the Chinese NY period. Sentiment also persists that Atlantic will ease disproportionately to the Pacific basin.

Australian Weather:

Rainfall across Southern NSW and VIC last weekend was welcomed, especially for late-sown crops. Harvest remains at an early stage, with relatively cool conditions slowing crop maturity. The seven-day forecast indicates more rain is on the way for VIC and the eastern parts of Southern NSW and we think this will be beneficial to crops in those areas.

8 day forecast to 12 November 2025
http://www.bom.gov.au/

Weekly rainfall to 4 November 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar (AUD) edged lower on Friday, with the AUD/USD pair trading below .65 in the wake of the US Fed meeting last Thursday. The decline comes as renewed US dollar (USD) strength exerts downward pressure on the Aussie, driven by several supportive factors for the greenback. The USD is benefiting from diminishing expectations that the Federal Reserve (Fed) will adopt a more dovish stance in the near term. A sustained break below the 0.6500 level could open the door for additional downside in AUD/USD.

Locally, the RBA met yesterday and in the wake of stronger than anticipated inflation data they kept the cash rates the same. The RBA staff will need to upgrade near-term forecasts for inflation.

Markets seldom move in straight lines, and more pockets of headline/data driven AUD volatility should be anticipated over the period ahead.

Australian Crop Update – Week 44, 2025

Tue, 28 Oct 2025 02:31:27 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Last week’s cash markets were relatively directionless as harvest got underway with little grower selling. Canola prices were firmer where the dry finish in Southern New South Wales (NSW) and smaller production has the domestic oilseed crushers rightly nervous. Victoria (VIC) wheat was softer in the new crop following 15-20mm of rain.

On the export front there is still a lot of chatter about the size of the barley program to China. Some have suggested it may already be well in excess of 2.5 million metric tonne (MMT) of sales as China demand has been pricing for some time in both bulk and container terms. Interestingly, it is now very difficult to get offers for export stem before the new year and discussions with a number of exporters suggest they are now focused on Q1 2026 sales.

Australian 2025-2026 Harvest Update:

We took a tour through the Eastern states and in general the north is in excellent shape with yields up in record territory. As you move further south into Southern NSW conditions and yield dropped off sharply but the later crops could still benefit from further rain. This is also the case in VIC. It is too early to draw any meaningful conclusions about quality but it is clear yield is being prioritised over protein so we are expecting, in the east at least, the majority of the wheat crop to be a mid protein APW/AH2 grade.

Grain deliveries in Queensland (QLD) and NSW are increasing as harvest is in full swing in these states. Most of the QLD deliveries have been chickpeas with high protein wheat starting to increase over the weekend. Canola and early wheat are underway in Northern NSW. Canola harvest has just started with the first deliveries of barley in VIC commencing also. South Australian (SA) bulk handlers have also reported early season wheat coming in albeit in small quantities. This will ramp up over the coming week with the dry and favourable harvest conditions.

Based on estimates, Southern NSW wheat, barley and canola yields will fall short of last year. Some crops have been baled for hay rather than seeing them through to harvest. The absence of soil moisture at the start of the season and mediocre in crop rain left crops holding out for finishing rains that didn’t eventuate. This has little to no impact on global markets - except to say Port Kembla may not be as busy as one would expect - but it is significant for the domestic markets that draw from these areas.

In Western Australia (WA), cooler temperatures and timely rain continue to support a big crop getting bigger. However, a low international price for grains has limited inputs so we, like many other commentators, are expecting a low protein year in the west.

The pulse harvest is also gathering pace, with northern crops on track to deliver better yields for chickpeas and faba beans, and lentil harvesting just getting started in the south. Markets for all three pulses remain depressed due to competition from Canada on lentils, and limited interest from India on chickpeas and Egypt on faba beans respectively. Because of the relatively low prices, off-the-header sales of chickpeas, faba beans, and lentils are shaping up to be well down on last year, with barley, canola and hay expected to be more attractive options for prompt sales.

Export Stem & Ocean Freight Market Update:

There was 380 thousand metric tonne (KMT) of wheat, 340KMT of barley and 120KMT of canola added to the shipping stem in the past week. About half of the wheat, 90% of the barley and all of the canola put on the stem last week was from WA.

The ocean freight market saw Atlantic rates fall as the FFA markets were also sold off. The Pacific market has been stable other than a small amount of weather-related disruption causing ships to miss cancelling dates. Sentiment is for more of the same going forward.

Australian Weather:

WA and SA are expected to get a break from any rainfall over the next week to ten days as the grain harvest and bailing season moves into full production. Eastern states have experienced seasonal storms with QLD and coastal NSW receiving widespread rainfall. Southern NSW and VIC will see up to 30-50mm over the next week which will fortify yields but slow any harvest progress. Daytime temperatures are expected to be mild over the next week providing respite from last week’s highs.

8 day forecast to 4 November 2025
http://www.bom.gov.au/

Weekly rainfall to 28 October 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian Dollar (AUD) was little changed against the US Dollar (USD) last week, as traders digested a fresh batch of mixed US macroeconomic data that sparked short-term volatility but failed to establish a clear directional trend. The AUD/USD pair is trading around 0.6535, largely unchanged after a week of sharp intraday moves following the release of the US Consumer Price Index (CPI) and S&P Global Purchasing Managers’ Index (PMI) reports. From a technical standpoint, AUD/USD continues to consolidate within a narrow 0.6480–0.6540 range, suggesting a period of indecision after the pair’s recent breakdown on the daily chart.

Australian Crop Update – Week 43, 2025

Mon, 20 Oct 2025 02:28:53 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Local grain prices pushed higher last week aided by the weak Australian dollar, yield punishing weather across southeastern Australia and slow farmer selling. Traders are reporting that wheat is difficult to buy in Southern Queensland (QLD) and Northern New South Wales (NSW) where farmers are holding out for higher prices. We see the sharp increase in the wheat prices across NSW and Victoria (VIC) as the bulk handlers’ attempt to draw wheat into up-country storages. The market is reporting that wheat and barley old crop offers have dried up across Southeast Australia, making it virtually impossible to cover old crop positions (Nov/Dec). Western Australia (WA) wheat bids were generally a couple of dollars firmer, helped by the void of farmer selling on the east coast. The market is very much in flux with weather and the north and south moisture levels as the 2025/2026 harvest gets underway.

Australian 2025-2026 Harvest Update:

Warm weather continues to allow barley and early wheat harvest in QLD, NSW, South Australia (SA) and WA. The themes are unchanged, WA, Northern NSW and QLD are on track for above average yields while the dry finish is shrinking yields in Southeast Australia. It’s early days but most are reporting that farmer selling is negligible. High protein wheat is being harvesting in Southern QLD and Northern NSW. There are also reports of some screening issues. The hot, dry finish has been conducive for higher wheat proteins across eastern Australia, but this is also likely to result in screenings and possible test weight issues. The market impacts are that Australia is still going to have large wheat, barley and canola crops.

Export Stem & Ocean Freight Market Update:

New crop barley, canola and wheat are starting to come onto the stem more liberally. A further 115 thousand metric tonne (KMT) of barley was added to the stem in WA through the week, as well as 170KMT of canola and 115KMT of wheat. East coast additions are slow and waiting for the harvest to advance. Traders are becoming increasingly cautious about shorting growers due to slow farmer selling and yield estimates taking a further hit this week with the hot and windy weather conditions. East coast additions amounted to just 30KMT of wheat put on the stem into Melbourne.

Market sentiment was mixed this week with uncertainty creeping in as China’s newly introduced port service fees began to take effect. While the full impact of these measures is yet to be seen, there’s little doubt they will disrupt traditional trade flows in the weeks ahead. After an early surge in Capesize rates on the back of this news, momentum eased and the week ended on a steadier tone. The power struggle between the US and China has left many market participants watching from the side lines and unsure of near term direction. Still, fixing levels held firm across both basins. The USG and ECSA regions continue to show resilience and balance, while the Pacific remains steady with tight tonnage lists particularly around Southeast Asia and Aussie. Additionally, there has been minimal movement in period rates which suggests confidence in the market remains (at least in the short term). Across all dry bulk segments, the week ultimately closed slightly up across the board. Attention now shifts to the week ahead as the market looks for clearer signals amid ongoing uncertainty, further influenced by recent political developments in the Middle East.

Australian Weather:

Hot, dry winds sapped significant yield potential out of crops through Southeast Australia in the past week, as well as a good deal of optimism out of the market. Declining yield and production potential across Southeast Australia also appears to be bolstering grower resolve to hold back on grain sales at current prices. While it was another dry week across Australian cropping areas, it was the hot gustily winds on Wed/Thu that will have hurt crops. Areas stretching from NSW, VVIC and SA were hit by hot temperatures and gusty winds which would have sapped any remaining moisture from already parched crops. Temps reached 37-38 C with wind gusts of upwards of 40-50km/hr. Until then, mild temperatures across most of Southeast Australia had been shielding crops from the lack of soil moisture. The burst of hot weather will lock in average to below average yields in a lot of areas across Southeast Australia. The bottom line of the above is that NSW yields won’t be as good as last year. Northern crops have lost potential with the hot, dry finish while the southern crops are likely to have suffered the most.

8 day forecast to 27 October 2025
http://www.bom.gov.au/

Weekly rainfall to 20 October 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian Dollar (AUD) remained under pressure on Friday, with the AUD/USD pair declining by 0.5% to trade around the 0.6450 level during the European session. The currency’s weakness reflects a combination of intensifying global economic risks and softening domestic fundamentals, both of which are prompting investors to adopt a more cautious stance toward the AUD. One of the key factors dragging the Australian dollar lower is the resurfacing of trade frictions between the United States and China. As the world’s two largest economies engage in renewed disputes over tariffs, technology restrictions, and geopolitical influence, risk appetite has taken a notable hit.

Australian Crop Update – Week 42, 2025

Tue, 14 Oct 2025 02:26:33 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Domestic markets were firmer last week helped by a 2% decline in the AUD as well as deteriorating crop conditions across Southeast Australia. Grain and canola prices were broadly firmer in all zones with sorghum and pulses weaker. Grain prices in Southeast Australia saw the biggest gains with markets up USD7 per metric tonne (/MT) for the week for protein grades as crops come under stress with the absence of finishing rains.

Exporters are patient, however across most zones where supplies will be large, there will be a requirement for sizable export programs to move the new season crop. This has changed however for Southeast Australia where the crop is shrinking. These areas will still have significant export surpluses, but the surplus will be lower. Northern and Western Australia (WA) markets are export competitive at current prices however international demand is lacklustre and farmer selling is slow at current prices. The forecast Australian wheat crop of >34 million metric tonne (MMT) will require prices to be export competitive through much of the season to attract sales for a 24-25MMT export task.

Australian 2025-2026 Harvest Update:

Barley harvest is underway in Queensland (QLD) keeping pressure on the delivered prices into the feedlots and for the first export vessels. Early wheat harvest has already started in some parts of the South West of QLD. The rapid dry down of the crop with hot, dry weather in recent weeks is expected to trim yields slightly but result in higher proteins. Reports of wheat being harvested in the west of QLD is consistently delivering >13% protein. This pattern is expected to continue into Northern New South Wales (NSW) as wheat harvesting pace picks up in the next 7-10 days.

Export Stem & Ocean Freight Market Update:

New crop vessels are starting to be added to the stem with 242k thousand metric tonne (KMT) of barley put on the stem in WA last week. This included 4 x 60KMT vessels which is assumed to be heading to China. There was also 200KMT of canola put on the stem in WA and 280KMT of wheat added to the stem which will be mostly old crop.

On the freight market, a sluggish start to last week with regional holidays in China and Korea caused activity levels to be to subdued. Rates gently eased as a result in the Pacific but not to the extent some charterers were hoping for which led to a decent standoff in the bid/offer spread. However, once China returned to the office on Thursday, there was a shift in the sentiment with more cargo demand appearing on all sectors. Panamaxes was active from Nopac, Australia, Indonesia and was still being lured towards ECSA, causing tonnage to remain on limited supply as rates began to climb again. The Ultramaxes followed a similar trend. Rates lost ground in the early part of the week as standard Nopac/Pacific rounds were being concluded 1-2kpd less than previous weeks however the tide changed and showed sign of improvement (albeit at a slower pace than the Panamaxes) by Friday. The Handysize sector trended sideways throughout the week. Despite the low activity levels, tonnage remained tight.

Looking forward there is an expectation of greater demand coming from Australia (especially on grains) so sentiment is looking positive leading up to Christmas in the Pacific.

A close watch going forward for the shipping markets is the USTR implementation of tariffs due this week on Chinese owners/tonnage and the counter measures announced on Friday by China on US owners/tonnage. The Israel/Gaza war has taken initial steps towards peace after two years of conflict and if it continues down that path, we would expect to see a greater traffic willing to transit the Suez/Red Sea/Bab-El-Mandeb corridor.

Australian Weather:

There are deteriorating crop outlooks in Southeastern Australia as traders and domestic buyers moved on securing volume. Traders were securing wheat throughout last week in Victoria (VIC) and Southern NSW with bids climbing by USD7-10/MT during the week. Time for crop saving rains across the region is starting to run out and while the Australian Bureau of Meteorology forecasted a wetter than normal spring, weather across eastern Australia hasn’t materialised. VIC cropping areas only received about 20mm of rain in September which is 50-60% of the monthly average. Forecasts remain dry for the next week or so. Soil moisture reserves are critically low following below average in crop rainfall.

8 day forecast to 21 October 2025
http://www.bom.gov.au/

Weekly rainfall to 14 October 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar (AUD) is showing signs of stability at the start of the new week, recovering some of last week’s losses against the US dollar (USD). On Monday, the AUD/USD currency pair climbed back above the key US$0.6500 level after briefly dipping to its lowest point since August 27, around US$0.6472, during Friday’s trading session.

Australian Crop Update – Week 41, 2025

Wed, 08 Oct 2025 02:23:28 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Domestic markets were quiet last week with participants reporting limited activity. We are expecting it will remain quiet until harvest commences in earnest in a few weeks. Farmers are showing little interest in selling new crop wheat and barley at current prices and consequently, trade selling has dried up. Chickpeas are being harvested in Central Queensland (QLD) but demand is well down on last year.

Weekly NDVI data showed the most significant weekly declines were in South Australia (SA). The declines in SA, Southern New South Wales (NSW) and Victoria (VIC) are a signs these areas are now running short of moisture. It’s not uniform across the regions as rains have been variable and some areas a better than others, but all of Southeast Australia needs finishing rains to avoid yield losses. This has already triggered some farmers to start baling crops in parts of SA and hold back from selling. Big crops in Northern NSW, Southern QLD and Western Australia (WA) are assured.

Australian Export Update:

There was 1.98 million metric tonne (MMT) of wheat exports in August down from 2.3MMT in July. This included 1.1MMT from WA and 675 thousand metric tonne (KMT) from NSW. Australia’s Oct/Aug exports are 18.77MMT with a month remaining in the 2024/25 marketing year. The Philippines was the largest destination with 426KMT followed by Indonesia with 310KMT. Australia’s exports of wheat to Africa have tumbled from >500KMT in Apr-Jun to <200KMT in Jul/Jul as the new crop Black Sea becomes the cheapest origin. Barley exports for Aug were 494KMT which was the smallest month since Oct 2024. WA shipped 206KMT and VIC 165KMT. China was the largest destination with 383KMT followed by Japan with 97KMT.

Export Stem & Ocean Freight Market Update:

It was another quiet week for shipping stem additions. Weekly wheat additions fell to 182KMT. This consisted of 116KMT in NSW. No wheat vessels had been added in WA through to Thursday with the Friday changes yest to be published.

It is China's golden week this week and as expected the market appears to be well-balanced and will hold firm throughout the long holidays. The Atlantic for the Panamax and Ultramax sectors are still being well supported by grain demand, especially loading EC South America. The Pacific remained active as rates trended sideways for the most part, as a general lack of available tonnage was still a major factor (not helped by Typhoon Ragasa wrecking havoc on Philippines/South China regions).

Australian Weather:

WA received soaking rain over the weekend with showers forecast for the coming week. Eastern Australia is forecast to remain mostly dry. Temperatures in Southern QLD and Northern NSW are warm to hot which will speed up crop maturity. Temperatures for Southeast Australia remain generally mild which is a positive for crop developmen

8 day forecast to 15 October 2025
http://www.bom.gov.au/

Weekly rainfall to 7 October 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

AUD/USD gained 0.15% to trade near 0.6625 to close out the week showing resilience despite weaker-than-expected trade figures. On Tuesday last week, the Reserve Bank of Australia kept its Official Cash Rate (OCR) steady at 3.6%, in line with expectations. However, the central bank signalled concern over inflation, stating that price pressures remain more persistent than anticipated. This hawkish tone suggests that the RBA may maintain or even tighten monetary policy further to keep inflation in check, providing some underlying support for the AUD to firm in the final months of 2025.

Australian Crop Update – Week 40, 2025

Mon, 29 Sep 2025 02:20:18 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Local wheat and barley bids were firmer last week in most areas. This is attributed to the weaker AUD while global export values were close to unchanged. The AUD dipped by a further 0.7% last week to 0.6540 and is now back 1.5% in the past two weeks. Wheat futures ended the week modestly lower but Black Sea wheat quotes were firmer. IGC pegged Russian 12.5 pro at USD228 per metric tonne (/MT) FOB mid-week, up from USD226/MT a week earlier. IGC kept its Australian APW FOB quote unchanged at USD244 FOB/MT through the week while the ASW quotes were down to USD241/MT FOB, which we are putting down to a looming large Western Australia (WA) crop which is expected to be ASW dominated. Australian barley markets were also firmer. Risk premiums in Southern New South Wales (NSW) and Victoria (VIC) are building with the absence of a finishing rain.

Australia exported 155,289 metric tonnes (MT) of canola in July, according to the latest data from the Australian Bureau of Statistics. July shipments were up 53 percent from the June figure of 101,766MT, but were roughly one third of the 386,033MT shipped in July 2024. Japan on 76,357MT, the United Arab Emirates on 64,335MT, and Malaysia on 6,584MT were the three biggest markets for canola shipped in July 2025. As often happens in July, European ports were absent from the destination list to reflect Australia’s biggest canola market switching to its own new-crop rapeseed supplies.

Australian 2025/2026 Crop Forecast - September 2025:

2025/26 wheat, barley and canola production has been raised by the improving crop conditions. Wheat production is forecast at 34.2 million metric tonne (MMT), barley at 14.6MMT and canola at 6.5MMT. The production estimates are similar to ABARES and are justified on planted areas and current crop conditions supported by vegetation index ratings. Australia’s 2025/26 wheat exports forecast has been raised to 25.0MMT (+1.8MMT year on year), barley exports at 8.0MMT are about the same as 2024/25, canola exports of 4.75MMT are down 0.65MMT on 2024/25.

Australian Pulses Update:

Falling chickpea and lentil prices are yet to produce a run of forward sales from growers in the past week. Domestic demand remains limited as those with livestock are happy to wait for harvest pressure to drive prices down further. Weak chickpea prices have so far failed to spark volume forward sales of wheat and barley in the northern region also. Export demand has been lacklustre with international markets reverting to spot purchases and awaiting the market to find a floor before engaging ahead of the Australian new crop harvest.

Export Stem & Ocean Freight Market Update:

It was a relatively quiet week for shipping stem additions. There was 271 thousand metric tonne (KMT) of wheat added to the stem in the past week down from 541KMT a week earlier. Most of the additions were in WA. There was 60KMT of canola put on the stem in Kwinana and no barley added to the national stem last week.

As China's golden week fast approaches the overall market appears to be well-balanced and will hold firm throughout the long holidays. The Atlantic for the Panamax and Ultramax sectors are still being well supported with grain demand, especially loading ex ECSA. The North Atlantic has been more subdued over the past week compared to the previous month with limited fresh enquiry hitting the market. The charterers are trying to lower the rates for Trans-Atlantic rounds but owners have managed to resist for more.

The Pacific for Panamax and Ultramax was active early in the week as charterers looked to cover prior to Golden Week. Australia was active with mineral demand and Indonesia coal export was healthy. The Fareast and Nopac was quieter than the recent norm, but rates held steady for most of the week. However, by Friday a sense of softness had begun to creep into the sentiment as market participants took a cautious outlook. The Handysize index gained ground again and closed above $15,000 (strongest level all year).

The Pacific remained active as rates trended sideways for the most part as a general lack of available tonnage was still a major factor (not helped by Typhoon Ragasa wreaking havoc on Philippines/South China regions) while the Atlantic had another positive week buoyed by an increase in cargoes ex CONT as the USG and ECSA held steady.

Australian Weather:

The Australian Bureau of Meteorology (BOM) issued its latest climate outlook for the coming weeks and months. It continues to point to above average rainfall for the eastern half of Australia for Oct to Dec and neutral weather for WA. Assuming the BOM’s forecasts are correct, the big issue is the timing of the rain for Southeast Australia. These areas lack enough moisture to finish crops without yield losses. The weekly forecast shows below average rain for most of Australia’s cropping regions through to Oct 12th and then more of a neutral period for the next week. Dry weather in the first half of Oct and possibly warm temps would result in yield losses through Southeast Australia. Some crops in these parts will be already starting to dry down and will be losing yield potential by then. This would result in lower yields through Southeast Australia, but this is still likely to be compensated by the strong yield outlook for WA. A 5% drop in production across Southern NSW, VIC and South Australia would be offset with a 5% lift in WA production, which is looking likely. Finishing temperatures over the next month will be critical.

8 day forecast to 6 October 2025
http://www.bom.gov.au/

Weekly rainfall to 29 September 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar (AUD) held its ground against the US dollar (USD) to close last week at .6540, pausing a two-day losing streak driven by renewed strength in the Greenback and broader market risk aversion. The AUD/USD pair had come under pressure earlier in the week as stronger-than-expected economic data out of the United States bolstered demand for the USD.

Australian Crop Update – Week 39, 2025

Wed, 24 Sep 2025 02:17:53 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

ocal grain markets ended last week mixed across the port zones. Cash bids for wheat and barley in Southern Queensland (QLD) and Northern New South Wales (NSW) were a couple of dollars higher for the week. Buyers started to lift prices as farmer selling slowed, particularly in the new crop. Grain prices were softer further south which has resulted in a narrowing of the southern risk premium. Western Australia (WA) wheat prices bounced last week on the back of recent kick in export demand.

Australian 2025/2026 Crop Forecast - September 2025:

Australian Pulses Update:

Australia exported 24,951 metric tonnes (MT) of chickpeas and 89,320MT of lentils in July, according to the latest data from the Australian Bureau of Statistics. Lentils exports in July rose 79percent (pc) from the June total of 50,032MT, with India the biggest market on 44,465tMT followed by Bangladesh on 22,651MT, and Sri Lanka on 18,522MT.

Export Stem & Ocean Freight Market Update:

Less that 500 thousand metric tonne (KMT) of wheat was added in the past week for late September and first half October shipment (mostly Newcastle NAT).

On Ocean freight, Panamaxes are gently easing again in both basins after a couple of strong weeks of gains. The Altantic is suffering from a lack for fresh demand hitting the market, especially from ECSA, causing tonnage supply to grow. Owners are yet to admit to the new norm which is causing the bid/offer spread to widen considerably, but without a fresh flow of cargo hitting the market, it will leave owners little choice to accept charterers revised levels. The Pacific followed a similar path as activity levels lost pace as charterers began to push rates lower as the week progressed.

The Ultramax sector is in a holding pattern as the participants appear to be happy to trend sideways after a few strong weeks of growth.

The Handysize sector has again proven to be remarkably resilient (as seen all year) in both basins. The Altantic is witnessing a slight uptick in rates but nothing substantial while the Pacific can be described as holding firm. Although, there may be a notable two-tiered market emerging in Pacific (especially in Southeast Asia) with the rate spread between large modern handies compared to older smaller handies growing slightly wider than expected recently. Australia is a close watch in the Pacific as subdued activity levels over the past few weeks has been a contentious talking point.

Australian Weather:

There were showers across NSW late in the week of up to 25mm in some regions fortifying crop development. There were also some light showers in Victoria (VIC) of 5-10mm. The forecast is mostly dry for the next 10 days over the major cropping areas. Soil moisture levels are above average in Southern QLD, Northern NSW and WA while Southeast Australia is average to above average. Southeast Australia needs another good rain event to finish the crop. Nearby temperatures are below average for the next week but are set to warm in late September.

8 day forecast to 1 October 2025
http://www.bom.gov.au/

Weekly rainfall to 23 September 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar (AUD) continued its downward trajectory against the US dollar (USD) last week, marking consecutive days of declines in the currency pair. The AUD finished in negative territory for the first time in four weeks, reflecting the ongoing strength of the US dollar following the Federal Reserve’s recent monetary policy announcement closing the week at 0.6582.

Australian Crop Update – Week 38, 2025

Wed, 17 Sep 2025 02:15:01 GMT

2025-26 - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Australian domestic markets were softer last week across all zones under the weight of weaker international prices, a stronger AUD as well as improving prospects for Australian winter crop. There were reports of farmer selling in northern NSW early last week, but this disappeared later in the week as the AUD continued to climb. The general view is that farmers will sell as little as they can at harvest and store what they can in the hope of better prices post-harvest. It is shaping up to be a more difficult marketing environment for the farmers than the 2024/25 crop when pulse and canola prices were relatively healthy and these sales allowed farmers to be more selective sellers of wheat. The decision of what crops farmers are prepared to sell at harvest to keep their bankers happy will be more difficult this year than last.

There were reports that Australian exporters had sold reasonable volumes (0.5 million metric tonne (MMT) plus) in recent weeks into Southeast Asia. Aussie wheat has been competitive with other origins into Southeast Asia. Sales were reportedly for Nov/Dec, and even some Jan we are told. These sales along with a significantly early barley program into China, feed wheat into the Philippines and Canola into China and Europe have certainly tightened the stem for buyers of early new crop milling wheat.

Australian New Crop Estimate

The USDA topped ABARES in its September WASDE report when they forecast the Australian 2025/26 wheat crop at 34.5MMT and barley at 15.0MMT. NDVI data shows that crop conditions in Northern New South Wales (NSW), Southern Queensland (QLD) and Western Australia (WA) are well above average, but not as good as last year. Crop conditions across Southeast Australia are better than average however they need some additional rain to finish. It should be said that most of the crop looks late, so we still have a bit of time to go.

Export Stem & Ocean Freight Market Update:

It was a very lean week for shipping stem additions. Total stem additions for week 37 were only 138 thousand metric tonne (KMT) of wheat. This included 110KMT of wheat in WA and 28KMT in Brisbane QLD. There were no other new nominations with other grains.

The ocean freight market remains steady with demand in the Atlantic driving strong front-haul business. That said, we don't see too much more upside on freight rates in Pacific - it's more a question of how long can owners sustain current levels. FFA performance suggests the firm market will last into November. There was a $25pmt drop in bunkers over the last week.

Australian Weather:

The Australian Bureau of Meteorology (BOM) updated its long-range forecast overview. This continued with the pattern of a wetter than normal spring for the eastern half of Australia. Rainfall is likely to be above average (60% to 80% chance) for most of the eastern half of Australia, with October showing the strongest signal for above average rainfall. The west is showing equal chances of above average/below average. During October and November, northern Australia gradually builds towards the wet season, bringing increased humidity, storms, and showers. The BOM is forecasting a higher chance of above average temperature for Oct/Nov for southeast Australia and southeast WA. Another southerly front is forecast for Victoria (VIC) and Southern NSW late this week which could offer rain for VIC. South Australia (SA) remains mostly dry.

8 day forecast to 24 September 2025
http://www.bom.gov.au/

Weekly rainfall to 16 September 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar (AUD) rallied to a fresh 10-month high against the US dollar (USD) on Friday, with the AUD/USD pair reaching levels near 0.6670 during the European trading session. The surge in the Aussie comes as risk-sensitive currencies outperform against the USD buoyed by an improving global risk appetite and evolving central bank expectations. Market sentiment has turned decisively optimistic ahead of the Federal Reserve’s monetary policy decision scheduled for Wednesday. Investors are increasingly confident that the Fed is nearing the end of its tightening cycle, with growing bets on a rate cut either at the upcoming meeting or later in the year. These dovish expectations have weighed on the US dollar and provided a broad-based lift to higher-yielding currencies like the AUD.

Australian Crop Update – Week 37, 2025

Wed, 10 Sep 2025 02:11:28 GMT

2024-25 Old Crop - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

The Australian wheat and barley cash markets remain relatively quiet as we settle into the intercrop period between old crop executions and new crop selling. Consumers continue to be comforted by the large crop outlook here and elsewhere in the world while farmers are wondering what the trigger for an improvement in prices will be. Farmers are in no hurry to sell new crop supplies at current prices which are at best break even with production costs, although above average yields will help this equation. Many feed grain consumers have already started to build some new crop coverage and are in no hurry to extend this with talk of a potential wet harvest particularly in the east. It remains a struggle for exporters to make any nearby sales with very limited FOB stem availability. Australian wheat has been competitive into Southeast Asia, Southern Africa and the Middle East in recent weeks. This appears to have allowed for the nearby logistics to have been used up.

The ABARES forecast Australian 2025/26 barley crop of 14.6 million metric tonne (MMT) weighed on Australian prices with reports that China - who has already bought a significant number of 2025/26 cargoes - backing off their buying to $245 c&f from $250 a couple of weeks ago.

ABARES has also lifted its forecasts for Australia’s pulse crops, with lentils now seen at a record 1.7MMT, according to estimates released in its September 2025 Australian Crop Report. Lentil area is seen at a record 1.136 million hectares (MHa), 99,000ha above the record of 1.037Mha set last season. Most of Australia’s lentil crop is grown in South Australia (SA) and Victoria (VIC), and the improvement in the SA season after a rugged start has seen both area and production estimates increase substantially. In New South Wales (NSW), the estimated lentil planted area has increased by 150 percent (pc) to a record 75,000Ha, while the production estimate has tripled to 90,000 metric tonne (MT).

Australia’s chickpea crop at 2.102MMT is forecast to be the second-biggest on record after last year’s 2.267MMT harvest, and from a record planted area of 1.078MHa, just ahead of the 2024-25 planting of 1.039Mha.

The national field pea crop is seen at 220,000MT from 184,000Ha, while lupins are seen at 840,000MT from 551,000Ha, including 650,000MT from 400,000Ha expected from Western Australia (WA).

The national estimate for faba bean production has risen 26pc over the quarter to 854,000MT, mostly because of a 40pc rise for NSW, and a 25pc rise for SA, where conditions have improved considerably in the South East of the state, home to much of the SA crop.

In VIC and SA, ABARES said after a mostly dry and sporadic start to the winter-cropping season, average to above-average June and July rainfall across most regions supported crop establishment and growth.

The ABARES pulse numbers and limited consumer demand have put new crop pulses prices under pressure. This included chickpea and faba bids in the north as well as faba beans and lentils in the south. Traders were reporting some small new crop business however the tonnages were small with little momentum to generate further trade.

Australian Export Update

Australia exports reached 2.359MMT of wheat in July which was approximately the same as June. NSW and Queensland (QLD) exports were larger, and WA was down on last month. Australia has exported 19.8MMT for the Oct/Jul which is 2.2MMT more than the same time last year. Indonesia was the largest destination with 548 thousand metric tonne (KMT), followed by the Philippines with 449KMT, then Korea with 259KMT and then Vietnam 202KMT. China was only 65KMT. Australia’s 2024/25 wheat exports are now expected to exceed 23MMT from previous expectations of 22.5MMT.

Barley exports for July were 634KMT with more than 500KMT shipped from WA. China was the largest destination with 491KMT followed by Japan and Mexico with 34KMT. There was 401KMT of sorghum exported in July. This included 179KMT from Brisbane, 66KMT Mackay and 145KMT Newcastle. Canola exports were 155KMT for July.

Export Stem & Ocean Freight Market Update:

There was 476KMT of wheat added to the stem in the past week. This lifts the wheat additions in the past two weeks above 1.1MMT. NSW accounted for 202KMT of last week’s wheat additions followed by 159KMT in WA with new vessels also in VIC and SA.

The ocean freight market appears to be in a holding pattern over the last week as market participants try to ascertain if rates will continue to push or trend sideways in the near future. The Atlantic is still holding firm with a general lack of tonnage and strong exports from USG/ESCA continue to be the main contributing factors for all sizes. The strength of the Atlantic, especially from ECSA, is continuing to draw tonnage from the Indian Ocean/Southeast Asia regions on the Panamax which is helping keep rates firm in both areas. The Handysize sector in the Atlantic held steady in most loading areas however by Friday rates ex USG felt under pressure with rumours some owners were willing to consider lower than last done levels for transatlantic rounds. The Pacific Basin looks to be more balanced over the past few trading days. Reported activity has been lower than previous weeks in Southeast Asia but the fixing levels held firm while in the Fareast a steady stream of backhaul steels has helped the rates trend sideways, despite charterers best efforts to bid lower than last done.

Australian Weather:

Crop conditions in Australia remain favourable to crop development. Perth had its wettest winter in more than three decades and the wet weather continues. Weather models have added widespread rain for eastern Australia over the next week. The heaviest rain over the coming week is expected to fall over southeastern Australia. The driest areas of Southern NSW are slated to see 20-40mm. Australia’s winter grain crop is big and still growing and this is comforting local and global buyers.

8 8 day forecast to 9 September 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

Last week, the AUD/USD exchange rate experienced moderate fluctuations, reflecting a cautious market environment shaped by ongoing global economic developments. The Australian dollar opened at approximately 0.6538 USD on September 1 and gained modest strength over the following two days, reaching a short-term peak near 0.6545 USD on September 3. However, this upward momentum proved short-lived, as the currency pair gradually retreated to close the week around 0.6516 USD on September 5. These movements were primarily driven by market speculation regarding potential shifts in U.S. Federal Reserve monetary policy.

Australian Crop Update – Week 36, 2025

Wed, 03 Sep 2025 02:08:46 GMT

2024-25 Old Crop - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

The domestic grain markets in the nearby were softer last week as good rain forced the grower to confront the old crop / new crop inverse. However, traders were reportedly more aggressive sellers into feed grain markets than milling, despite the increased optimism about crops across Australia on account of forecasts for a wet spring - particularly on the East Coast. The nearby FOB market was defined by a distinct lack of liquidity as most sellers have sold what they had and are now focused on new crop planning. That said, we are hearing some trades of barley have been made to China - and wheat - and this has kept the Western Australian (WA) markets well supported.

In general, we are rapidly entering the technical intercrop period when harvest logistics, maintenance programs and weather can play havoc with traders best laid plans. That said - Australia remains on track for a >34 million metric tonne (MMT) wheat crop in 2025/26 and a >14MMT barley crop with good August rain across most states lifting production estimates. ABARES had raised its wheat production estimates. Australia's wheat output is projected at 33.8MMT, although the production is poised to be 22% above the 10-year average. Wheat production is now seen at similar levels to FY 2023/2024. Barley, canola and pulse production was also raised. Australia’s 2025 barley crop was lifted by 1.7MMT to 14.6MMT, equal to the record crop in 2020. Australia's canola output in 2025/26 is estimated at 6.4MMT, up 1% from a year ago. Last year’s canola crop was also raised. In other crops, ABARES said Australian lentil production is forecast to rise 34% to 1.7MMT while chickpea output is likely to drop 7% to 2.1MMT.

Export Stem & Ocean Freight Market Update:

It’s been a busier week for stem additions. 690 thousand metric tonne (KMT) of wheat was added to the stem in the past week, the most in 10 weeks. This comprises 340KMT from WA and 200KMT in New South Wales. There was also a 64KMT vessel added from BNE FI and 80KMT in Victoria (VIC). Barley additions also improved with 115KMT for the week. This included 60KMT in WA and handy size ships in Pt Kembla and Geelong. Australia is on track for 22.5MMT of wheat exports for 2024/25 as well as 8.1MMT of barley and 5.4MMT of canola.

It was another positive week for shipping as all sectors gained ground, although at a slower pace than previous weeks. The Panamax sector has been well supported in the Atlantic by an abundance of fronthaul cargoes from the Americas causing tonnage to remain tight. Asia was also active, especially from Australia with a steady stream of mineral demand to help underpin the market. There also appears to be no slowing on recent gains in the Ultramax sector. The Handysize sector has followed the trend of the unit larger with the same general principles applying: increased demand in most key loading zones combined with tight tonnage supply. Another contributing factor assisting tonnage supply to remain tight in Asia is a recent spate of typhoons around the Philippines/Vietnam/South China region, causing vessel schedules to be affected.

Australian Weather:

The current vegetation index continues to point towards another big wheat and barley crop in 2025/26. The rainfall averages of the Australian cropping zones have improved the NDVI ratings steadily improving through July and August following the late start. The next 10-14 days is again positive for rainfall in areas that need the additional moisture.

8 8 day forecast to 9 September 2025
http://www.bom.gov.au/

Weekly rainfall to 2 September 2025
http://www.bom.gov.au/

That said the Indian Ocean Dipole (IOD) is becoming increasingly negative and is pointing to a wet spring for much of Australia. The IOD index needs to drop below -0.4 and remain there for several weeks to be classified as a negative IOD event. The latest weekly IOD value was -0.91 on August 17, marking the fourth consecutive week below the negative IOD threshold. If the index drops below -0.94 in the coming weeks it will become the strongest negative IOD value we have seen since October 2010, which was Australia's 2nd wettest October on record and is the reason why many are being cautious about selling milling grades into new crop and are instead wanting a few feed shorts to trade around.

AUD/USD Currency Update :

Last week, the AUD/USD currency pair traded within a relatively tight range, fluctuating between approximately US$0.6462 at its lowest point and US$0.6539 at its highest. This limited range suggests a period of consolidation and cautious trading activity among investors. The Australian dollar demonstrated some resilience against the US dollar despite a mix of economic data and broader market uncertainties.

Australian Crop Update – Week 35, 2025

Mon, 25 Aug 2025 02:58:27 GMT

2024-25 Old Crop - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

It’s been a quiet week across Australia’s domestic grain markets which has seen traders focusing on weather and old crop execution. Wet weather in the north helped to support old crop values where the rain has slowed farmer deliveries into domestic feedlots. New crop wheat markets remain thin with little if any grower engagement. Sorghum in the north was softer last week. The bulk sorghum shipping program is seen as largely finished with the last of the vessels now appearing on the stem. Container shipments are moving however the bids to farmers were lower as the bulk buyers step away from the markets. We weather in the north also has farmers preparing for another big sorghum planting which will commence as soon as the paddocks are dry enough from the recent rains.

Sentiment is changing in Southeast Australia where the wheat bids are climbing as buyers try to find sellers to shore up late season old crop supplies as well as new crop coverage. The recent dip in the AUD as well as the broader market sensing that global wheat values may be at seasonal lows has seen a step-up in exporters buying, albeit at unpalatable prices for the farmer. However, dry weather worries across Southeast Australia are also increasing. Farmers in the southwestern New South Wales (NSW), parts of Victoria (VIC) and South Australia (SA) need rain soon or yields will fall. The sentiment is widespread and its impacting buyer behaviour.

Export Stem & Ocean Freight Market Update:

Shipping stem activity remains quiet. There was 323 thousand metric tonne (KMT) of wheat put onto the stem in the past week split between Western Australia (WA) and VIC with SA and Queensland (QLD) also chipping in. A further 90KMT of sorghum was added to the stem. This included a further 30KMT into GNC Newcastle and 60KMT into QBT Brisbane which was back in July with the belated stem updates. The bulk sorghum shipping program is largely done, according to the trade, with the container activity from the Downs continuing for longer. Only small volumes of barley and canola were added.

Australian Weather:

NDVI (Normalized Difference Vegetation Index) readings at the regional levels across Australia at the middle of August are very similar to last year. They are well above average in QLD, Northern NSW and WA, but not as good in Southeast Australia which leaves that region vulnerable to spring weather. Current collective NDVI readings in Southern NSW and VIC are about the same as last year and above average, so crops are still ok, although there are patches that are already suffering. SA is also about normal for this time of the year, but spring weather is critical, and rain is needed early spring. There is still time for a recovery in the crops across Southeast Australia, but the timing of rain is now critical. These areas need rain in the coming weeks. Some parts are already deteriorating but most are holding on. Weather forecasts for SA and VIC are encouraging with some rain forecast for next week, but it doesn’t look as good for Southern NSW.

8 day forecast to 1 Septebmer 2025
http://www.bom.gov.au/

Weekly rainfall to 25 August 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

Last week, the Australian dollar saw a noticeable decline against the US dollar, dropping by around 1.2% as global currency markets reacted to shifting economic signals. The AUD started the week trading near US $0.654 but steadily lost ground, reaching a two-month low of approximately US $0.641 by midweek. This weakness was primarily driven by renewed strength in the US dollar, which benefited from investors scaling back expectations of a near-term interest rate cut by the Federal Reserve. Although the Australian dollar staged a modest rebound later in the week, closing near US \$0.649, it remained under pressure amid broader risk-off sentiment.

Australian Crop Update – Week 34, 2025

Mon, 18 Aug 2025 02:54:26 GMT

2024-25 New Season - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Local Australian markets drifted lower with limited activity in the past week. Global influences were again negative with the declines in CBOT wheat and corn following the bearish August WASDE report. Most of the domestic focus is now on the new crop but there is limited farmer selling or exporter buying. Growers are reportedly selling some old crop supplier in Northern New South Wales (NSW) and Southern Queensland (QLD) ahead of harvest which begins at the end of next month.

Grower and trade sales of new-crop chickpeas, faba beans, and lentils remain relatively slow reflecting the lateness of most crops, and uncertainty of yields. Lentils prospects have improved greatly for South Australian (SA) and Victorian (VIC) lentils thanks to recent rain, but yields will depend on a kind finish to the growing season. Northern NSW and Southern QLD fava beans crops look to be in good condition, like last year, however the southern crop’s condition is still a matter of debate. Trade talk is that Egypt, the destination for nearly all the faba beans Australia exports, is very well supplied, and unlikely to present the demand - and shipping program - we saw last year.

Export Statistics – June 2025:

Australia shipped 2.54 million metric tonne (MMT) of wheat in June, slightly down from the 2.59MMT in May. This included 1.42MMT from WA and 0.58MMT from New South Wales (NSW). Container wheat exports were 155 thousand metric tonne (KMT) with Victoria (VIC) falling to 43.5KMT. Indonesia was the largest destination with 649KMT which is the largest monthly shipments to them since Aug 23. Philippines was the next largest with 328KMT. China was just 111KMT. Larger shipments in Africa and the Middle East are helping to make up for the smaller Chinese imports. Australia has shipped 1.6MMT of wheat to African countries in the April to June and 1MMT to the Middle East. Asian exports have been holding around 1.5-1.7MMT/month.

Barley exports remain strong with a further 800KMT shipped in June, just shy of the 845KMT in May. WA accounted for 518KMT of this with 170KMT from VIC and 90KMT South Australia (SA). China made up 78% of the June exports with 622KMT followed by Japan with 152KMT.

There was 245KMT of sorghum exported in June down from 506KMT in May. Nearly all of this went to China. There was 118KMT shipped from Brisbane, 27KMT from Gladstone and 75KMT from Newcastle. Sydney accounted for the remainder.

Canola exports tumbled in June to 102KMT down from 659KMT in May.

Lentil exports were healthy at 61KMT up from 47.2KMT in May. Chickpea exports came in at 43.4KMT which was the biggest month since March. Most of the chickpea exports went to Pakistan with the bulk of the lentils going to Bangladesh. This may be a reflection of the headache traders have had executing into India.

Export Stem & Ocean Freight Market Update:

Shipping stem additions have slowed. There was 158 thousand metric tonne (KMT) of wheat, 60KMT of canola and 30KMT of barley added to the stem in the past week. There was 100KMT of wheat added to the stem in Geraldton.

Australia shipped 2.54 million metric tonnes (MMT) of wheat in June, slightly down from the 2.59MMT in May. Indonesia was the largest destination with 649KMT which is the largest monthly shipments to them since Aug 2023. Philippines was the next largest with 328KMT. China was just 111KMT. Larger shipments into Africa and the Middle East is ensuring the export pace is maintained with 1.6MMT of wheat shipped to African countries from April to June and 1MMT to the Middle East. Asian exports have been holding around 1.5-1.7MMT/month. Barley exports remain strong with a further 800KMT shipped in June, just shy of the 845KMT in May. China made up 78% of the June exports with 622KMT followed by Japan with 152KMT.

Lentil exports were healthy at 61KMT up from 47.2KMT in May. Chickpea exports came in at 43.4KMT which was the biggest month since March. Most of the chickpea exports went to Pakistan with the bulk of the lentils going to Bangladesh. This may be a reflection of the headaches traders have had executing into India.

Panamaxes are holding steady while Ultramaxes and Handysize continue to gently firm buoyed by an increase in Indo coal and Aussie grains. With tonnage still feeling tight, there is a confidence that the market will continue to hold firm at least in the near term as fresh demand continues to hit the market.

Australian Weather:

Australia’s Bureau of Meteorology released its latest long-range weather forecast last week with above average rainfall predicted for eastern Australia for September to December. The latest forecasts offer more rain for Western Australia (WA), Southern QLD and possibly Northern NSW in the next week but Southeast Australia is expected to see limited rain in the next 7-10 days were crops are already two to four weeks later than normal in their development.

8 day forecast to 25 August 2025
http://www.bom.gov.au/

Weekly rainfall to 18 August 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

During the week of August 11 to 17, 2025, the Australian dollar (AUD) exhibited modest movement against the U.S. dollar (USD), ending the period with a slight overall decline, fluctuating between a low of 0.6498 USD and a high of 0.6556 USD. The weekly average settled around 0.6518 USD, marking a mild weekly loss of approximately 0.10%. Overall, the AUD’s performance remained relatively stable, reflecting a cautious trading environment and limited domestic inputs.

Australian Crop Update – Week 33, 2025

Mon, 11 Aug 2025 02:51:08 GMT

2024-25 New Season - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Local Australian markets finished mixed last week with bearish global influences weighing in on grain bids. There were signs however that cheaper prices were starting to trigger export demand late in the week with larger volumes being traded to cover apparent shorts. Western Australia (WA) APW10.5 was quoted USD 250 per metric tonne (/MT) FOB which is seen as competitive into Asia. Export buying interest is reportedly picking up at these levels for bulk and container buyers with interest emerging on the lower prices for the nearby months. Most of the demand appears to be for Sep/Nov as the inverse from old to new crop condenses. It was reported that AH12 wheat sold at around $260/MT FOB. Container exporters were also reporting improved demand albeit at prices that were difficult to work. Nonetheless, demand is surfacing at current prices.

Export Statistics – June 2025:

Export Stem & Ocean Freight Market Update:

A further 311KMT of wheat and 90KMT of canola was added to the stem in the past week. There was new barley vessels put onto the stem in the past week. There was also some faba beans and lentils put on the stem in Adelaide. WA accounted for 223KMT of the wheat that was put onto the stem in the past week, and the remainder was in Quattro Pt Kembla. All the canola was in WA. Stem additions are slowing but this comes as no surprise. There has been 660KMT of wheat added to the WA stem in the past four weeks compared to 725KMT in the previous four weeks.

Australian Weather:

There has been improving sub-soil moisture profiles across Australia’s cropping zones. The levels have improved following the good July rains which is showing a lot of similarities to where were at this time last year. Queensland (QLD) and Northern NSW are very good. Conditions taper away in Southern NSW. Conditions are mixed in VIC as is SA with below average moisture but improving following the rain. Rainfall over the next week appears to mainly coastal after decent soaking rains were received in most cropping areas last week. VIC and SA will be the biggest beneficiary with 10mm to 20mm expected in cropping regions.

8 day forecast to 18 August 2025
http://www.bom.gov.au/

Weekly rainfall to 11 August 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

Last week the Australian dollar (AUD) exhibited a modest yet steady appreciation against the US dollar (USD). The currency began the week trading in a relatively stable range between 0.6469 and 0.6477 USD, reflecting cautious market sentiment in the early sessions. However, as the week unfolded, several positive developments contributed to a gradual strengthening of the Aussie dollar. A primary catalyst was the release of stronger-than-expected trade balance data from Australia, which revealed that the nation continued to maintain a healthy trade surplus. This bolstered investor confidence in Australia’s broader economic outlook, reinforcing the AUD’s appeal to close out at .6524.

Australian Crop Update – Week 32, 2025

Mon, 04 Aug 2025 02:48:14 GMT

2024-25 New Season - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

It was a relatively quiet week locally with most participants at the Australian Grain Industry Conference in Melbourne. That said, it was a softer finish to the week with global markets trending bearish and a 1.2% fall in the Australian dollar as the USD responded to the latest trump tariff news.

Recent rainfall has boosted grower confidence, prompting more farmer selling in New South Wales (NSW) and parts of Victoria (VIC). Jan ’26 APW 10.5 wheat was indicated around USD 253 FOB East Coast. The AGIC conference in Melbourne had a bearish tone, reflecting recent widespread rain, strong global supply, and subdued export demand. Exporters remain cautious about shorting cashed-up growers ahead of harvest and although old crop and new crop farmer selling has increased it is still subdued. However, the headline is crop outlooks are improving significantly and many traders now expect Australia to match or exceed last year's wheat production and talk of 34 million metric tonne (MMT) new crop is now being openly discussed.

Australian Pulses Market Update:

Australia’s chickpea, faba bean, and lentil crops have all established in conditions that vary from good to ideal in the northern regions to average in the south. That said, recent rain across most regions has opened up the prospect of better crops in the south and market participants at the recent AGIC conference suggested we were likely to see crops of a similar size this year although quality, yields and timing, particularly of the southern Fiesta crop, are still up for debate.

On the demand side, Egypt’s demand for bulk and containerised faba beans has fallen away on ample stocks.

Southern growers are yet to start selling new crop, with production prospects still uncertain in many parts of VIC and South Australia (SA). A few growers in NSW and Queensland (QLD) have forward sold small amounts of faba beans, but have generally prioritised forward selling of chickpeas, which occupy a much bigger northern area than beans.

Export Stem & Ocean Freight Market Update:

About 235 thousand metric tonne (KMT) of wheat, 100KMT of sorghum, and 30KMT each of barley and canola were added to the export stem last week. NSW added just over 100KMT of wheat, Western Australia (WA) just under 100KMT, and VIC (Melbourne) 30KMT. QLD added a further 100KMT of sorghum, mostly from Central QLD, with 15KMT via GNC Newcastle.

Australian Weather:

Widespread rain capped off a wetter-than-normal July across key cropping regions. This has helped turn around winter crop outlooks, with wheat production now expected to reach 34+MMT and barley 13.5MMT. The Bureau of Meteorology's latest seasonal outlook (Aug–Oct) continues to forecast above-average rainfall for most of mainland Australia, excluding the far west and southeast. This bodes well for 2025 winter crops, particularly in northern NSW and southern QLD where timely planting rains have boosted confidence. Crops in southeast Australia, which had a late and slow start, are also benefiting. WA crop conditions have improved, but subsoil moisture remains below average—making follow-up rainfall critical for yield potential.

8 day forecast to 11 August 2025
http://www.bom.gov.au/

Weekly rainfall to 4 August 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

Last week, the Australian dollar (AUD) broadly underperformed against major currencies, finishing the week lower. AUD/USD fell sharply, pressured by renewed expectations of interest rate cuts from the Reserve Bank of Australia (RBA) following softer-than-expected labour data and a rise in unemployment. At the same time, the US dollar gained strength ahead of a key Federal Reserve policy meeting, further weighing on the AUD which closed at .6463 on Friday.

Australian Crop Update – Week 31, 2025

Mon, 28 Jul 2025 02:45:13 GMT

2024-25 New Season - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

US wheat futures traded in a tight range last week. Northern Hemisphere harvest pressure and ample global supplies capped the upside. However, robust U.S. export demand and Russian production issues is offering underlying support. Global inputs kept with the negative theme with CBOT wheat down 1.5% for the week and the AUD creeping 0.8% higher. Australian domestic markets were sold lower last week ahead of forecast rain on Friday and the weekend. Weather models forecasted widespread rain of 20-40mm across all of Australia’s cropping regions for the past week.

Wheat bids drifted lower in all cropping zones, with some of the biggest declines seen in South East Australia where they were still holding premiums compared to northern New South Wales (NSW) and southern Queensland (QLD). Wheat bids were back UD2-5 across the country. APH13 remains well supported in the north on tight supplies and a solid export program into Asia. APH13 is now quoted USD24 per metric tonne (/MT) over APW10.5, while AH12 is only USD4/MT. New crop 2025/26 wheat bids aren’t being shown in all crop zones with most of the focus still on the 2024/25 supplies.

Barley values also came under pressure with last week’s rain with old crop feed barley was back USD2/MT. Sorghum prices in southern QLD and Northern NSW were being supported in the first half of the week on exporter short covering but tumbled when the exporter buying disappeared late in the week.

Australian New Crop Forecast 2025/26 Season:

ABARES is forecasting total winter crop plantings for 2025/26 to be modestly lower to 25.4 mill ha from 26.1 mill ha in 2024/25. Most of this is in wheat with reduced plantings in NSW as the planting rains in the western fringe wasn’t as favourable as 2024/25. Western Australia (WA) is also slightly lower.

The 2025/26 wheat production forecast is up to 30.7 million metric tonne (MMT), up from the previous 30MMT. National barley production forecast to is also higher to 13.4MMT, with most of the increase in WA. Canola production is steady at 5.6MMT. The increases have been due to slightly increased plantings rather than altered yield assumptions which are still based on historical averages.

Pulse plantings are expected to remain strong in 2025/26. ABARES has QLD and NSW edging higher (+1-2%) and holding above 1 mill ha vs the 5 year average (YA) of 570k ha. South Australia (SA) and Victoria (VIC) lentil plantings are expected to remain large. This is also about 1 mill ha vs the 5YA of 700k ha. Faba bean plantings are seen as similar to 2024/25. Oat and lupin plantings in WA are both expected increase by >10% from 2024/25 levels.

Export Stem & Ocean Freight Market Update:

It’s been a lean week for shipping stem additions. They amounted to 273 thousand metric tonne (KMT) of wheat and 154KMT of barley. WA accounted for 240KMT of the weekly wheat stem additions. WA also led the barley additions but there was also 44KMT put on in Geelong. There’s been 100KMT of barley added to the Geelong stem in the past couple of weeks.

Australian Weather:

Rainfall totals were lighter across NSW last week with 15-20mm across most of the state. It was patchier in the north where some areas received rain earlier in the week as well as showers on Friday. Most areas saw 15-30mm with the heavier falls to the east. QLD received 20-30mm for the week. Last week’s rain stabilised the crops in all zones and provides confidence Australia is on track for a 30MMT wheat harvest and a 13MMT barley crop. More unsettled weather is forecast across Australia in the week ahead which is expected to see follow-up showers, particularly for NSW and SA.

8 day forecast to 4 August 2025
http://www.bom.gov.au/

Weekly rainfall to 28 July 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The AUD/USD gained approximately +0.17 % over the week, making the Australian dollar one of the modest winners among G10 currencies. The rise was supported by growing risk appetite as markets priced in improving trade sentiment and awaited key data and central bank updates. Notably, AUD/USD climbed to around 0.6619–0.6625, reaching eight month highs before pulling back slightly by the end of the week. Technically, the AUD/USD pair faces resistance around 0.6590 to 0.6687.

Australian Crop Update – Week 29, 2025

Wed, 16 Jul 2025 02:42:23 GMT

2024-25 New Season - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

The Australian domestic grain markets finished last week mixed but with a little more activity. Global inputs were negative, with CBOT wheat down 2% for the week while corn futures tumbled 9%. Canadian canola futures tumbled 5%. Global cash markets were less volatile with Russian FOB wheat nominally $1 higher. The AUD was 0.5% higher.

Old crop export shorts are still supporting wheat bids in New South Wales (NSW) and Western Australia (WA) and barley in WA. Current prices are seen as uncompetitive into export markets for bulk and containers. It’s hard work for the exporters and there is no sign of this changing in the near term with northern hemisphere crops coming off in line with or better than expectations. This was largely reflected in the USDA’s July WASDE on Friday night. Demand from Australia therefore remains consistent to the time of year with other global markets more competitive for the time being.

Australian Export Statistics Update:

Australia exported 862,783 metric tonnes (MT) of barley and 530,471MT of sorghum in May, according to the latest data from the Australian Bureau of Statistics. Feed barley saw May export totals of 727,647MT which was up 26%t from 575,838MT shipped in April, with China on 652,884MT being the biggest market.

May’s total sorghum exports were also up from April, posting a 33% rise. China was the main destination importing 483,133MT for May sorghum shipments with 23,110MT to Indonesia and 16,001MT to Kenya.

Export Stem & Ocean Freight Market Update:

Shipping stem additions have slowed in recent weeks in line with expectations. There was 326 thousand metric tonnes (KMT) of wheat added to the stem this week following 134KMT in the previous week. The four-week average prior to this was 420KMT. There was also 50KMT of barley and 30KMT of canola added to the stem in the past week.

The market witnessed a notable surge on the Panamax and Supramax markets, especially in the Atlantic basin, where an increase cargo activity from USG and ECSA caused the indexes to gain approximately 20% week-on-week as the tonnage supply tightened across the board. The CONT-MED markets welcomed the flow-on effect as we saw rates gain from Monday through the Friday. The Panamax sector in the Pacific is also benefitting off the back of the strength ex ECSA as many market players now had a viable option to ballast from India/SEAsia towards the Atlantic which caused the tonnage-vs-cargo ratio to sway into wwner’s favour. There were early sign of rates pushing upwards by end of the week in the Pacific but many believe this should gain pace over the next few days. The Supramax market in the Pacific has an underlying positive sentiment circulating as more demand from Far East/Nopac is entering in the market, while in Southeast Asia there has been a sudden push for Nickel Ore exports from Philippines to China. Tonnage is in limited supply so we expect rates to continue its upwards trajectory in the Pacific.

A notable watch on the market is the recent escalations in the Red Sea by the Houthis. Although there was still a limited number of owners willing to transit, we expect that list to shorten further as a result.

Australian Weather:

Weather forecasts offer more of the same this week in WA and South East Australia set to see a series of cold fronts offering showers and some rain and possibly some isolated rain in the northern areas of the east coast. Last week most of Victoria received 8-15mm. New South Wales received 4-10mm however it didn’t extend into the central west. South Australia enjoyed the best of last week’s rain with 15-45mm. WA also received beneficial rain, albeit patchy.

8 day forecast to 23 July 2025
http://www.bom.gov.au/

Weekly rainfall to 15 July 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

Last week the Australian dollar (AUD) gained ground against the U.S. dollar, appreciating by approximately 0.7%. The AUD/USD pair opened the week around 0.6550, climbed to a high near 0.6597 on July 10, and closed slightly lower at around 0.6572 by Friday. The AUD was supported mid-week by stronger-than-expected Australian inflation data and encouraging economic signals from China, which boosted risk sentiment and lifted demand for the currency. However, the rally lost momentum toward the end of the week as the U.S. dollar regained strength following renewed trade tariff concerns and a more cautious global outlook. Despite the brief pullback, the AUD managed to hold most of its gains for the week, trading in a relatively tight range between 0.6491 and 0.6597. Looking ahead this week and the AUD/USD is expected to trade in a relatively narrow range, with slight bearish pressure as markets brace for an RBA rate cut and its ripples through global sentiment. Technical indicators show resistance around 0.6600.

Australian Crop Update – Week 28, 2025

Mon, 07 Jul 2025 02:39:54 GMT

2024-25 New Season - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Opening calls for US ag markets are sharply lower for the start of this week following last week’s short covering recovery on ongoing favourable weather in the US Midwest, the absence of a trade deal with China from Trump’s Iowa meeting and OPEC’s weekend announcement of a larger than expected increase in crude oil output which is expected to send crude oil lower. Sluggish demand and ample supplies continue to drive global grain markets, including Australia.

Australian domestic markets have been quiet over the past week. The absence of export demand and the focus now on the weather with local consumers covered meant very little activity. Traders were reporting some light farmer selling in the north but no avalanche of farmer selling with the new financial year. Southern markets are also steady to a tad higher where farmer selling remains reserved on the back of tighter old crop supplies and uncertainty about the new crop outlook with crops late germinated and in need a soft spring to achieve near average yields. End users are mostly comfortably covered through to spring.

Australian Export Statistics Update:

The Australian Bureau of Statistics released its May Australian grain export data late yesterday. Overall, wheat exports were similar to April but barley and canola shipments for the month were larger.

Australia’s wheat shipments for May were 2.574 million metric tonne (MMT) which is similar to April and up from the ~2.1MMT level in Feb and Mar. Western Australia (WA) accounted for 1.25MMT but New South Wales (NSW) was healthy at 539 thousand metric tonne (KMT). Indo was the largest destination with 413KMT followed by Thailand with 241KMT and then Philippines with 210KMT. China shipments fell back to 71.4KMT. Collective shipments to Africa remain historically large at 510KMT for May. Larger feed wheat shipments into Asia and increased exports to Africa are making up for the smaller shipments to China. Australia has shipped 15MMT of wheat from Oct to May. This leaves 7MMT to be shipped from June to Sep at an average rate of 1.75MMT/month. We are expecting exports of around 2.5MMT in June and then tail away to ~1.5MMT/month through Jul/Sep.

Barley exports for May jumped to 863KMT from 678KMT in April. China accounted for 774KMT or 90% of the monthly exports. This lifts Oct/May exports to ~6.1MMT.

Canola exports for May were strong at 617KMT. This lifts the Oct/May canola exports to 4.8MMT.

Export Stem & Ocean Freight Market Update:

The panamaxes market was relatively flat throughout the week, although by Friday, ECSA appeared to be gaining some ground with activity levels picking up. North Atlantic was largely uninspiring and the returns for vessel was a mixed affair depending on the delivery point and cargo as tonnage list grew faster than fresh cargoes. The Pacific, by comparison, was generally active in most areas and rates remained steady. The Supramax market was the best performer as both basins welcomed upwards pressure on all routes. The Atlantic was active from USG and ECSA while the CONT/Med regions started to get fresher enquiries by Friday. The Pacific was active from Indonesia which helped drive rates in Southeast Asia and Australia while in the Fareast, more steel demand appeared causing tonnage list to tighten. Period interest has returned with many looking for opportunities to find coverage for the remainder of 2025. The Handysize market followed a similar trend to the Panamaxes as tonnage and cargoes appeared well balanced in all regions as rates trended sideways.

Australian Weather:

We are expecting more of the same through July where uncertain local weather is being weighed against sluggish exporter demand for Australian wheat. Australia’s wheat exports are expected to tail off in Jul/Sep as markets swing to cheaper 25/26 Black Sea supplies. Farmer selling in the south will remain slow with the crop/weather uncertainties. More light showers are expected for southern WA and southeast Australia next week but nothing significant. Northern cropping areas remain dry.

8 day forecast to 14 July 2025
http://www.bom.gov.au/

Weekly rainfall to 7 July 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar (AUD) saw a mixed, but generally upward trend, against major currencies last week. It edged up approximately 0.34% against the US dollar (USD), fluctuating between US$0.6531 and US$0.6582. Despite two prior interest rate cuts in 2025 and easing inflation, consumer confidence remains soft. Looking ahead the market is keenly focused on the RBA Board meeting scheduled for July 7-8, with the decision due. The overwhelming consensus among market economists and Australia's "big four" banks (ANZ, CBA, NAB, Westpac) is for the RBA to cut the official cash rate by 25-basis points (0.25%), lowering it from the current 3.85% to 3.60%.

Australian Crop Update – Week 27, 2025

Tue, 01 Jul 2025 02:37:06 GMT

2024-25 New Season - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Sharp declines in US grain markets triggered general trade selling across the Australian domestic east coast markets in the past week, sending cash markets solidly lower. US CBOT and KC wheat futures tumbled 7-8% for the week, corn futures lost 4%, while Canadian canola finished more than 6% lower. The combination of last week’s correction in the US wheat futures and beneficial follow up rain across eastern Australian cropping areas encouraged selling. Traders appear to have taken out all the old crop bids in New South Wales (NSW) and this flowed through to the Victorian (VIC) market by the end of the week. Farmer selling has improved on the improved rain through June but remains thin in all zones. Crop conditions in southern Queensland (QLD) and northern NSW remain good to excellent, but farmer selling in the old crop remains reserved with traders saying they are still having to pay higher for the odd spot loads, when needed. However, demand is limited with end users well covered and not inclined to chase more volume with the favourable outlook.

Export Stem & Ocean Freight Market Update:

A further 700 thousand metric tonne (KMT) of wheat was added to the shipping stem in the past week. This comprised 380KMT from Western Australia (WA) as well as 150KMT from NSW (120KMT Pt Kembla) with VIC, Brisbane and South Australia (SA) also chipping in. A further 120KMT of sorghum was added to the stem in the past week with 90KMT of this from QBT Brisbane after they update their stem.

An interesting week after the recent escalation then de-escalation in the Middle East. It was a wait and watch situation on Monday while the market was trying to discern how severe the short-term shock would be, however by Wednesday, with peace "restored" to the volatile region, the activity levels gained pace and hire rates started to push.

The Panamaxes gained ground across both basins with steady demand coming from most major loading areas and the overall index gained circa 1300 points over the week.

The Supramax sector was a mixed bag as the USG market showed signs of contraction after a few strong weeks, ECSA remained steady, while in the Asian area fresh demand from Indonesia and Nopac helped placed upwards pressure on rates. By end of week, available tonnage was shrinking causing charterers to chase wider than anticipated to found coverage.

The Handysize market has been more stable than its bigger cousins. The Atlantic was active from ECSA, USG, USEC while the Cont, Med regions were quiet. The Pacific was generally active across most areas causing rates to push circa 1-1.5kpd week-on-week for standard rounds while short period rates have pushed back above 13k for nice modern large handies (after slipping in the 12k's for a few week).

Bunkers appear to have settle back close to the levels prior to the Middle East conflict.

Australian Weather:

Southeastern Australia received widespread showers over the past week associated with the deep low in the bight and southerly front moving across the regions. Parts of SA received better than expected rains although the rain struggled to penetrate far inland. There was 10-20mm across the VIC, and NSW also benefited from follow up rain. Rainfall in southern NSW was at the upper end of the model forecasts with 15-20mm across the state. The week ahead appears more coastal with a large cold front expected to hit the east coast on Tuesday which should push inland to cropping regions.

8 day forecast to 8 July 2025
http://www.bom.gov.au/

Weekly rainfall to 1 July 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar traded within a narrow range on Friday, holding onto gains won Thursday, consolidating its recovery back above US$0.65. Having pierced through US$0.6550 on Thursday after the USD DXY index hit its lowest level in over 3 years the AUD settled into a 50-point range bouncing between US$0.6510 and US$0.6560 closing the day a quarter percent lower at US$0.6530. Renewed trade threats prompted whippy price action with details of a US/China trade framework helping add a floor beneath the AUD while the abrupt termination of trade discussions between the US and Canada ensured uncertainty and risk aversion remained in play. The AUD outperformed the Canadian dollar after President Trump terminated trade talks in response to Canada’s plan to implement a digital services tax. Trade and geo-political tensions continue to dominate direction while China PMI numbers and commentary from Fed policy makers dominate the macro ticket.

Australian Crop Update – Week 26, 2025

Tue, 24 Jun 2025 02:34:21 GMT

2024-25 New Season - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

Nearby Australian domestic wheat prices were solidly higher last week with the 7% short covering rally in CBOT. New crop January wheat was up $10 per metric tonne (/MT) or 3%. Gains were basis driven but sellers were scarce. Barley bids were steady to softer despite the gains in wheat. Sorghum remains quiet outside sold isolated packer and exporter bids. Canola was also firmer with the stronger French futures. Friday seems like a lifetime ago with the US now involved in the Iran conflict. The expectation is that the current geopolitical environment will make markets heavily volatile with risk playing a large part of export executions.

Export Stem & Ocean Freight Market Update:

It’s been a quiet week for shipping stem additions. There was 166 thousand metric tonne (KMT) of wheat added to the stem with most of this occurring into Melbourne.

As we wait to see the fallout from the astonishing developments over the weekend in the Middle East conflict, the week leading up was a mixed bag for shipping. It was a subdued start to the week with most market players seemingly in a wait and see mode and as result, we found vessel hire rates coming under pressure in most regions with tonnage lists growing due to little fresh demand appearing. However, by midweek, with the uncertainties and oil increasing, there was a shift in charterers mood to try cover orders as early as possible in order to counteract the rising costs (namely bunker prices increasing - up USD 50 pmt in most ports). As activity levels increased, it helped stabilise the market in the Atlantic. In the Pacific there were moderate gains on rates, with some charterers having to pay better than last done levels to secure tonnage. Any cargoes to/from the Persian Gulf are now commanding a premium with many preferring to avoid the area. Australia has been quiet compared to the previous couple weeks given the end of financial year laycans have now been covered.

Australian Weather:

Western Australia (WA) received widespread rain across the past week supportive of current growth levels of new crop wheat and barley. Other cropping regions were mostly dry. Victoria (VIC) picked up some light showers with 2-5mm. It won’t be long before the focus in South Australia (SA), VIC and Southern New South Wakes (NSW) swings back to dry weather concerns. Crops in SA and VIC are only just starting to germinate following the recent rain even and Southern NSW is about 7-10 days ahead. These areas have little to no subsoil moisture which has growers nervous and uncertain about production and unwilling sellers. Farmers are already concerned about the dry and this is likely to extend into the trade markets if the dry weather continued into July. Southeastern Australia will see showers early this will as a low from the bight moves into the region. The best chances for rain are in southern NSW. It’s expected to bring light showers to SA and VIC cropping areas, but SNSW could see 5-20mm.

8 day forecast to 1 July 2025
http://www.bom.gov.au/

Weekly rainfall to 24 June 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar is weaker to close last week against the Greenback trading at 0.6423. Over the last week the AUD lost roughly 0.6% versus USD with volatility tied to geopolitical tensions and shifting risk appetite. The AUD peaked around 0.655 driven by improved trade sentiment, particularly ahead of US–China discussions, and a strong Chinese trade surplus. With the US now involved in the conflict with Iran, the expectation is that the AUD will weaken with new support levels at .6305. If it breaks this barrier, we could see the AUD fall again to .6100.

Australian Crop Update – Week 25, 2025

Tue, 17 Jun 2025 02:31:21 GMT

2024-25 New Season - USD FOB Indications

NEW CROP PRICES ARE BASED ON TRACK BID/OFFER SPREAD PLUS ACCUMULATION & FOBBING COSTS AND ARE NOT FOB PRICE INDICATIONS.

Australian Grains Market Update

It’s been a quieter week for the Australian domestic markets following last weekend’s belated weather break in South Australia (SA) and Victoria (VIC). East Coast prices have pressed lower over the past week under farmer and trade selling in the north, and trade selling the south. East Coast wheat and barley bids were generally down $2-3 per metric tonne (/MT) this week. While there are plenty of sellers, buyers have now become hard to find on the domestic and export side of the trade. Feed Lots and consumers are generally well-covered for nearby needs and are in no hurry to extend purchases further having positioned with new crop coverage through the week. Exporters remain hesitant buyers with the lack of volume demand from overseas buyers. Export sales remain difficult and there is no sign of this changing any time soon with the northern hemisphere harvest just starting where larger crops are expected in Europe, Russia and the United States.

Australian 2025/2026 Production Update:

Drought across South East Australia has been influencing domestic grain and fodder markets across the entire east coast over the past three months. Last week’s rain in SA and VIC has sapped the market weather urgency for the 2025 winter crop although it does little to ease the nearby fodder shortages other than offer a green tinge to the pastures through winter. However, it does change the sentiment. Traders will be less inclined to trade the old crop from the long side now that farmers have received rain and are more likely to revert to a more neutral position as they wait and see how the winter wheat evolves. Farmers are also more likely to release old crop grain supplies now that it has rained. The rain will germinate fodder, cereal, canola and legume crops across VIC and SA. These areas need good rainfall across the winter as well as a favourable spring weather to achieve average yields. Nonetheless, the immediate goal of timely planting rains to germinate crops by mid-June looks to be accomplished. New crop prices across southeastern Australia will still have weather premiums over other regions because of the absence of soil moisture which leaves these crops more exposed to the spring weather.

Export Stem & Ocean Freight Market Update:

There was 460 thousand metric tonne (KMT) of wheat, 95KMT of barley, 110KMT of canola as 60KMT of sorghum added to the stem in the past week. Most of the wheat was added in Western Australia (WA) with New South Wales (NSW) contributing 166KMT (most in the Port Kembla zone). WA accounted for all of the weekly barley and canola additions.

The Panamaxes have continued to gain ground, buoyed by the underlying stability of grain volumes coming from US and ECSA. Combined with a tight tonnage count in the Atlantic, the sentiment remains bullish in the Atlantic for the short term. The Pacific achieved more moderate gains compared to the Atlantic but more mineral demand appearing has caused the indexes to turn green.

It’s a tale of two stories in the Supramax sector. We are seeing strong growth in the Atlantic, again off the back of steady demand from US and ECSA. While in the Pacific a hint of softness has creeped into the sentiment as charterers begin to bid lower than last done levels with a lack of fresh cargoes appearing in the market to counteract the growing tonnage count.

The Handysize market has generally been trending sideways in both basins with the general feeling of being well balanced. The Australian market appears to be a tad quieter with the usual end of financial year rush ending.

Looking forward, the main area for concern is the Israeli-Iran conflict and trying to discern what the flow on effect will be. We have already witnessed a spike in bunkers prices (circa USD 40-50/MT in most main bunkering ports) and a growing list of owners wanting to avoid sending vessels to Persian Gulf ports.

Australian Weather:

Southern markets have been comforted by last week’s rain but weather risks for southeastern Australia remain elevated. Nearby forecasts are mostly dry apart from some traces. Areas closest to the coast are in line to pick up more showers over the next week but the major cropping regions are not forecast to see much rain. The Australian Bureau of Meteorology’s extended weather model points to drier than normal conditions for VIC and most of WA’s cropping areas in July. This offers for more difficult markets. Subsoil moisture reserves are below average across much of WA and Southeastern Australia whereby farmers will remain reluctant sellers.

8 day forecast to 24 June 2025
http://www.bom.gov.au/

Weekly rainfall to 17 June 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

Last week, the Australian dollar (AUD) experienced notable volatility against the US dollar (USD), primarily influenced by escalating geopolitical tensions and shifting investor sentiment. The AUD/USD exchange rate closed at 0.6487, marking a 0.7% decline from the previous day. This drop was attributed to a surge in demand for safe-haven assets following Israeli airstrikes on Iranian nuclear facilities, which heightened global geopolitical risks. According to UOB Group's FX analysts, the AUD/USD pair is currently trading within a range between 0.6430 and 0.6550. The major support level is identified at 0.6430, suggesting limited downside risk in the near term. The outlook for this week’s analysts suggests that the AUD/USD pair may continue to trade within the established range, with geopolitical developments and central bank policies being key factors to watch in the coming weeks.

Australian Crop Update – Week 24, 2025

Wed, 11 Jun 2025 02:28:29 GMT

2024-25 New Season - USD FOB Indications

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

Please note that we are still able to support you with container quotes. However, with the current Red Sea situation, container lines are changing prices often and in some cases, not quoting. Similarly with Ocean Freight we are still working through the ramifications of recent developments on flows within the region – please bear with us.

Please contact Steven Foote on steven@basiscommodities.com for specific quotes that we can work on a spot basis with the supporting container freight.

Australian Grains Market Update

Australian domestic markets were softer last week ahead of forecast rain across South East Australia. The local markets have seen some selling following the late May rain in Southern New South Wales (NSW) and improving weather outlook in Victoria (VIC) and South Australia (SA) and we expect this to accelerate into the new financial year in July. Candidly lack lustre global demand and favourable Northern Hemisphere production forecasts should weigh on Australia’s grain exports in the July-September quarter. Australian milling wheat is losing ground to competitive offers from Black Sea suppliers. A large carry out will develop if exports do not pick up before the end of September.

Australian 2025/2026 Production Update:

ABARES issued its June crop report early last week which offered its initial 25/26 production estimates. ABARES flagged the varying crop conditions across the country with the extremely dry weather in Southern NSW, VIC and SA. This means that much of the 2025/26 winter crop has been dry sown and will require adequate and timely rainfall during June to allow for crop germination and establishment. By contrast, conditions have been favourable in Queensladn (QLD), Northern NSW and Southern Western Australia (WA), reflecting the above average early autumn rainfall.

Australia's wheat production is projected to drop 10% this year to 30.6 million metric tonne (MMT) but remain above the 10-year average, ABARES said. Barley production is forecast to fall by 3% to 12.8MMT. Canola production is projected to decline by 6% y/y to 5.7MMT. Pulse production is forecast to remain elevated with chickpea production forecast at 1.9MMT and lentils at 1.5MMT.

Export Statistics Update:

ABS also reported 2.63MMT of wheat exports in April up from 2.11MMT in March, making it the largest export month for the 24/25 season so far. This puts Australia’s Oct-24 to Apr-24 wheat shipments at 12.5MMT. Container wheat exports were 176 thousand metric tonne (KMT) in April, which was the smallest month since January.

Indonesia was the largest export destination for Apr with 395KMT followed by South Korea with 223KMT and then the Philippines with 202KMT. However, it was larger exports into Africa that allowed the additional 0.5MMT of monthly shipments in April vs the March figures. Australia’s wheat exports into Africa jumped to 570KMT vs 55KMT in March. This was the largest month of wheat exports into Africa since May 21. There was also 105KMT of durum wheat shipped to Italy in April.

Barley exports for April were 680KMT down from 830KMT in March. WA accounted for 526KMT of the April exports. China was the largest destination with 397KMT followed by Japan with 116KMT. A further 66KMT was shipped to Saudi.

Sorghum exports jumped to 464KMT in April up from 188KMT in March. This was made up of 320KMT from QLD and 102KMT from NSW but also 42KMT from WA. Canola exports for April were 563KMT down from the 904KMT in March.

Export Stem & Ocean Freight Market Update:

It was a positive week for Panamaxes in both basins off the back of more grain and minerals demand. The gains in the Pacific were less noticeable than the Atlantic but sentiment is positive. In contrast the Supramax and Handysize sector were generally flat across all regions. The Pacific remained lacklustre the whole week but with the supply and demand equation being well balanced, we are expecting a sideways trend for the short term. The Handysize continued its recent path of minimal upwards or downwards swings in both basins as it appeared it has found its equilibrium. There is little evidence or suggestion that we will experience major changes in this sector for the foreseeable future.

Australian Weather:

Much of Australia’s driest cropping areas received welcome rain over the past week. This included WA’s Geraldton zone as well as parts of SA and VIC. Overall, the weather models performed reasonably well with the ECMWF AIFS accurately forecasting the cropping areas totals. Last week’s rain should germinate most of the dry planted crop in SA and VIC, but more rain is needed.

WA – Most of the Geraldton zone received a general 20-60mm for the week. Last week’s rain is enough to get all of the planted WA winter crop germinated. Rainfall totals were lighter in the Kwinana zone, with the heaviest falls also closer to the coast. Most of the Great Southern received 10-15mm with the isolated areas less than 10mm. Although the rainfall totals were lighter in the Great Southern, these parts benefited from good April rain. In the Esperance zone, falls ranged from 5-20mm.

SA – Variable falls but it was probably the state’s best cropping area rainfall for several months. The Eyre Peninsula saw a general 10-15mm with some isolated areas getting 15-20mm. Isolated storms resulted in a patchy 20-40mm in the Upper North. Most of the Mid North, Yorke Peninsula and Adelaide Plains saw 10-25mm which should get >80% of the dry planted crop germinated. The Upper South East received 20-30mm.

VIC – Good falls in the southern Wimmera and Western Districts. It looks like >80% of the Wimmera received 20mm or more. The Western Districts received its best rain since September last year with a general 30-60mm across the area. The Mallee saw lighter rain, which was consistent with model projections. There was 10-15mm in the southern Mallee and 8-15mm across the northern Mallee. There appeared to be around 15mm across most of the central Vic cropping areas

NSW – there was also some patchy rain across NSW. This included 20-30mm in central west around Nyngan, Nevertire, Trangie, Dubbo, Peak Hill and Pakes. Walgett also picked up 17mm, but the rest of the north west received limited rain. Areas around Wagga, Henty, Corowa and Yarrawonga also saw 20-30mm.

8 day forecast to 18 June 2025
http://www.bom.gov.au/

Weekly rainfall to 11 June 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

Having edged back below US$0.65 on Friday evening after US Non-farm payroll data printed marginally ahead of market expectation the AUD started the new week trading between US$0.6490- US$0.6510. US/China trade talks absorbed much of the markets attentions as key officials met in London. While it was unable to extend toward last week’s 2025 high it has held onto gains above US$0.65 leading into this week’s open.

In the longer term, many analysts feel the various Trump Administrations policies could act to constrain US growth and/or dampen investor confidence in holding US financial assets. In time, we think this may see the USD steadily weaken, and this can help the AUD trend higher over the coming year. Certainly, a move back over 70 is being spoken about which is not going to help the Australian farmer churn through carry out and a 30 million plus new crop wheat harvest. Also helpful for the AUD’s longer-term outlook are steps being taken by authorities in China to boost domestic activity, particularly commodity intensive infrastructure investment. As is the resilience of the Australian jobs market and core inflation dynamics.

Australian Crop Update – Week 23, 2025

Wed, 04 Jun 2025 02:24:21 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Australian domestic markets were sold lower by farmers and traders following last week’s soaking across Southern New South Wales (NSW) and some more patchy rain in Victoria (VIC) and South Australia (SA). Weaker global inputs also added to last week’s domestic sell off with US and French wheat futures under pressure. Black Sea cash markets also weaker as we approach northern hemisphere new crop.

That said traded volumes were thin and exporters are standing back with domestic end users having already built coverage. Last week’s sell down puts the nominal Newcastle APW at $248 FOB which on a CFR equivalent is in the low $270’s into SE Asia vs PNW HRW 11.5 in the high $260’s CFR and new crop Black Sea wheat in the low $260’s. Last week’s selloff has improved the export competitiveness for Northern NSW, but it’s still more expensive that other competition.

For the time being, Australian wheat values across the zones remain a function of heavy old crop supplies in Queensland, Northern NSW and Western Australia (WA), sluggish export demand and dry weather across south east Australia and some areas of WA, which are casting doubts over the size of the 2025/26 crop.

According to ABARES, Australia's wheat production is projected to drop 10% this year to 30.6 million metric tonne (MMT) but remain above the 10-year average. Barley production is forecast to fall by 3% to 12.8MMT. Canola production is projected to decline by 6% year on year to 5.7MMT. Pulse production is forecast to remain elevated with chickpea production forecast at 1.9MMT and lentils at 1.5MMT. ABARES flagged the varying crop conditions across the country with the extremely dry weather in southern NSW, VIC and SA. This means that much of the 2025/26 winter crop has been dry sown and will require adequate and timely rainfall during June to allow for crop germination and establishment, they said. By contrast, conditions have been favourable in QLD, Northern NSW and Southern WA, reflecting the above average early autumn rainfall.

Longer term weather models are now looking at a possible negative IOD developing in the winter. Warm sea surface temperatures near Indonesia are expected to heat up further over winter, possibly triggering a negative Indian Ocean Dipole (IOD) event. The IOD is an index that measures the difference in sea surface temperatures across the equatorial Indian Ocean. IOD events typically occur between May and November and break down when the monsoon moves over Indonesia in late spring or early summer. They are typically associated with increased moisture to the north west of Australia which offers more rain across central and eastern Australia as well.

Export Stem & Ocean Freight Market Update:

There was 542 thousand metric tonne (KMT) of wheat and barley added to the stem in the past week.

ABS wheat exports to March and stem to June put exports at 17.2MMT which is 78% of our forecast 22MMT. Using the same analysis, barley exports are already 94% complete. Wheat exports seasonally decline from July onward as the northern hemisphere new crop competition is felt.

Negativity has seeped into the Panamax and Supramax sector as rates faced downward pressure in both basins all week. As tonnage supply grew in both markets, fresh cargo inquiry failed to keep pace and charterers were bidding below last done levels with owners having no other choice but to accept if they needed coverage. A possible positive from the previous week was that we didn’t witness a steep decline in rates, rather a gentle easing. Looking forward, despite the recent swings across the different size sectors, the market is still indicating a fairly flat and well-balanced market for the remainder of 2025.

Australian Weather:

WA saw rain later last week (Thu/Fri) receiving 15-30mm. WA is expected to see more showers in the week ahead as a slow-moving low passes over southern WA on the weekend and early next week offering lingering showers across the cropping areas.

Dry weather remains a concern for SA and VIC where most of the crops have been planted dry but are awaiting rain to germinate. This week will be mostly dry with some possible showers later in the week. The late start and dry sub soil moisture reserves mean these areas will be at significantly higher risk of below average yields.

8 day forecast to 11 June 2025
http://www.bom.gov.au/

Weekly rainfall to 4 June 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

Over the past week the Australian dollar (AUD) experienced a modest appreciation against the US dollar (USD). The USD faced downward pressure due to concerns over US fiscal stability, including a sovereign credit downgrade and trade tensions with the European Union. On the local front the Reserve Bank of Australia (RBA) reduced the official cash rate by 25 basis points to 3.85%. Despite this dovish move, the AUD held steady, supported by expectations of further rate cuts and a softer inflation outlook. Looking ahead this week the AUD/USD pair is expected to continue trading within a tight range, influenced by upcoming economic data releases and global market developments.

Australian Crop Update – Week 22, 2025

Thu, 29 May 2025 02:21:09 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Rain in New South Wales (NSW) and more general rain in the forecast for this week and into June resulted in a flurry of activity in the Australian domestic grain markets over the last week. Wheat and barley sellers emerged which put some pressure on prices particularly for those slots that are starting to compete with northern hemisphere new crop positions. The changes in price were relatively small as the strength of the AUD took out some of the benefit.

How much rain South Eastern (SE) Australia will see in the next couple of weeks will be important. At best, SE Australia will see its autumn break at the start of winter. At worst they could be still waiting for enough rain to germinate dry planted crop. Areas will need at least >20mm to germinate dry planted crops. New crop markets will react once/if this is received to the downside for wheat, barley, canola and pulses.

Export Stem & Ocean Freight Market Update:

There was 518 thousand metric tonne (KMT) of wheat added to the stem in the past week. All of this was in Western Australia (WA). It included 268KMT in Kwinana, 150KMT in Geraldton and 50KMT each in Esperance and Bunbury. There was also 300KMT of barley put on the stem in the past week with 195KMT of this in WA as well as individual cargoes in South Australia (SA) and Victoria (VIC). A further 51KMT of canola was put on the stem in VIC.

In general, the ocean freight markets were stable over the last week. The Pacific was more active in the early part of the week with demand appearing from Australia and North Pacific. However, by Friday, a softer feel had started to seep through with fresh enquiry starting to dry up. For the most, Supra/Ultra sector was fairly stable throughout the whole week with a general feeling the cargo/tonnage equation is well balanced. The Indian Ocean had continued to deliver strong returns for Owners with tonnage said to be scarce causing Charterers to pay up. Demand/cargo volume has been stable in the Handysize sector.

Australian Weather:

Southern NSW received welcome rain in the past week and Adelaide and the Hills also received good amounts of rain (the best in nine months) with most of the rest of SA receiving around 10-14 mm. Tropical moisture is building across northern WA, and this pattern will influence the weather across much of Australia throughout the week. This is expected to see more rain in Queensland (QLD) and NSW through the week. Southern WA will see a cold front later in the week which is expected to result in cropping areas showers on the weekend. The big question is how much rain SE Australia will see. Weather models aren’t forecasting any significant rain for SA and VIC cropping areas this week but are offering a better chance in the following week and into June. The model accuracy is significantly lower the further out we go. The good news for southern Australia is the lows are now hitting the mainland, whereas before they have been much further south in the Southern Ocean.

8 day forecast to 5 June 2025
http://www.bom.gov.au/

Weekly rainfall to 28 May 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

Over the past week, the Australian dollar (AUD) experienced a modest appreciation against the US dollar (USD), reflecting a broader trend of USD weakness driven by softer-than-expected US economic data and shifting expectations around Federal Reserve interest rate cuts. The upside faces strong resistance from a descending trendline and the 0.6500 psychological barrier, a level that has repeatedly capped gains this month. At the same time, the AUD is drawing additional strength from encouraging signals on the global trade front. China’s Foreign Ministry confirmed that Beijing and Washington have agreed to maintain open communication channels following a high-level diplomatic exchange. Local Markets are betting on further interest rate cuts to come, after the Reserve Bank took the knife to the cash rate at its May meeting.

A burst of trade and economic optimism washed through markets overnight with US traders back on deck after their long-weekend break. The mood music around US/EU trade relations was positive. Following on from the weekend announcement that the US had extended the EU tariff deadline to 9 July markets were buoyed by President Trump’s social media post stating the “EU has called to quickly establish meeting dates”.

The uptick in the USD on the back of the more positive expectations about a US/EU trade deal and outperformance of US financial markets has exerted a bit of downward pressure on the AUD and NZD over the past 24hrs.

Australian Crop Update – Week 21, 2025

Tue, 20 May 2025 02:17:21 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Global markets inputs were little changed last week. US wheat futures ended little changed with corn edging lower with the favourable weather. US wheat tried to rally through the week from lows, but sellers soon emerged on big winter wheat crop expectations and cheap Black Sea new crop offers. The AUD/USD was modestly lower.

The Australian domestic markets for protein in the east and south have widened in the past week with the north a tad softer while southern markets strengthened on dry weather and domestic shorts. There appears to have been some increased farmer selling in New South Wales (NSW) but sellers remain scarce further south. Victoria (VIC) and South Australia (SA) markets were firmer. VIC barley was up USD 2-8 per metric tonne (/MT) for the week and wheat up ISD3-6/MT. Faba Beans for feeding were also up USD 8-12/MT. It’s a challenging market with domestic shorts and slow farmer selling pushing values higher to generate new export demand with old crop values tracking higher. SA is heading into a drought market with wheat and barley USD10/MT over east and west coast values now.

Australian wheat is currently quoted at $255-258 FOB while new crop Russian 12.5 is indicatively quoted at $225 FOB. This puts Black Sea wheat into Asia at ~$260 CFR vs Australian at >$275. New crop Black Sea barley is also being offered much cheaper than Australian. China reportedly bought 400 thousand metric tonnes (KMT) plus of French / Ukrainian at $250-254 CFR vs old crop Australian at $241 FOB.

Australian Export Statistics Update:

Australia exported 838,793 metric tonnes (MT) of barley and 208,907MT of sorghum, with China the leading destination by far for malting and feed barley, as well as sorghum, according to the latest data from the Australian Bureau of Statistics. Malting barley exports at 206,248MT more than doubled from the 87,635MT shipped in February, with China accounting for 152,265MT, Vietnam 25,477MT, and Peru 22,000MT.

Feed barley, March volume at 632,545MT dropped 29 percent from the 889,689MT shipped in February, with China the destination for 561,903MT, followed by Saudi Arabia on 55,730MT, and Vietnam on 3267MT.

Sorghum exports continued their annual climb to reflect new-crop availability, with the March being close to double the 106,298MT shipped in February. Behind China on 166,973MT, Kenya on 29,998MT, and Taiwan on 7994MT were the major destinations.

Export Stem & Ocean Freight Market Update:

There was 837KMT of wheat additions on the stem in the past week making it the largest week in nine weeks. Western Australia (WA) accounted for nearly 400KMT and NSW close to 300KMT. The other states chipped in with smaller volumes. A further 186KMT of barley was put on the stem in the past week, with all but 10KMT of this coming from WA. There was also 55KMT of sorghum added to the stem in Newcastle NAT.

Strong wheat additions in the past week confirms the strengthening in Australian wheat shipments through April and May. We expect this will continue into June and into July. The understanding is that exporters have been working hard to increase export sales over the past couple of months with sharp prices, and this is now showing on the shipping stem. The stem is pointing to May wheat shipments of ~2.7 million metric tonne (MMT) up from ~2.3MMT in April. However, buyers will have little appetite for Australian wheat beyond June when cheaper Black Sea become available.

An overall lacklustre week for the drybulk shipping market that was interrupted with holidays and various shipping events around the globe. For the most part, the market was trending sideways on all sizes with a possible hint of softness creeping in by Friday, which is usual after a couple of days of low activity.

The Panamaxes in the Atlantic faced pressure by midweek as demand couldn’t keep the same pace as growing tonnage count causing rates to contract slightly, while in the Pacific support was found with Australian exports increasing but Nopac and Indonesia were noticeably quiet.

The Supra/Ultra's were generally quiet in both basins and became a very positional market with vastly different rates being heard on similar routes for similar ships. The exception was US Gulf where demand was strong throughout the week. The Handy market held stable for the most part with the overall sentiment being fairly well balanced in both basins.

Looking forward we still find the overarching outlook to be conservative for the remainder of 2025. Many operators are going short on tonnage and cargo exposure as they are not prepared to make major calls either way, instead happy to take a short term approach until the market can give clear signals of the direction.

Australian Weather:

Queensland (QLD) and parts of NSW received some showers and isolated storms last week. Mid-week, recorded rainfall ranged from 15-45mm with heavier rains confined to small parts of the states. Many areas were dry planted and in need of rain to complete winter crop sowings having missed the heavier falls in early April. Forecasts remain mostly dry for Australia’s main cropping regions for the coming week. The northern cropping areas may see some lingering instability offering showers but the dominate high over the country’s south east is dominating weather patterns.

The Australian Bureau of Meteorology (BOM) released its latest climate outlook for June to September. BOM is forecasting that there is a 60-80% chance of above average rainfall for much of inland Australia. Rainfall is expected to be within the typical range for June to August for western WA, much of VIC, parts of the east coast and across the far tropical north. However, the breakdown of the BOM’s weekly and fortnightly maps shows they don’t expect the rain to start to improve until the second week in June.

8 day forecast to 27 May 2025
http://www.bom.gov.au/

Weekly rainfall to 20 May 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

Australian Crop Update – Week 20, 2025

Tue, 13 May 2025 02:14:00 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Australian grain prices drifted higher last week with the southeastern (SE) Australian markets leading the way. It’s purely a domestic push from the drought conditions in SE Australia with US wheat futures ending the week 4% lower. Reported wheat export sales to China for a Jun/Jul shipment appeared to offer support to wheat in the east and west last week. It was rumoured that Australian exporters sold 200-300 thousand metric tonne (KMT) of milling wheat late last week with traders confirming the sale of 275KMT on Friday on newswire.

The bigger factor driving Australian markets last week was the ongoing dry weather in SE Australia and the impact this is having on domestic prices. Grain markets across SE Australia are feeling increasingly pressured by drought conditions. The current conditions are different to many other droughts as its isolated to SE Australia and currently it is just an old crop problem for now. There is still plenty of time to plant crops in the SE and much of this is already dry planted. New crop markets are unlikely to become overly concerned for another four to six weeks.

Australian Export Statistics Update:

Australia exported 2,118,261 metric tonnes (MT) of wheat in March according to the latest data from the Australian Bureau of Statistics. This is up 0.4 percent from the 2,109,483MT shipped in February, but down 17pc from the 2,566,965MT exported in March 2024. In containerised sales, Vietnam on 45,195MT followed by Malaysia on 30,087MT, Thailand on 28,676MT and Indonesia on 28,649MT were the four biggest markets for March-shipped wheat. On bulk, Indonesia on 339,516MT, Thailand on 293,581MT, and China on 278,49MT were the three biggest markets, with the volume to China the largest in many months.

Export Stem & Ocean Freight Market Update:

Last week saw only a few vessel additions to the shipping stem with 378KMT of wheat added which is the smallest in five weeks. This included 154KMT in Western Australia (WA) (mostly Kwinana), 110KMT in New South Wales (NSW) (Quattro) as well as single cargoes in Victoria (VIC) and South Australia (SA). There was also 30KMT of barley put on the stem in Albany WA.

After a sluggish start, activity gained momentum across all sectors as the week progressed in the freight market. This has brought a more positive tone to the market as regional holidays have mostly come to an end.

The Atlantic overall performed better in terms of rates and activity given the Pacific was largely hampered by the holidays. The Atlantic Panamaxes witnessed steady support from grain runs ex NC South America which helped push rates in the North. Down south, EC South America was noticeably quieter than previous weeks which had the usual flow on effect into the Indian/SE Asia market with rates sliding. In the Supra/Ultra sector, the Altantic was busy from USG and EC South America but patchy from CONT/Med. West Africa tonnage was being pulled by ECSA and SAFR giving owners plenty of options to consider. The PG/India sprung to life after being muted for the last few months. Supra/Ultras are seeing in the mid/high teens for trips multiple directions. The Pacific market was generally quiet with a lack of Indo coal demand in the market and Aussie/Nopac being subdued as well. The Handysize has remained flat across both basin as the market appears to have found its equilibrium in the short term.

Australian Weather:

Parts of SA, VIC and Tasmania (TAS) have endured their driest start to a year on record as a lack of early Autumn rain worsened drought conditions in parts of all three states. High pressure systems have been dominating the weather patterns near southern Australia in recent months. These stubborn areas of high pressure have prevented any substantial rainfall from reaching large areas of SA, VIC and TAS since the start of 2025. The map below shows the rain that fell across Australia in the first four months of 2025 represented as a percentage of the long-term average. The brown shading shows where rainfall was less than 20 percent of the long-term average for the January to April period. Dry weather is also a concern for the Geraldton zone in WA. Forecasts remain dry for at least the next 10 days.

8 day forecast to 20 May 2025
http://www.bom.gov.au/

Weekly rainfall to 12 May 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar closed last week at similar levels to the previous with much volatility during trade sessions. The market ended at .6413 on Friday after pressuring through .6500’s and falling to the mid .6300’s throughout the week. Expectations are that the new normal is volatility with the world markets reacting to the ongoing tariff implications and global instability. Bank forecasts are still anticipating that the AUD/USD pairing will firm in Q4 of 2025 and push towards .7000 cents with 2 Federal interest rate cuts before the end of the year.

Australian Crop Update – Week 18, 2025

Tue, 29 Apr 2025 02:09:50 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Domestic markets were predictably quiet over the past week with many participants away for the Easter and ANZAC weekends. Wheat prices were softer in all port zones on the back of limited participation and the softer global inputs.

Global buyers are paying close attention to the market inverse that exists across the wheat markets with cheaper new crop values beginning to be seen in the market. Favourable global weather is also comforting the market about new crop supplies.

Export Stem & Ocean Freight Market Update:

The shipping stem shows that the wheat shipping pace will improve in March, April and May as exporters came to grips with the downturn in China’s import demand and sharpened their pencils into other destinations. More than 0.5 million metric tonne (MMT) of wheat was added to the shipping stem in a truncated week by Easter and ANZAC day. Western Australia (WA) accounted for most of the wheat additions in the past week with South Australia (SA) and Victoria (VIC) also adding cargoes.

Rates gained ground across the week as the positivity from the Atlantic basin flowed through to the Pacific which gained momentum as the week progressed. The Supra/Ultra market was a mixed affair as the Atlantic struggled to follow the Panamax trend while in the Pacific ships were being fixed at better than last done levels on all routes. The notable standout was the large premiums charterers had to pay for India direction given the upcoming monsoon season. The Handysize sector was quiet in both basins with rates trending sideways all week as activity levels were sluggish after the holidays.

The markets appear to be well balanced for the short to medium term with the forward curve values being relatively flat for the remainder for the year.

Australian Weather:

The major weather models focused the rain event across New South Wales (NSW) and VIC, with some isolated heavier storms and then a secondary rain benefiting cropping regions. Although rain was received the rainfall event does little to ease to ongoing tightness in the southern grain markets where the spreads between feed grains and higher protein wheat grades continues to narrow in expectation of ongoing drought conditions. SA and VIC farmers have already started dry planting, but they will head into May waiting for soaking rains.

Famers in Southern NSW will also be disappointed with the weekend rain. Rainfall totals improved in the Central West, and this extended into the northern cropping areas of NSW. While rain in Southern NSW was disappointing, good falls in the northern half of the state have consolidated soaking rains in early April making for an ideal start to the season in Northern NSW and Queensland (QLD).

WA is also enjoying a positive start to the growing season.

8 day forecast to 6 May 2025
http://www.bom.gov.au/

Weekly rainfall to 28 April 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar softened slightly to close last week when valued against the USD trading at 0.6392. The outlook of the Aussie dollar remains uncertain until both China and the US reduces additional tariffs imposed recently.

Australian Crop Update – Week 16, 2025

Wed, 16 Apr 2025 02:27:17 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

A significant amount of grain was bought and sold in the past week making it the largest trading week in more than a year as traders swooped up the cheaper farmer offers which became workable with a lower AUD weakened by Trump’s China Tariff increases. The 5% plus movement in the AUD through the week – both up and down also offered selling opportunities for farmers and exporters. Although it seems demand remained muted as a lot of consumers continued to sit on the sidelines – concerned about further volatility and improving global weather that may widen the emerging inverse to northern hemisphere new crop values further.

That said dry weather worries through South Australia (SA), Victoria (VIC) and Southern New South Wales (NSW) are building and is beginning to influence farmer decision making. Some farmers are holding off planting and we are also hearing southern farmers are holding back on forward fertiliser purchases they would normally be making at this time of the year due the dry outlook. Queensland (QLD) and Northern NSW on the other hand have received a good early break and Western Australia (WA) is also in fair condition. Soil moisture levels were near to above median in NSW, QLD, and WA, while below median in SA and VIC. The first week of April showed significantly above median levels in QLD, above median in NSW and WA, and a remaining soil moisture deficit in SA and VIC (below 80% of the median).

Elsewhere, our analysts released their initial 2025/26 winter crop plantings, yields and production estimates last week. Overall wheat plantings should remain steady, but we expect farmers will trim total plantings in South East Australia. This shouldn’t apply to areas that have enjoyed a favourable start to the season, such as Northern NSW and much of WA. Barley plantings in the big states of WA and NSW are expected to be large and steady.

Export Stem & Ocean Freight Market Update:

There was 800 thousand metric tonne (KMT) of wheat vessel nominations added to the shipping stem in the past week, 141KMT of sorghum, 121KMT of barley and 58KMT of canola. It was the largest week for total stem additions in eight weeks. WA accounted for around 540KMT of the weekly wheat additions followed by NSW with 166KMT and the Vic with 94KMT. All the weekly barley additions were in WA, and this is unlikely to change with the continued dry weather in South East Australia.

The dry bulk shipping market has also been grappling with geopolitical volatility, creating uncertainty as both shipowners and charterers continue to feel the associated repercussions. Freight rates have been up and down like a yo-yo, keeping everyone on their toes and making the decision-making process difficult for anything longer than 20-30 days forward. Not surprisingly the spot rates took a hit across all sectors last week with market players erring on the side of caution rather than being prepared to make a bold play either way. However interestingly, remaining relatively firm are owner’s period rates (though there has been little evidence of fixing) which indicates many are still looking for more evidence that the fundamentals have changed before they are willing to consider reduced levels. For now, it’s very much a wait and see game with cautiousness still the status quo on both side of the market.

Australian Weather:

Southern WA is expected to see more rain later this week as the tropical system close to the Kimberly region and unstable airmass influences weather patterns. This is expected to result in more for the Esperance area on Thursday and Friday. This may result in some light showers for SA and VIC on the weekend but limited to light showers. Eastern Australian cropping is expected to remain dry on the nearby models until the end of April. NSW and North East VIC will see coastal rain associated with the low in the Tasman Sea.

March 2025 recorded slightly higher-than-forecast precipitation across all states (135% vs. 120% of the median forecast). The latest April 2025 forecast shows significant above-median rainfall in NSW, QLD, and WA (>150% of the median), but lower estimates in SA and VIC (~50% of the median). The May to September 2025 outlook remains above median across all states (~120%), with notably high rainfall in NSW and QLD, and near to slightly above median levels in VIC, SA, and WA.

8 day forecast to 23 April 2025
http://www.bom.gov.au/

Weekly rainfall to 10 April 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The upbeat tone across the markets and a weaker USD helped the Australian dollar to a strong close to last week. The bullish tone for the AUD emerges as the US dollar (USD) continues to weaken across the board, dragged by lower-than-expected economic data and growing investor concern over inflation and trade policy. While momentum is cautiously improving, we don’t think volatility is going away any time soon.

Australian Crop Update – Week 15, 2025

Wed, 09 Apr 2025 02:23:40 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Last week was quite volatile for global inputs as investors assessed the rapidly changing dynamics with Trump’s tariff agenda. US wheat futures finished the week steady while corn was firmer and French rapeseed lower. The Australian dollar ended the week sharply lower, although most of this was in Friday night’s selloff which won’t be reflected into local markets until Monday. The A$ fell 4% or 2.5 cents for the week to just over 60 cents to the USD.

The Australian domestic markets were quieter in the past week with only modest values changes. Northern grain selling has slowed following last week’s flurry following the soaking rains in Queensland (QLD) and Northern New South Wales (NSW). New crop wheat values drifted lower last week with the rain. In the cash markets, the trade buying interest is for the lower wheat grades, which is leading to a compression in the grade spreads. Southern markets are well supported by the ongoing dry weather across South East Australia. Barley is well supported in the south as well as other feed grains. Wheat bids in Western Australia (WA) were firmer for the week on exporter short covering. APW and ASW bids were up USD5-8 for the week. Barley was down USD3 per metric tonne (/MT).

Dry weather is set to shrink Australia’s 2025/26 wheat output by 16%, according to a poll conducted by Reuters. Australia is likely to produce 28.6 million metric tonne (MMT) of wheat in 2025/26, an average of five analysts and traders polled by Reuters shows, down 16.1% from 34.1MMT in 2024/25. However, there is a considerable spread between the forecast which ranges between 27MMT to 30.752MMT. Australia is being confronted with contrasting production outlooks for the 2025/26 winter crop. NSW and QLD are off to an ideal start with early soaking rains. The WA Great Southern is also enjoyed favourable rains in the past couple of weeks.

Australian Supply and Demand update:

Our Analysts have raised our forecast of Australia’s 2024/25 barley crop to account for the strong export pace. Heavy supplies of barley in QLD and Northern NSW also justify higher yield assumptions for the northern production areas of the east coast. National barley production has been raised to 13.2 million metric tonne (MMT). National wheat and canola production are little changed but the exports have been updated for the ABS actuals for October/November/December and stem forecast projections for the January/February/March quarter. We have kept national wheat exports close to 24MMT but the sluggish start to the program means more of the export task will be pushed into the July/August/September quarter when Australia competes with 2025/26 Black Sea supplies. The latest updates lift Australian wheat production to 33.5MMT, barley production to 13.2MMT, canola 6.0MMT and sorghum at 2.475MMT.

Source: AgScientia www.agscientia.com.au/

Australian Export Update:

Australia exported nearly 2.1MMT of wheat in February, close to 1.0MMT of barley and 0.526MMT of canola. Although wheat exports improved from the 1.85MMT in January, our current national 2024/25 export forecast of 21.8MMT requires a continuation of the 2.1MMT plus monthly exports from March to September if the forecast is to be achieved.

Wheat exports to China improved in February to 74.7 thousand metric tonne (KMT) but total shipments remain sharply below last year. The Philippines was the largest destination in February with 472KMT. This was a monthly record to the Philippines and slightly higher than the previous high of 459KMt in Jul 2023. Indonesia was the next largest with 338KMT, which is the largest monthly total to them so far for 2024/25. Thailand was the next largest with 352KMT, which was the most since Jun 2023. Australian wheat exporters are working to maximise sales into feed destinations with China’s lacklustre appetite for imports. There was also 52.5KMT of wheat shipped to Algeria in February.

Barley exports remain strong with 979KMT of shipments in February. WA dominated the February barley exports with 657KMT with South Australia (SA), Victoria (VIC) and NSW chipping in with cargoes. China accounted for 604KMT of Australia’s February barley exports, slightly back on the 703KMT in January. Other notables were 113KMT to Saudi (328KMt now for DJF) and 71.5KMT to Iran.

Canola exports remain strong with a further 526KMT shipped in February. This included 357KMT from WA and 159KMT from VIC.

Export Stem & Ocean Freight Market Update:

t’s been another modest week for shipping stem additions. There was 345KMT of wheat added to the stem in the past week. There was also 121KMT of canola, 113KMT of barley and 72KMt of sorghum (Newcastle NAT). Stem movements are reinforcing some underlying themes that have been evident in the local market for a while. These include - wheat export sales are difficult to make and this is leading to a slow export pace in the state’s where supplies are most plentiful. Sales are getting done, but probably not at the pace needed for the current 21.8MMT export forecast.

Another slow week marked by a lack of urgency and declining activity levels across all segments, and regional holidays combined with uncertainty on policymaking further dampened the likelihood of a short term recovery. The introduction of sweeping tariffs shifted the sentiment to a negative tone as the shipping market tries to come to terms with what real effect they will have going forward. The Pacific was quiet in all usual loading regions as rates slid from Monday to Friday. The exception to this was early in the week, there was a surprising steady flow of handy size backhaul steels in the Feast which helped support initially however this was short lived and faded as the week progressed. The North Atlantic was depressed all week but the south was supported and held steady off the back of ECSA activity. The paper market continues its downward trajectory, with the outlook for 2025 shifting back to a more negative tone. It’s hard to discern where a shift in momentum will come from right now however, as seen earlier this year, conditions can change rapidly.

Australian Weather:

As famer in South East Australia anxiously wait for the traditional Autumn break, the latest Bureau of Meteorology (BOM) outlook indicates the drier pattern may persist. In its latest climate outlook statement for April to July, the BOM said rainfall is expected to be within the typical range for April to June for most of Australia. However, parts of southern Australia have a slightly increased chance of below average rainfall for the three months.

8 day forecast to 6 April 2025
http://www.bom.gov.au/

Weekly rainfall to 4 April 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar is heavily weaker to close last week trading at 0.6008 surpassing the low recorded in 2020 at the start of the Covid-19 pandemic. The drop follows an intensifying trade standoff between America and China, which saw Beijing slap an additional 34 per cent tariff on all US imports on Friday in retaliation for similar US levies. Markets now expect the RBA to potentially deliver back-to-back rate cuts in the next few meetings, with some banks even forecasting a 50 bps move in May.

Australian Crop Update – Week 12, 2025

Tue, 18 Mar 2025 02:11:38 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Trump’s tariff agenda has added another layer of complexity to international grain markets in recent weeks. However, the local prices drivers remain little changed as this overseas volatility provides noise as to where we go from here.

There are two opposing features that are currently driving domestic grain markets. Grain markets in southeastern Australian are being driven by the dry weather and limited pasture supplies which are keeping the delivered feed grain markets firm. This is starting to spill into the track feed grain values. These dry weather worries are creeping north where it was reported that farmers were now holding lupins as stockfeed as they are concerned for the seasons weather prospects. The weather worries will continue to build the longer the east coast goes without significant rain as we approach the planting season.

On the other hand, sluggish wheat export sales are dampening the appetite of traders to chase wheat supplies. It’s an interesting discussion how these two factors get resolved in the market. In the south, its likely to be the timing on rains that trigger pasture growth ahead of the cooler months. Sluggish demand from key Asian wheat importers is unlikely to change without a major production scare in Russia given the balance sheet and certainly that they have little incentive to move away from just-in-time purchasing patterns which is akin to a Dutch auction between the major origins. Ultimately Asian buyers are happy for the Australian farmer to carry wheat for the time being and the farmer is not in a hurry to sell.

What is interesting is the small protein spread that we are seeing in Australia. Higher protein wheat grades slipped $2-3 per metric tonne (/MT) while ASW bids edged higher on the strength of the domestic feed markets.

Australian Supply and Demand update:

Source: AgScientia www.agscientia.com.au/

Export Stem & Ocean Freight Market Update:

IThe Panamax market sprung to life off the back of stronger Transatlantic and ECSA demand last week. The Pacific was stable compared to the gains in the Atlantic but as owners with ships in Asia are now looking to ballast towards the east coast of South America, it has a had a flow on effect with offer rates being revised upwards. With Nopac and Australia still active, some Charterers were caught out by this sudden shift. The Supramax/Ultramax market continued its strong run in the Pacific but remains a mix affair in the Atlantic. The Handysize sector remains the quiet achiever over the past few weeks in both Basins. The Pacific is still well supported with long backhaul steels paying a premium which is causing tonnage lists to tighten. As a result, the outbound values from Australia/NZ have grown, not necessarily by an increase in demand but by a lack of suitable tonnage available for charterers to fix.

There was 873 thousand metric tonne (KMT) of wheat put onto the stem in the past week making it the second biggest week of nominations for the year. This included New South Wales (NSW) with 297KMT followed by Western Australia (WA) with 285KMT, Victoria (VIC) 175KMT and South Australia (SA) with 116KMT. Other grains were reasonably lean with 124KMT of barley and 107KMT of canola.

Despite this good export stem performance, we adjusted our export forecasts through the week. The stem and export reports show that wheat shipments are lagging the pace needed to achieve the previously forecast 23.8 million metric tonne (MMT) export forecast. Specifically, NSW, Queensland (QLD) and WA. We have reduced NSW wheat exports by 1MMT to 5.0MMT. Interstate flows have also been adjusted. WA wheat exports have been cut to 10.6MMT which lifts the ending stocks to 1.5MMT. Australian wheat exports are now forecast at 21.8MMT, but this could still prove optimistic if the exports in NSW, QLD and WA don’t improve in Q3 and Q4 of our October to September marketing year. National wheat ending stocks are forecast at 4.3MMT which is 2MMT more than last year. Australian barley exports have been edged higher to 6.9MMT. WA exports are now 5.2MMT. Ending stocks will be tight in all states.

Australian Weather:

Weather concerns are increasing following a dry summer in southeastern Australia and a hot summer in the north. The most pressing concern is the dry weather across SA and VIC. Most of SA’s cropping area soil moisture is in the bottom 1%. These dry weather concerns have now also extended into Southern NSW. Northern farmers are also looking for rain and were disappointed that the storms following Alfred didn’t offer any significant rain for the cropping areas apart from Central QLD and some patchy storms in Southern QLD.

On the other hand, the Australian Bureau of Meteorology extended outlook from April to July is holding to the normal rainfall patterns for eastern and central Australia. Although their recent track record hasn’t been that good in terms of forecast. WA picked up good rain last week which has only added to reasonably healthy moisture profiles in the west. The rainfall totals were better than initially forecast with the cropping regions receiving 20-45mm across the week providing a good start to the 2025/26 Season.

8 day forecast to 25 March 2025
http://www.bom.gov.au/

Weekly rainfall to 18 March 2025
http://www.bom.gov.au/

The Bureau of Meteorology released its long-range forecast for March to June last week. Rainfall is likely to be in the typical range for the season for most of Australia, with below average rainfall likely for much of northern, eastern and central QLD and above average for parts of north-western Australia. Warmer than average days are very likely across most of Australia, with an increased chance of unusually high daytime temperatures across much of the country.

AUD/USD Currency Update :

The Australian dollar was higher to end last week when valued against the Greenback closing at 0.6302. The Australian dollar (AUD) received support from rising commodity prices, including gold, steel, and iron ore on Friday. However, The AUD/USD pair could face pressure from a strengthening US dollar (USD) amid growing fears of a global economic slowdown. We continue to think more bouts of AUD volatility should be anticipated over coming weeks.

Australian Crop Update – Week 10, 2025

Thu, 06 Mar 2025 02:06:34 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Grain prices in Australia eased again last week with the declines in global markets, although wheat basis strengthened. Prospects of rain encouraged some early week farmer selling but this faltered as priced declined. Sorghum prices were the big winner last week as trader bids climbed after China’s imposed retaliatory tariffs on US supplies. Canola prices tumbled with the sharp declines in Matif.

Against this backdrop Australian wheat exporters are struggling to get the volume of sales needed to achieve 24 million metric tonne (MMT) in wheat exports for the 2024/25 Season. This was evident in the January ABS export data that was released through the week. Australian wheat exports for Jan were 1.85MMT down from 2.147MMT in December which makes it unlikely it will even get to 10MMT by the half year stage of our marketing year.

Indonesia was the largest wheat destination in Jan with 296.7 thousand metric tonne (KMT) with the Philippines and Japan also taking more than 200KMT for the month. Wheat exports in Jan to China were disappointing at 5KMT. Australia’s Oct/Jan 24/25 wheat exports are at 5.7MMT which is down ~0.8MMT down on last year’s numbers. This is driven by China’s imports being down to just 177KMT – last year it was 1.4MMT at the same stage. It is worthy to note that there was 71.5KMT of wheat shipped to Iraq in Jan following the 41.5KMT in Dec. India also took 20KMT of wheat following the 18.3KMT in Dec.

January barley exports were strong at 1.094MMT. Close to 760KMT was shipped from Western Australia (WA) with Victoria (VIC), South Australia (SA) and New South Wales (NSW) chipping in for the remainder. The monthly barley shipments were evenly split between malting barley and feed barley. China took 705KMT of barley shipments in Jan. Thailand was the next largest with 101KMT and then Mexico with 96KMT. Saudi was next week 65KMT. Latin American malting barley exports for Jan totalled 126KMT.

Monthly canola exports continued at a strong pace with 788KMT shipped in Jan. Just under 500KMT was shipped to Europe and 192KMT to Pakistan.

The national wheat production estimate for the 2024/25 season now stands at 34.MMT, the third largest on record, up from 31.9MMT seen in December. Canola is now seen at 5.9MMT, up from 5.6MMT in the previous forecast, and the fourth-largest crop on record, while barley at 13.3MMT is up from 11.7MMT seen in December to make it the fifth-largest crop on record.

Australian Pulses Update:

Australia exported 395,428 metric tonnes (MT) of chickpeas, 201,554MT of lentils and 47MT of faba beans in Jan according to the latest data from the Australian Bureau of Statistics. Chickpeas destinations saw India receive 250,932MT, Pakistan on 72,786MT and Bangladesh on 55,336MT in January. Lentils export saw India receive 99,806MT, close to half the monthly total, Bangladesh 60,749MT and Sri Lanka on 21,847MT.

Export Stem & Ocean Freight Market Update:

It was a softer week on the Panamaxes, while Supramaxes held steady and Handysize gained ground. While we witnessed a marginal uptick in demand across most of the trading routes, the overall sentiment was soft as there is generally a sense of oversupply on tonnage.

In the Pacific we saw rates gently ease from Monday through to Friday. The Supramax sector saw a week of consolidation. The Handysize market continued the positive momentum in both basins with prompt tonnage continuing to be fixed. There was a notable shift in the Australian handy market with increased demand finally appearing for end March/early April dates causing a positive shift in sentiment for the first time in weeks.

Weekly shipping stem additions improved following a quiet couple of weeks. There was 573KMT of wheat put onto the stem in the past week. This included 272KMT from WA, 160KMT NSW and a welcome 86KMT in Qld and 55KMT in SA. There was also 228KMT of barley added to the stem, which was entirely WA as well as 60KMT of canola.

Australian Weather:

Southeast QLD and Northern NSW experienced significant rainfall over the past week as ex tropical cyclone Alfred made landfall on Friday. The slow moving system dumped record rainfall totals in coastal cities and as it moved west over the ranges.

NSW and SA look as though they will remain dry over the next week, with some of VIC and WA receiving between 10 to 25mm of welcomed rainfall.

8 day forecast to 20 March 2025
http://www.bom.gov.au/

Weekly rainfall to 13 March 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The AUD/USD pair struggled to recover as risk sentiment deteriorated with traders reacting to weaker-than-expected job growth and softer wage gains. Meanwhile, China’s trade balance data showed an unexpected drop in imports, raising concerns over slowing demand, which weighed further on the Australian dollar. China's imports unexpectedly shrank over the January-February period, while exports lost momentum, as escalating tariff pressures from the United States cast a shadow over the recovery in the world's second-largest economy.

Looking forward, more bursts of volatility should be anticipated as global economic and market ructions play out. But from a medium-term perspective we still think there is more upside than sustained downside potential for the AUD. A fair degree of negativity is already priced in with the AUD tracking ~3-4 cents below some ‘fair value’ models. In addition, the AUD has been sub-$0.63 less than ~3% of the time since 2015. Underlying dynamics that cushioned the AUD remain in place.

Australian Crop Update – Week 9, 2025

Mon, 24 Feb 2025 02:02:48 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Hot on the heels of our previous delayed report the Australian domestic wheat and barley bids have strengthened across eastern Australia in line with gains in global markets over the past week. Gains were sharpest in Queensland (QLD) and Northern New South Wales (NSW) where they are playing catchup to other values in southeast Australia. Reserved farmer selling is also offering support, where farmers are selling but not enough to keep the improving export pace satisfied.

Exporters have been getting their share of export sales on in recent weeks given that Australian wheat has been increasingly competitive. This was evident in the Australian Bureau of Statistics exports where monthly shipments into the Middle East countries were the largest in more than a decade in December. Shrinking Black Sea supplies is playing its part in this as well as the Russian export restrictions than came into force in mid-February.

Australian Supply and Demand update:

Source: AgScientia www.agscientia.com.au/

Export Stem & Ocean Freight Market Update:

Shipping stem additions were significantly smaller in the past week following the previous week’s 1.7MMT. There was 380 thousand metric tonne (KMT) of wheat, 125KMT of canola and 65KMT of barley put on the stem in the past week.

After a quiet start to the week for Panamax, rates started to gain ground by Wednesday to finish the week on a stronger note. The Pacific sparked to life off the back of some grain demand ex Aussie and Nopac. For Supramax/Ultramax it was another positive week in the Pacific, mainly driven by sustained demand in the Fareast and Nopac markets (mostly steels and grains) which has pushed rates along. Interestingly, Australia is lagging due to minimal fresh demand for this sector. The Handysize market has followed a similar trend in Asia, with the Fareast being the best performer over the week. Overall, there has been a wide range of reported fixing rates for all types which indicates the market is still working to find its equilibrium.

Australian Weather:

Southern QLD and NSW received some patchy rain last week. Broadly, QLD and NSW farmers are sitting on good soil moisture reserves ahead of autumn planting dates which has farmers comfortably positioned. Victorian (VIC) and South Australian (SA) farmers are keen to see soaking rains where grain farmers have seen little to no rain since early December. Subsoil moisture reserves are well down on this time last year and soaking rains are needed before winter crop plantings in April and May. Nearby forecasts remain dry. Extended Bureau of Meteorology models point to improved rain in late February returning to normal rainfall patters for March-May.

8 day forecast to 3 March 2025
http://www.bom.gov.au/

Weekly rainfall to 24th February 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar remained static to end last week when valued against the Greenback closing at 0.6350. Having given up fresh 2025 highs above US$0.64 the AUD slid to session lows only marginally above US$0.6350. Uncertainty surrounding the new Trump administration's economic policies and a sell off across US equities sparked a sharp uptick in risk aversion driving markets to haven assets and away from the AUD.

Australian Crop Update – Week 8, 2025

Fri, 21 Feb 2025 01:57:45 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Australian domestic wheat and barley markets were stronger across most port zones, with the exception of Western Australia (WA), in the past week as buyers lifted bids to chase elusive farmer selling. The AUD was 1.3% higher for the week as the US lost some of its gloss following the Trump election victory.

Australian 2024/25 Production Update:

Forecasters have raised production estimates of Australia’s 2024/25 barley crop to account for the strong export pace. Heavy supplies of barley in Queensland (QLD) and Northern New South Wales (NSW) also justify higher yield assumptions for the northern production areas of the east coast. National barley production has been raised to 13.2 million metric tonne (MMT).

National wheat and canola production are little changed. National wheat exports are estimated for the season to be close to 24MMT but the sluggish start to the program means more of the export task will be pushed into the July/Aug/Sept quarter when Australia competes with 2025/26 Black Sea supplies.

The latest updates lift Australian wheat production to 33.5MMT, barley production to 13.2MMT, canola is 6.0MMT and sorghum production at 2.475MMT.

Export Stem & Ocean Freight Market Update:

It was a big week for the shipping stem last week with a combined 1.7MMT of wheat, barley, canola and sorghum added. Wheat made up 850 thousand metric tonne (KMT) of the total, comprising 655KMT in WA and 175KMT in NSW. There was also approximately 400KMT each of barley and canola put onto the stem as well as 60KMT of sorghum in Brisbane.

It was a mixed week for shipping where we witnessed Capesize and Panamax lose ground while the Supramaxes and Handysizes continued to gain. The Atlantic came under pressure on the larger sectors as demand became scarce. As a result, charterers began to drive down their bid levels and left owners little choice but to accept or risk becoming spot/prompt in a falling market. The Pacific bucked the trend with a steady demand stream appearing ex Nopac and Aussie to help hold rates stable for now. The Supramaxes experienced another positive week with most loading zones being achieved in Atlantic and Pacific which helped owners to revise their offer levels upwards by another 1-2kpd. In the Pacific, we are also seeing an increased amount of FarEast back haul voyages appearing in the market. Charterers willing to pay healthy rates for long duration business could help position tonnage out of the Pacific and tighten the supply/demand equation in the east.

The Handysize have been steadily increasing since the Lunar New Year holidays and there is a renewed sense of optimism in the market. The Handy Pacific indexes have all increased circa 2000 points over the past two weeks and owners are pushing rates to the next levels with charterers having to now chase to secure tonnage. Period activity on all sizes remains healthy which has led to owners increasing offer levels up 1-2kpd depending on the duration and what optionality charterers need.

Australian Weather:

It was a good rainfall week for QLD and Northern NSW but dry elsewhere. Last week’s rain means these areas are well positioned for soil moisture ahead of Autumn/Winter crop plantings. Southern cropping areas remain dry and will be looking for Mar/Apr rain. WA is dry but that’s not unusual for this time of the year

8 day forecast to 28 February 2025
http://www.bom.gov.au/

Weekly rainfall to 20th February 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was higher over last week when valued against the Greenback closing at 0.6354. The Australian dollar advanced Friday amid softer US retail sales data and dwindling tariff fears. While Trump's regime of reciprocity remains in sharp focus the threat of imminent tariffs has faded as officials’ analysis the US’s trade relationships with the intent of issuing country-by-country tariff programs. Having pushed through US$0.6350 the AUD touched its highest level since mid-December marking US$0.6368. This week we saw the expected 25 basis point interest rate cut, although the Federal Reserve remains cautious about flagging further cuts ahead of an impending general election campaign.

Australian Crop Update – Week 7, 2025

Tue, 11 Feb 2025 01:54:52 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Australian cash markets were firmer last week aided by the strength in US futures. The market felt like export shorts started to show a greater appetite to increase coverage as the AUD strengthened to help them. However, calculated FOB replacement wheat values were US$3-6 higher for the week.

Farmer selling remains slow. Overall, Western Australia (WA) is probably more than 50% sold on wheat, more on barley and mostly sold on canola. The size of the WA crop has surprised farmers which have left them more undersold than they thought. We get the impression that New South Wales (NSW) farmers would be volume sellers of wheat at values of +$5-10 above where the bids are.

The Australian Bureau of Statistics released its December grain export data which showed a sharp kick in wheat shipments and a huge month for chickpea shipments.

December wheat exports were 2.156 million metric tonne (MMT), up from 577 thousand metric tonne (KMT) in November. Exports to Asia were 1.46MMT and 593KMT to the Middle East which was the largest monthly exports in more than a decade. Let’s hope for more of the same!!

Barley December exports were 679KMT, down from 834KMT in November. China was the main market with 386KMT. There was 150KMT of barley shipped to Saudi Arabia as well.

On pulses, chickpea exports were huge at 781KMT. India took 75% of the December chickpeas. Lentils exports were also strong at 240KMT. Pulse exports exceed both barley and canola in December which is an interesting development. The chickpea figure has lifted exported for the first quarter of the shipping year to 1.3MMT, with the currently tariff-free Indian market accounting for close to 1MMT of that. The surge reflects Indian demand ahead of the expected reinstatement of the tariff in April, and the availability of a large, good-quality Australian chickpea crop which growers were happy to sell for cash at harvest.

On lentils, the December total exported was a more than five-fold increase on the November. This is again reflecting new-crop availability, and buoyant demand for a relatively low-volume Victorian (VIC) and South Australian (SA) crop, the result of a low-rainfall growing season. Australia’s main customers for December-shipped lentils were India on 114,365 metric tonne (MT), Bangladesh on 81,854MT, and the United Arab Emirates on 25,727MT.

Export Stem & Ocean Freight Market Update:

Exporters added 560KMT of wheat to the stem in the past week which lifts the additions in the past four weeks to 1.7MMT. It is apparent that export sales of wheat are still difficult to make whereby shippers are working hard to get sales on. It also flags that 2024/25 wheat exports may not reach the forecast 24MMT which will push up the carryover stocks in NSW and WA – something to be considered. It also means that traders have limited willingness to chase farmer supplies with a resulting stand off. Barley shipments and forward stem are already two thirds for the forecast 5.5MMT 2024/25 shipments which is 7 pts ahead of last year. Canola shipments are equally advanced. There was also 215KMT of barley added to the stem in the past week and 280KMT of canola.

There was a slow start to ocean freight last week post Lunar New Year holidays. There was a positive swing on the indexes and FFAs for the first time in weeks. Owners were less eager to chase Charterers. Instead, many were happy to sit and wait as the rates started to increase from late Wednesday through to Friday afternoon as increased cargo demand started appearing now that many market participants are back behind the desk. Owners have been resistant to take last done levels, and we have witnessed standard pacific rounds rates gaining 1-2kpd by the end the week. It will be interesting to see whether this positive sentiment continues – we are not so sure.

Australian Weather:

Subsoil moisture in the northern cropping areas is generally good ahead of autumn plantings while southern cropping areas are dry (not abnormal for this time of the year).

BOM’s extended weather outlooks offers a wetter than normal autumn for northern and southern Australia. The long-range forecast for February to April shows above average rainfall is likely for northern Australia and much of the south, with an increased chance of unusually high rainfall for much of these regions. For parts of southern WA and scattered parts of south-east Australia, rainfall is likely to be in the typical range for February to April. Warmer than average days are likely across much of southern and eastern Australia. Since late December, conditions across the tropical Pacific have been more La Niña-like, with both oceanic and atmospheric indicators beginning to align. However, until a sustained atmospheric and oceanic response is observed, the BOM’s ENSO status remains neutral.

8 day forecast to 18 February 2025
http://www.bom.gov.au/

Weekly rainfall to 11th February 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was sharply higher over last week when valued against the Greenback closing at 0.6250. After plunging below US$0.61 on Monday the AUD proved remarkably resilient in closing the week higher yet remains ever so vulnerable to tariff headlines.

Australian Crop Update – Week 5, 2025

Thu, 30 Jan 2025 01:51:01 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Increased farmer selling and reports that Chinese buyers were trying to washout Australian wheat purchases and sell them back into Southeast Asian markets were behind the weakness in the early part of last week, but wheat and barley cash bids were generally firmer into the weekend.

Sorghum harvest has started in Southern Queensland (QLD) and Northern New South Wales (NSW) around Moree. Northern NSW is forecast to see some storms late next week which could slow progress. Early yields in Southern QLD and Northern NSW have been favourable.

Australian Pulses Update:

Exports of Australian chickpeas, faba beans, and lentils are well advanced, as buoyant export demand and good quality enables a string of cargoes to set sail for South Asian and Middle East markets. Shipping figures and stems indicate more than 1 million metric tonnes (MMT) of the 1.9MMT chickpea crop, as forecast by ABARES, will have been exported from October to January, the first third of the marketing year. Around 300,000 tonne (MT) of current-crop lentils will have been shipped by the end of this month out of a total crop seen by ABARES at 1.1MMT crop. Faba beans is expected to see approximately 700,000MT exported by the end of March.

Export Stem & Ocean Freight Market Update:

There was 656 thousand metric tonne (KMT) of wheat put onto the stem in the past week which is the most in 18 weeks. Half of the wheat additions were in Western Australia (WA) but there was also 142KMT in NSW and 100KMT in South Australia.

There was also 172KMT of barley put onto the stem in the past week, split between SA and WA.

There was a further 73KMT of canola put on the stem as well.

Overall, wheat shipments are historically lagging while the barley and canola export pace is strong.

The Lunar New Year holiday is now in full swing with many Asian countries on leave this week. As the rates steadily declined over the past few weeks, it has caused market sentiment to be the lowest since the start of COVID – with freight rates to match. All sectors have been affected with many owners having to fix low freight or TC rates on the spot basis in order to find coverage with the hope that the market will improve once the Long Holidays are over. While this week we are not expecting any wholesale changes in the market, there is a general sense that rates are dragging along the floor and looking forward, there is still optimism that the market will bounce once the spot/prompt tonnage is cleared (which will take a couple of weeks). Helping this sentiment, there still appears to be a healthy amount of cargo enquiry currently in market, albeit at reduced levels. On a macro level, news of a ceasefire in Gaza was welcomed. If the truce is held, we will wait to see when the Red Sea is safe to transit again without the threat of a Houthi attack which would dramatically reduce the tonne/miles on many trades.

Australian Weather:

The 3-month long-range BOM forecast from Feb-Apr is indicating above median rainfall for most QLD, NSW, Victoria (VIC) and SA. This is welcome news for growers if it means a ‘normal’ break, particularly for VIC and SA. The forecast for the next week shows only coast rainfall with little pressure on the sorghum harvest for disruptions.

8 day forecast to 2nd February 2025
http://www.bom.gov.au/

Weekly rainfall to 29th January 2025
http://www.bom.gov.au/

http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was up 2% to finish last week when valued against the Greenback closing at 0.6300. The market traded with nervous optimism through the first week of Trump's second presidency as a more benign than expected policy agenda emerged. Heading into this week, the focus was on inflation rates. Q4 2024 CPI printed below consensus forecasts (as it has tended to do over the past two years), and importantly it also undershot the RBA’s projections. Headline inflation rose just 0.2% in Q4 with the annual rate running at 2.4%pa. As such, most banks now feel the RBA will announce a 25bp interest rate cut when it meets on 18 February. A 25bp move is now ~96% factored in. While the first step has been brought forward the outlook for the RBA’s cycle hasn’t materially changed. Interest rate markets are pricing in just over three cuts in 2025.

Most analysts believe further near-term downside should be limited. At the same time however, with US trade tariff risks still lurking and the USD firm, any near-term AUD rebounds are also likely to be capped. As per our 2025 outlook we see the AUD oscillating in the low- to mid-$0.60s over coming months as domestic and offshore cross-currents play out.

Australian Crop Update – Week 4, 2025

Wed, 22 Jan 2025 01:43:01 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Domestic wheat prices were firmer last week, barley was mostly steady, canola bids were lower with the declines in ICE and Matif. Global inputs were mixed. The AUD was up 1% for the week, now back at 62 cents. Overall, wheat basis remains soft with traders not willing to reward CBOT rallies while they are struggling with export competitiveness into Asia while the export pace is lagging. Feed grain markets across south east Australia edged higher in most key regions. However, the trade focus is now on the 2024/25 crop which is expected to result in another large sorghum harvest which will require another year of large exports, which will primarily go to China. Australia’s 2024/25 sorghum production is expected to top last year’s ABARES 2.2 million metric tonne (MMT).

Australia exported 579,589 metric tonnes (MT) of wheat in November 2024, according to the latest data from the Australian Bureau of Statistics. The figure is down 49 percent from the 1,126,926MT shipped in November 2023. Big pulse programs out of ports from Mackay in Queensland (QLD) to Newcastle in New South Wales (NSW), coupled with a drought-reduced crop out of South Australia (SA), contributed to the drop.

In containerised exports, Thailand on 32,691MT, followed by Malaysia on 24,161MT, and Vietnam on 23,886MT, were the biggest markets for shipments in November 2024.

In the bulk market, a total of 418,994MT was shipped for the month, with the Philippines on 96,198MT, followed by Indonesia on 83,481MT, and Japan on 58,349MT were the major destinations.

This week’s stem results reaffirm earlier observations of the advanced barley shipping pace compared to the lacklustre wheat program. Australia’s 2024/25 barley exports are 57% complete against our s&d forecast which is similar to last year in terms of the percentage complete of the forecast export program. Whereas the current Feb wheat exports are 18 percent behind last years. Hence, the only urgency in wheat buying is from some of the domestic delivered markets in south east Australia.

Exporters will be happy to let the farmer hold wheat supplies until export competitiveness improves.

On the demand side trader reports were circulating in Europe that Chinese buyers have cancelled an unspecified volume of Australian wheat purchases. It supports the overall narrative of disappointing Chinese grain imports this year. One to be watched.

Export Stem & Ocean Freight Market Update:

There was 292 thousand metric tonne (KMT) of wheat, 175KMT of barley and no canola put onto the shipping stem in the past week. There was also 185KMT of chick peas put on the stem, which was mostly QBT in Brisbane, catching up with some December loadings as well as forecast loading for Jan and Feb.

The dry bulk market continues to experience a challenging start to the year. Although expected, the extent of the downturn has caught many by surprise with rates plummeting lower than anyone predicted. There is a clear over supply of tonnage putting pressure across all sectors. This week we have seen an increase in smax/umax vessels fixing handysize business. Operators continue to be cautious in this difficult environment with a clear lack of confidence in the immediate future. With Chinese New Year (CNY) approaching, many are looking for the traditional rebound that follows these holidays. As in previous years, there is a sense of anticipation that post CNY there will be some much-needed stability and recovery in activity. However, until then there is very much a wait and see approach from most owners.

On a different subject, reports are emerging from Houthi sources that they may call a halt to rocket attacks now the peace agreement in Gaza seems to be holding. It may take a little while for owners and container lines to jump back in but sentiment, at least, does seem to be this will happen sooner rather than later. This should shorten delivery times with a resultant reduction in freight and container rates.

On the other side of the world, while water levels have recovered at the end of 2024 as El Nino subsided and La Nina emerged, the Panama Canal now faces heightened geopolitical tensions. Trump stated that he would not rule out military measures to regain control of the canal, citing concerns over Chinese influence on this strategic waterway. These developments further strain one of the main arteries of global trade.

Australian Weather:

Scattered thunderstorms continued across the east coast over the weekend and through the week amounting to reasonable totals. There was 5-40mm across the Darling Downs and 10-30mm in Central QLD. Northern NSW recorded some storm activity 5-30mm. Central West NSW picked up heavier storms of 30-70mm which will build soil moisture for autumn winter crop plantings. The storms resulted in structural damage in parts of Southern NSW and the Central West. There were wind gusts of more than 100kmh with the Central West, Riverina, and Southern Slopes areas amongst the worst affected. Trees were toppled with damaged to buildings in areas from Griffith, Wagga and the Central West. The storms are benefiting sorghum crops although delaying early harvest in QLD.

8 day forecast to 29th January 2025
http://www.bom.gov.au/

Weekly rainfall to 21st January 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was slightly firmer to finish last week when valued against the Greenback closing at 0.6190. The expectation is that the USD will ease and AUD/USD to strengthen this week as AUD looks oversold. However, the known unknown risk of US tariffs, specifically on China is a factor. Trumps tariff intentions are a big swing factor, and we are already seeing him put some of his pledges into action with a flurry of executive.

Australian Crop Update – Week 3, 2025

Tue, 14 Jan 2025 02:52:47 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Local markets were firmer to start the week as buyers reacted to Friday’s WASDE and continued weakness in the AUD in the face of a rampant USD. East coast basis continues to come under pressure as buyers look to improve export competitiveness into Asia and other key markets. However, this has done little to entice importers where demand is light and competition fierce. This is being reflected in softer values and a lagging export pace.

Australia’s 2024/25 winter crop harvest is now 99.9% complete. We updated the grain production estimates based on the final bulk handler grain delivery information. The major point of this is that larger than expected grain deliveries in Western Australia (WA) justify larger national wheat and barley crops. Overall, it was an amazing performance in WA where output exceeded all expectations where below average, but timely rains resulted in well above average yields. The above-mentioned production changes lifts Australia’s 2024/25 wheat crop to 33.3 million metric tonne (MMT), mainly due to the 1.8MMT increase in the size of the WA crop. We have lifted Australia’s wheat exports to 23.9MMT with room to go higher, demand allowing. National barley production is raised to 12.5MMT with exports of 5.5MMT. WA has sufficient supplies to lift exports comfortably above 6.0MMT, demand permitting. Australia’s canola production is steady at 5.9MMT with exports of 4.35MMT.

Export Stem & Ocean Freight Market Update:

The Australian Bureau Statistics released its November exports figures. Overall, wheat exports for November were disappointing while barley, canola and pulse exports were robust.

Australia exported 583.6 thousand metric tonne (KMT) of wheat in November down from 1.134MMT in Oct. It was the smallest Nov wheat exports since Nov 2020.

Barley exports for November were 839KMT which was the largest since Jan 2024. China took 750KMT of that.

November canola exports were 769KMT with 629KMT or of 72% of this heading to Europe.

Pulse exports kicked in November. This included 140KMT of faba beans with 94KMT of this coming from New South Wales (NSW) and 40KMT from Queensland (QLD). Egypt accounted for the bulk of the export demand with 126KMT shipped. Chickpea exports for Nov were 443KMT. India accounted for 350KMT of the shipments (79%), Pakistan 11% and Bangladesh 5%. There was also 49KMT of lentils exported in Nov.

There was 436KMT of wheat, 386KMT of barley and 128KMT of canola added to the stem in the past week. The data has been updated into the monthly shipping stable which now includes the Oct & Nov ABS exports as well as the shipping stem for Dec to Feb. Although there will be more Jan and Feb vessels that will come into the stem in coming weeks, a picture of the 2024/25 shipping pace is developing. With thanks to our analysts, we have introduced some additional charts to better illustrate this. In short, the wheat exports are lagging while canola and barley shipments are reasonably advanced. The below monthly shipping table shows wheat exports based on the ABS Oct-Nov and the stem for Dec-Feb.

Source - Agscienta

From an ocean freight perspective, we are still waiting for the market to kick into gear for this year. It's been a slow start with minimal desire or urgency (especially on behalf of cargo interest) to engage. Instead, many participants are willing to take a wait and watch approach which appears to be working in their favour as the spot and forward curve have been very gently easing over the past few weeks. The big question on everyone's mind is how the market will react once Chinese New Year week comes and goes. Many are still sitting on the fence and are not prepared to make any bold predictions either way just yet so it will continue to be a close watch.

All index routes lost ground as the week progressed and while there was fixing being done, all rates were below last done levels. There have been minimal period fixtures being concluded as we have a big stand-off in the bid/offer spread between charterers and owners.

Australian Weather:

Rainfall across the Australian cropping areas last week was patchy and most areas of rainfall were coastal. Rain forecasts for the next week are somewhat similar however the expectations are for QLD, NSW and the eastern part of Victoria (VIC) to receive between 10-25mm which will do little for sub-soil with the summer temperatures expected to range between 25-35 degrees for the next week in these areas.

8 day forecast to 21st January 2025
http://www.bom.gov.au/

Weekly rainfall to 14 January 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker again to finish last week when valued against the Greenback closing at 0.6150. The USD and US short term interest rates jumped after US payrolls easily beat expectations. The US unemployment rate decreased by 0.1pt to 4.1. FOMC rate cuts are at risk. AUD/USD can test 0.6099 if the Australian labour market report is weak as expected.

USDA Summary (from Agscienta):

The USDA’s January WASE report was supportive corn and soybeans but neutral for wheat.

Wheat

USDA reported U.S. wheat ending stocks at 798 million bushels, in line with trade expectations for 785-825 million bushels. USDA also released its initial 2025/26 US winter wheat seedings report overnight where plantings were up 725,000 acres, which was not expected. This would add a further 50-60 mill bu of winter wheat production, assuming normal abandonment and trend yields. USDA’s global changes for the 2024/25 balance sheet were little changed in the Jan WASDE. Global wheat production was about unchanged at 793MMT, but world wheat exports were cut by 1.7MMT to 212MMT. Russia’s wheat exports were reduced by 1MMT to 46MMT and Ukraine was back 0.5MMT to 16MMT. China’s wheat imports were reduced by a further 0.5MMT to 10.5MMT compared to last year’s 13.6MMT. Turkey’s wheat imports were cut by 1.0MMT to 5.5MMT, compared to last year’s 9.4MMT and 12.1MMT in 2022/23.

Corn

USDA estimated U.S. corn production at 14.867 billion bushels, below market expectations for 14.965-15.193 billion bushels. USDA estimated U.S. corn yield at 179.3 bushels per acre, less than analysts' expectations for 181.3-183.7 bushels per acre. Ending stocks were at 1.54 billion bushels, at the low end of predictions for 1.540-1.815 billion bushels. Globally, USDA kept its South American production estimated unchanged (Argi 51.0MMT and Brazil 127.0MMT). Global corn production was cut by 3.5MMT to 1,214MMT with US production down 7MMT to 377.6MMT. Global exports were reduced by 1.6MMT to 191.4MMT. China’s 2024/25 imports were cut by a further 1MMT to 13MMT, down 10.3MMT from last year’s 23.4MMT. The full extent of the impact of this is only seen by looking at the 2023/24 numbers as well. USDA’s 2023/25 Brazil’s exports forecasts have been in free-fall in recent months. USDA cut Brazil’s 23/24 corn exports by a further 2MMT to 39.5MMT. This is 8.5MMT less than the 48MMT forecast in Sep24.

Barley

The most notable feature of the USDA’s 0.5MMT reduction in China’s 2024/25 barley imports to 9.5MMT. This is 6.4MMT below last year’s 15.9MMT. Russia’s barley production was lowered by a further 0.3MMT to 16.3MMT, down from 20.5MMT in 2023/24.

Soybeans

USDA estimated U.S. soybean production at 4.366 billion bushels, compared with analyst expectations for 4.408-4.539 billion bushels. They said U.S. soybean yield was at 50.7 bushels per acre lower than trade expectations for 51.1-52.6 bushels per acre. USDA put U.S. soybean ending stocks at 380 million bushels, below analyst predictions for 390-495 million bushels. USDA lifted its US soyoil forecasts, which was broadly expected and needed. Globally, USDA lowered world soybean production by 2.8MMT to 424.3MMT. This was due to the 2.6MMT reduction in US production to 118.8MMT. South American production was unchanged with Brazil at 169MMT and Argi 52MMT. China’s imports were unchanged at 109MMT. Global ending stocks were reduced by 3.5MMT to 128.4MMT, which is 16MMT more than last year and record large. Most of the reduction in world soybean stocks came from the 2.5MMT reduction in US ending stocks to 10.3MMT.

Canola

USDA made some significant changes to its historical Chinese rapeseed production assumptions which altered the historical balance sheets, although the trade numbers were little changed. World 2024/25 world production was reduced by 1MMT to 85.2MMT. This was made up of a 0.35MMT reduction in Russian to 4.65MMT and 0.5MMT cut in India’s output. Canada’s crop was unchanged at 18.8MMT, but exports were raised by 0.5MMT to 7.25MMT as they gain market share into the EU. EU imports were unchanged at 6.85MMT.

Basis Commodities and BALCO Australia visit GCC

Tue, 07 Jan 2025 06:44:07 GMT

During the last quarter of 2024, Basis Commodities and BALCO Australia embarked on a major marketing push through the GCC visiting dairy and equine customers benefiting from BALCO Australia’s oaten hay exports.

The delegation included BALCO Australia CEO, Rob Lawson, Basis Commodities Managing Director Chris Whitwell, and Basis Commodities General Manager Dubai, Musab Jafar.

Chris Whitwell, said it was a very busy few weeks, but well worth the time and investment.

“This is an important and expanding market for oaten hay, with the growth in dairy production in the region,” Mr Whitwell said.

“We’re pleased our connections in these areas have been able to assist BALCO Australia to expand into more markets and continue to grow and improve their oaten hay exports into the Middle East, while benefiting customers in the region with quality produce.”

While in Riyadh, the trio attended the 41st Saudi Agricultural Exhibition, which provided a valuable chance to further connect with the Saudi fodder market and gain valued insight into the country’s future plans in the sector. The busy schedule also included a seminar with participants from Kuwait Dairy Farmers Association.

“It was an honour to present to the association and tell our story while visiting our existing customers in Kuwait,” Mr Lawson said.

“There has been a tremendous effort by the BALCO Australia team over the years to invest in the cultivation, processing and exporting of our oaten hay.

“Being able to talk to that journey, and highlight the high quality produce coming from our Australian farmers and the benefits its having particularly within the dairy and equine industries give me great pride.”

Basis Commodities have been agents to BALCO Australia since 2018, assisting them to build relationships and export their oaten hay into the Middle East.

For more information on Basis commodities and how we can assist your business, visit basiscommodities.com or email info@basiscommodities.com.

Australian Crop Update – Week 2, 2025

Tue, 07 Jan 2025 06:01:38 GMT

2024-25 New Season - USD FOB Indications

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

Firstly, welcome back to our first weekly market report for 2025 and all the best for the year ahead from all Basis Commodities team.

Before we dive into the details of the Australian cash market, we have spent a bit of time with our analyst pondering market relativities to understand some of the potential market risks. At the start of the year, US equities at hovering close to record highs less than two week’s out from Trump’s inauguration. The US dollar index is approaching its COVID high and pushing the AUD into the lower end of its historical trading range. The US economy finished 2024 in good shape as the Fed successfully dodged a hard landing. However, in other parts of the world economies are struggling. After decades of continuous economic growth, Beijing is facing deflation and is looks to turn the economic malaise around with the previous economic leavers no longer working or available. They are still suffering from the impacts of the real-estate crisis with state government and provincial government enterprises crippled with debt. As a result, the soft commodity markets still feel muted, and it feels like demand is king for now. Consequently, it feels like consumers will continue to buy on a hand to mouth basis. However, there are some bull flags appearing on the production side for 2025, most notably Russia for wheat, that when combined with some of these other market relativities could lead to a relatively volatile year ahead for us all.

Australian Grains Market Update

The Australian domestic markets remained unusually quiet over the last two week with most participants still away on holidays or light duties with the Christmas and New Year’s holiday period. The weaker AUD is offering modest price support with basis sharply higher on Friday night with the selloff in Chicago.

Australia’s winter crop grain harvest for 2024 is now largely complete. Final production estimates are yet to be issued however there will likely be some modest adjustments to the New South Wales (NSW), Victoria (VIC) and South Australia (SA) numbers. The Western Australia (WA) receivals number continues to grow so our analysts have raised their Australian 2024 wheat production to 32.5 million metric tonne (MMT) and barley 12.5MMT.

Export Stem & Ocean Freight Market Update:

It’s a short and disjointed week for the shipping stem with New Years Day holiday in the middle and many people still away for the Christmas holidays. Even so, there was 305 thousand metric tonne (KMT) of wheat put on the stem in the first week of 2025. Half of this was in WA and the remainder was split between NSW and SA.

As we navigate the festive and New Year period, it appears the dry bulk market has also entered holiday mode. While the end of the year has been disappointing for owners, reflecting on 2024 it was a positive year overall. Freight rates for Capes averaged over $20kpd only the second time in the last 15 years while Smax/Umx rates averaged around $15k–$16kpd, which is strong performance. Additionally, the premiums achieved by large eco handies for trips and period were also historically impressive. However, much of the asset value gains recorded in the first half of the year have eroded as we enter 2025.

Looking ahead to the dry bulk shipping market in 2025, the outlook is more cautious. Around 90% of market players anticipate a weakening market. Stable new deliveries for Capes, Pmx, and Umx are expected, which could pressure supply-demand dynamics. Uncertainties surrounding the shipping routes through the Red Sea, as well as the ongoing conflicts in Ukraine and Russia, add further complexity. When combined with potential impacts such as Trump-era tariffs, and broader geopolitical developments, the dry bulk shipping market faces an interesting year ahead.

Bunkers prices has remained stable for the most part with major ports around the world averaging between 525-575pmt for VLSFO and 675-725pmt for LSMGO.

Australian Weather:

Queensland has seen good rain over the past 10 days and is set to see more in the next week. Summer crops in the western and eastern Downs are in line for above average yields.

8 day forecast to 14th January 2025
http://www.bom.gov.au/

Weekly rainfall to 7 January 2025
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker again to finish last week when valued against the Greenback closing at 0.6220. The currency traded sideways for the past two weeks during the Christmas and New Years holiday period. The expectation is that the AUD / USD pairing will remain at these levels over the next few weeks and will see downside ahead of the US election with the USD strengthening once Trump is inaugurated for his second term.

Australian Crop Update – Week 51, 2024

Mon, 23 Dec 2024 05:58:28 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

The Australian cash markets were softer in all zones and positions last week in the wind down to the Christmas and New Year break. Local markets progressively quietened through the week as traders exit the offices for the holiday period. Wheat was generally weaker across the east coast with exporters unwilling to chase supplies from the farmer given the difficulty of making overseas sales. East coast values are back to export competitive levels, particularly with AUD weakness, but farmer selling remains slow, so exporters are cautious. Australian wheat is competitive into Southeast Asia at these values. Overall, farmers are well sold on canola and pulses but undersold on wheat.

On the production front, late harvest grain deliveries in Western Australia (WA) have exceeded all expectations and warrant further crop increases. As of late in the week, WA deliveries were 19.3 million metric tonne (MMT) including >10.6 MMT of wheat, 5.1MMT of barley and 2.7MMT of canola. Australia’s winter crop production continues to climb, and a big crop is getting bigger.

Export Stem & Ocean Freight Market Update:

There was around 540 thousand metric tonne (KMT) of wheat added to the shipping stem in the past week, lifting the two-week tally to close to 1MMT. South Australia (SA) contributed more than 300KMT to last week’s wheat additions with around 230KMT in WA. Nothing was added in New South Wales (NSW) which further consolidates the slow start to the NSW wheat export program, despite the massive wheat harvest. Barley additions are moving ahead reasonably quickly with the Oct/Jan exports and stem already up to 2.3MMT.

As the freight market settles into the holiday period, activity levels have noticeably dried up in both the Atlantic and Pacific as expected.

Panamaxes in the Pacific experienced another tough week with rates continuing to slide. The underlying factor remains the imbalance between fresh demand hitting the market compared to the growing tonnage lists. With the low spot levels, it’s not surprising the lack of period fixing being concluded with owners not prepared to lock in any low rates for an extended time. In somewhat of a surprise, the Atlantic did witness a slight improvement in TransAtlantic levels off the back of more minerals demand appearing in the market. However, despite this uptick, we did not see any push on fronthaul trips which instead remained flat throughout the week.

The Supramax and Handysize markets have been following a similar path recently which is not expected to change in the short term. There has been no change in the fundamentals, and rates continue to gently ease. Looking forward, it is hard to see any genuine change in market conditions for the foreseeable future as many charterers and owners are taking the opportunity for a well-earned rest before getting ready to tackle 2025.

Australian Weather:

Limited rainfall is expected over the next week to ten days in Australia. Harvest pace has been maintained as many programs come to an end and the industry closes down for the Christmas break. Daytime temperatures in central and north Australia will remain extreme with temperatures reaching 41 to 45 degree in WA, Northern Territory and central Queensland.

8 day forecast to 30th December 2024
http://www.bom.gov.au/

Weekly rainfall to 23 December 2024
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker again to finish last week when valued against the Greenback closing at 0.6250. The AUD continued its bearish outlook to close out 2024 with USD strength and uncertainty with the viability of the China economy. Expectations for the nearby are that the AUD will continue to be under pressure with resistance levels broken, impending Trump inauguration and the ramifications of tariffs and geopolitical pressures.

And that’s about it for 2024. We are going to take a break next week.

We wish those of you who are celebrating a very happy Christmas and New Year. May 2025 bring peace, health and prosperity to you all.

Australian Crop Update – Week 50, 2024

Wed, 18 Dec 2024 05:55:53 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

The harvest continues to roll on and seems to be confirming a larger crop. Most of this was due to higher-than-expected yields in Western Australia (WA) across barley, canola, and wheat although that will come at a cost in terms of wheat protein.

“There is no single factor influencing the incredible quantity of grain being harvested right across the state on very little rainfall,” GIWA said, adding that pre-harvest yield estimates for wheat, barley and canola have ended up being well below the actual results. “The total tonnage for the state will easily end up being the third-largest harvest on record.”

Export demand is generally sluggish with exporters cautious about how much Australian wheat and barley China will import. Other destinations are happy to maintain the hand-to-mouth buying purchasing strategies. Australian canola is the exception with strong demand from Europe.

In terms of quality, more reports are emerging of wheat crops that are still making milling grades following the rain and this seems to confirm our view that less than million metric tonnes (MMT) of wheat in New South Wales (NSW) and Victoria (VIC) will has been downgraded. Grower selling has picked up a little ahead of a large sorghum crop in the north and a little more in the south.

Our analysts updated their Australian supply and demand estimates last Friday. Harvest is advanced in all states and receival data has allowed some fine tuning of the production estimates. Overall, wheat production has been similar to the November forecast, but WA’s canola and barley has come in better than expected. The crop is larger, but wheat and barley exports are off to a slow start. Australian supplies are still relatively expensive vs Black Sea and Argentina although the gap is closing. Chinese demand is much softer than last year, and other buyers are happy to stick with the hand to mouth buying strategies and are arguing for cheaper prices. On the demand front, there are reports that Beijing has instructed importers to limit grain imports into China due to a large domestic crop. Some traders are saying that buyers have been instructed to limit Australian wheat, barley, and sorghum imports to 12.0MMT. Elsewhere, wheat demand feels sluggish.

Australian Pulses Market Update:

Australian growers remain willing sellers of chickpeas, faba beans, and lentils as pulses continue to populate the nearby shipping stems. Solid demand from South Asia for lentils is seeing plenty of business written for on-farm and accumulated parcels, but the arrival of Canadian and Russian yellow peas, as well as new-crop Australian cargoes, has dampened India’s demand for desi chickpeas.

A record, or near-record, volume of early-season faba beans has seen several cargoes shipped to Egypt from the northern ports of Newcastle and Brisbane in recent weeks, but prices are holding at levels high enough to keep growers selling. The quality of most pulses harvested has been high, but successive rain events caught some of the NSW chickpea crop in the field, and the same for faba beans in South Australia (SA) and VIC.

Export Stem & Ocean Freight Market Update:

It’s been a busier week for shipping stem additions with more than 1.2MMT of grain additions since last week’s update. This included 424 thousand metric tonne (KMT) of wheat, 355KMT of barley, 360KMT of canola as well as more pulses.

From an ocean freight perspective, the pre-holiday slump is continuing with fresh activity being limited and a general lack of urgency from charterers. Vessel hire rates are still facing gentle downward pressure, but the general consensus is the floor has been found, and we will trend sideways for the near term.

It was a similar story on the Panamax sector whereby both basins are struggling to generate fresh inquiry to combat the growing tonnage supply. Australia and Nopac have been quiet in the Pacific and while in the Altanitc there did appear to be a slight increase of trans-altanic trips in the North, it couldn't combat the general negative sentiment as we saw rates slide again.

The Supramaxes appeared to be more active ex ECSA and USG in the Altantic for trips within the basin and the indexes reflected a more optimistic feel. However, very limited fixing information leaked out into the market which could indicate it has been driving more from sentiment rather than anything of substance. By contrast, the Pacific was very subdued.

The Handysize followed the same path. Many market players are going on their leave at the end of this week so have decided to cover early so they only need to monitor over the next few weeks.

Australian Weather:

There is limited rain expected over the next week to ten days across the cropping regions of Australia as farmers look to finish harvest ahead of the Christmas holidays. There is no rain on the forecast for WA and SA with only coastal showers expected for VIC and NSW. Queensland (QLD) is forecast to see rainfall in land, however harvest is complete, so the rainfall will be welcomed with the imminent sowing for summer crops. Daytime temperatures are expected to soar in rural areas with heat waves crossing rural VIC, NSW and into the Northern Territory. Temperatures will peak between 41-45 degrees in these areas.

8 day forecast to 25th December 2024
http://www.bom.gov.au/

Weekly rainfall to 18 December 2024
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to finish last week when valued against the Greenback closing at 0.6346 with the Chinese yuan remaining a key driver for AUD/USD weakness. AUD/USD runs the real risk of moving below 63c.

Australian Crop Update – Week 49, 2024

Tue, 10 Dec 2024 05:57:44 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Domestic markets softened over the past week with declines in global markets and as traders wait to see the impact of widespread rain on unharvested crops across eastern Australia. Globally, US wheat futures were 2% to 6% lower with KC futures the biggest loser. Corn was back 0.6% for the week while Canadian canola futures tumbled 3.5%. Matif rapeseed was only modestly lower for the week.

Locally, New South Wales (NSW) and Victoria (VIC) canola bids tumbled by around USD20 per metric tonne (/MT) or 3.5% while Western Australia (WA) Kwinana was only back USD3/MT or 0.6% for the week. Wheat and barley bids were up USD2-5/MT across most port zones as buyers scrambled for nearby supplies, particularly wheat. ASW was up USD6/MT as buyers are to better understand how much wheat was downgraded following the rain. There will be some, but we doubt it will be general across all areas. Weekly rainfall totals were lighter south with 17-25mm and heavier to the north with 50-80mm.

Australian Pulses Market Update:

Australia exported 109,622 metric tonnes (MT) of chickpeas and 29,887MT of lentils in October, according to the latest data from the Australian Bureau of Statistics. India on 82,418MT was the major destination for October-shipped chickpeas, followed by Pakistan on 14,384MT, and Bangladesh on 3948MT.

On lentils shipped in October, India was also the leading destination, taking 10,952MT, followed by Sri Lanka on 7,615MT and Bangladesh on 4,943MT.

In terms of overall production ABARES cranked up chickpea production to over 1.88MMT. They bumped fava beans to nearly 700KMT on the back of a large NSW crop and slashed lentils production back to 1.1MMT due to a poor harvest in SA.

Export Stem & Ocean Freight Market Update:

The Ocean Freight market has settled into this year’s Christmas Season relatively early. Rates have been drifting over past few weeks but for the most part have now stabilised. We are not anticipating any major movements (up or down) until 2025.

Panamaxes have been sluggish in both basins and while we did witness a brief mid-week push in the Atlantic it failed to materialise into anything of substance. The Pacific has struggled with little fresh cargo appearing in the market, but it does feel like a floor has finally been established with rates trending sideways for the most part.

The Supramax and Handysize sectors followed the same trend.

It’s been a relatively lean week for shipping stem additions. This included just 200KMT of wheat, 260KMT of barley, no canola and some chickpeas. Some wheat slots were switched to chickpeas. We will be watching for further possible changes in the weeks ahead.

Australian Weather:

Over the next week there is little rain expected in the unharvested regions of the country, so farmers will focus on stripping the balance of the grain ahead of the Christmas period. Once the grain has been harvested, we will be in a better position to assess the overall damage of this rain event.

8 day forecast to 16th December 2024
http://www.bom.gov.au/

Weekly rainfall to 9 December 2024
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to close the week when valued against the Greenback trading at 0.6372. The AUD/USD pair experienced significant weakness on Friday, sinking near its August lows after the release of the US Nonfarm Payrolls (NFP) report for November. On the data front last week, Australia's economy grew by 0.3 per cent in the September quarter, and 0.8 per cent over the year, according to the Australian Bureau of Statistics (ABS). Looking ahead this week and on Tuesday, the Reserve Bank of Australia (RBA) will have a monetary policy meeting. The central bank will announce its decision, and it is widely anticipated that interest rates will be kept on hold. The Official Cash Rate (OCR) has been steady at 4.35% since November 2023, when the RBA delivered its latest interest rate hike.

Australian Crop Update – Week 48, 2024

Wed, 04 Dec 2024 05:55:05 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

2024/2025 Harvest Update:

It is thought that greater than 80% of the NSW wheat crop has been harvested and around 40% of the VIC wheat crop. This means NSW has harvested >9.6 million metric tonne (MMT) of its forecast 12.0MMT wheat crop while VIC is around 1.5MMT harvested of its 3.6MMT crop. Therefore, NSW has about 2.0 to 2.5MMT of wheat exposed with downgrading and VIC still has about 2MMT yet to harvest. South Australia’s (SA) grain harvest is estimated to be 50% complete although it is thought that the crop could come in smaller than expected. WAs CBH total harvest deliveries is at 8.9MMT which is above 50% complete. It is estimated the WA wheat harvest is about 1/3 done, barley is around 2/3’s and canola are more than 90% complete. The WA wheat harvest has been mostly ASW.

Export Stem & Ocean Freight Market Update:

Meaningful additions to the shipping stem were seen last week with more than 1.1MMT of wheat, barley, canola and pulse nominations seen. This included 440 thousand metric tonne (KMT) of wheat (mostly WA), 300KMT plus of barley and 300KMT of canola. The canola stem is gathering pace with the stem additions climbing to 8 pts w/w to 36% of the export forecast. NSW is the most advanced of the canola exports at 52% of the forecast 600KMT. The 304KMT of barley additions was all WA. This saw the cumulative Oct/Sep stem additions increase to 28% (24% LW) of the forecast 5.5MMT. WA is 1.3MMT which is 38% of the forecast 3.4MMT. National wheat steam additions of 443KMT in the past week lifted the cumulative wheat stem additions to 3.4MMT which is 19% (+3% w/w) of the forecast 22.0MMT.

The ocean freight market began this week with positive sentiment off the back of the momentum at the end of last week. Many thought the pre-Christmas rush was going to eventuate, however by Tuesday it was clear this was incorrect. Momentum and optimism stalled and instead of the anticipated push, rates for Handies and Supra were stabilising. Demand was steady which helped activity levels remain healthy throughout the week, but the tonnage supply kept pace which put a ceiling on rates.

Handies on the Australian coast are fixing in the high teens for outbound trips for 37/38kdwt types and 2-3kpd less for smaller units. In Southeast Asia, pac rounds for large handies were concluding around 12500-13500 depending on cargo and redelivery while 28kdwt's have settled at around 10,000 for same. For non-Aussie traders there is a 1-2kpd discount for rounds. Fareast was under pressure again with a lack of fresh cargoes. Nopac rounds for 38kdwt types are fixing 11500/11750 sub spec/dely (abt $500-750 less than last week) while even steel runs to PG/WCI have reduced close to 12000 now.

Supras in the Fareast have settled to around 10000-11000 for nopac/pac rounds while in Southeast Asia they could achieve 11000-12000 for Indo or Aussie rounds. The MEG/India region continues to be under pressure with the amount of ships entering the region to discharge. In the Atlantic, we found the market to be active from USG and ESCA prior to the Thanksgiving holiday but ended on a quiet note as expected.

The Cont/Med markets struggled on all sizes as a distinct lack of fresh cargo appearing in the market to help stop the downward pressure on rates. Looking forward for the rest of 2024, the general sense is that the market will settle in both basins and likely trend sideways in Christmas.

Australian Weather:

Widespread rain stalled grain harvest across NSW and VIC last week. NSW harvest is advanced with only about 20% of the crop or around 2MMT still to be cut with is mostly in the eastern cropping areas in the northern, central and southern slopes. These areas received 50-100mm last week which is expected to see a lot of the crop downgraded from milling quality. VIC also received general rain last week, but the wheat crop is still less than 50% harvested (about 2MMT unharvested). More stormy and unsettled weather is forecast for NSW and VIC this week. Most of the NSW cropping areas will see 10-20mm on Tuesday. VIC sees showers later in the week and showers are forecast to return to NSW on the weekend.

8 day forecast to 11th December 2024
http://www.bom.gov.au/

Weekly rainfall to 1 December 2024
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar finished stronger last week when valued against the USD at 0.6504. The AUD/USD pair extended gains for the third straight day on Friday, although it has trimmed a portion of its intraday gains and holds above the 0.6500 psychological threshold. The pair recently reached a multi-day high before retracing some of its intraday gains. The positive momentum in the pair is influenced mainly by broad-based US dollar weakness.

Australian Crop Update – Week 47, 2024

Tue, 26 Nov 2024 05:52:42 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Domestic markets finished the week mixed, with buyers focused on the harvest and available supplies to meet nearby requirements. Western Australia (WA) APW wheat bounced higher USD10-15 per metric tonne (/MT) through the week on exporter short covering as the harvest slowed with rain and the lower protein profile of harvest receivals to date. East Coast feed wheat values continue to strengthen on limited supplies of ASW in the north and Victorian (VIC) wheat and barley also edged higher ahead of forecast rain in the week ahead. Global inputs for wheat were mildly supportive. US wheat futures were 1.5-2.5% higher but this was partially offset by a 0.7% increase in the value of the AUD. Canadian canola and EU rapeseed were sharply lower last week as investors slashed long positions in canola and vege-oil markets which look overheated compared to other ag commodities. The sharp declines in canola and rapeseed resulted in sharp declines in the local Australian markets.

Overall, the crop is coming in as expected which has buyers comfortable on the total crop size of around 31 million metric tonne (MMT) for wheat, but slow farmer selling, and the weather delayed harvest is keeping values supported. This was evident in WA, when APW bids jumped USD10-15/MT last week. It appears that exporters have sold some reasonable volumes of wheat and barley for shipment over Dec/Jan/Feb with most of the wheat and barley expected to go to China. However, other destinations have also been buying. Overall sales volumes into China are sharply lower than this time last year but still sizable. Global markets remain very competitive with Argentinean wheat now the cheapest milling wheat in the world at around $220 FOB. Stiff competition means that exporter prices must be sharp to make sales into Asia and other markets.

Australian Pulses Update:

Chickpea markets were weaker for most of the week with nearby vessel accumulations in Brisbane and Newcastle being well covered. The rainfall during the week slowed harvest across New South Wales (NSW) with northern NSW having approximately 15% remaining to be harvested and Central West NSW 50%. There was a pickup in market activity on Friday as further bulk demand started flowing through to the interior. The strong demand has meant that there is now a vessel being accumulated for out of Melbourne due to the tightness of shipping capacity in NSW and Queensland (QLD) prior to Christmas and the larger than usual production in northern Port Kembla zone that can be trucked/railed to Melbourne. This provided a strong bid in Central NSW which growers are selling while the opportunity presents. It feels further business may have been done out of Newcastle and Brisbane as bids reappeared late in the week. The faba bean market continues to rally strongly with Southern NSW harvest underway. Quality is mixed with reports of bug damage, but yields are good. Bids for bulk accumulations were $30AUD higher on the week with one accumulator finishing their coverage while another steps up to the plate. Lentil harvest is underway in VIC and South Australia (SA) with yields coming in better than expected albeit from low expectations to being with.

2024/2025 Harvest Update:

Grain harvest is progressing, although wet weather slowed progress in some areas. NSW grain harvest is about 60% complete. Grain harvest in northern NSW slowed last week but is now moving ahead quickly in the state’s Central West and southern NSW. Unsettled weather and high winds also slowed progress in some areas. Harvest is wrapping up in QLD. Harvest activity picked up in VIC and SA however progress was slowed by unsettled weather. Grain harvest activity ramped up last week in WA ahead of forecast rain this week with growers making the most of ideal harvesting conditions ahead of the forecast rain. It is estimated that WA overall grain harvest is approximately 40% complete. However, canola is about 80%, barley 60% and wheat around 25% through. Barley quality is improving as the southern harvest picks up with more malting barley deliveries.

Export Stem & Ocean Freight Market Update:

It has been another steady week for shipping stem additions for the new season. There were steady additions for wheat, barley canola and pulses, but it’s clear that exporters are having to work hard for sales to keep the grain pipelines moving. There has been 419 thousand metric tonne (KMT) of wheat put onto the stem in the past week, 164KMT of barley, 75KMT of canola as well as more chickpeas.

Another subdued start to the week as we saw rates continue to drift in the Pacific. However, by Friday the sentiment began to shift with signs the market has stabilised and possibly ready to push. Aussie looks busy on handies for first half December laycans which is having a positive flow-on effect into Southeast Asia where owners are starting to ask better than last done levels. Large/nice spec handies are back aiming in the $14k's and charterers are willing in the $13k's for Aussie/Pac rounds. Far East is still lagging for handies however large units can still achieve $13/14kpd if willing India/PG direction, otherwise will have to settle in the $12k's for short jogs or southbound trips. Supra/Ultra has followed a similar trend. The S2 route index (Pacific round) was green for the first time in a few weeks and has coincided with a change in owners sentiment. We are yet to see any meaningful change in TC rates as Ultra in Southeast Asia are still fixing $13/14k for rounds while in far east, rates have settled around $11/12k for same but we are expecting an upwards shift over the next week or so. By contrast, rates in the Atlantic felt the pressure all week on all sectors. ECSA and Cont/Med has been quiet with a lack of fresh cargo appearing. USG was the outlier in terms of being active with a few fresh orders appearing, however due to growing tonnage supply, the rates weren’t able to hold ground and eased. There is pessimistic outlook in the Atlantic currently, so we are not expecting any uptick in rates for the next week or so.

Australian Weather:

Wet weather in Australia slowed harvest across all zones last week. Warmer temperatures assisted to burn off moisture to ensure delays were not too concerning or downgrading of the crops. Over the next week, the eastern states of Australia are expected to see between 25-50mm of total rainfall from Thursday onwards so growers will be focussing on a huge week of harvest to ensure they get the crops off ahead of another series of delays. Both SA and WA should have a relatively delay free week with minimal rainfall forecast for the next 7-10 days.

8 day forecast to 3rd December 20024
http://www.bom.gov.au/

Weekly rainfall to 25 November 2024
http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar finished the week firmer when valued against the USD at 0.6520. The AUD/USD pair recovered more than half of its intraday losses throughout Friday after the RBA held interest rates to close out the year finalising the current cash rate of 4.35%. The peak rate of 4.35% is lower than in many other economies in part because the RBA determined that borrowers would be feeling the rate pain more quickly than elsewhere given the prominence of variable-rate mortgages.

Australian Crop Update – Week 46, 2024

Wed, 20 Nov 2024 05:50:13 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Harvest progress across New South Wales (NSW) and Western Australia (WA) slowed last week due to unsettled weather. Harvest in Victoria (VIC) is now underway but was also slowed by showers last week. Harvest is still in its early stages in South Australia (SA) but the dry growing season has helped grain quality if not pricing. Early wheat deliveries have been more than 60% hard wheat and there has been a good volume of malting barley. Overall, the WA harvest is seen as nearly a quarter complete although canola and barley are more advanced.

Our latest balance sheets see national wheat production to 31.3 million metric tonne (MMT) from 30.0MMT a month ago. National barley production is up to 11.2MMT and canola at 5.5MMT. Most of the production increase has been in NSW where farmers have been reporting better than expected yields across the northern half of the state and this is extending into the central west. Australia’s 2024/25 wheat exports have been raised to 22.0MMT. From a logistics perspective, it will be a slow start to the season as Queensland (QLD) and northern NSW are focussed on early pulse exports despite the large wheat crop. VIC and SA exports will be slow because of the supply restrictions.

On the domestic front the local markets were mixed last week with most zones drifting lower with the sharp declines in US wheat futures and a weaker AUD. However, in some zones exporters willingness to pay up for nearby supplies helped to support farmer bids for particular grades/port zones. Farmer wheat selling still appears to slow in NSW, and most areas for that case, but most appear to be selling canola as its harvested. WA wheat values edged higher as trades tussle for nearby supplies to load ships.

Australian Pulses Update:

Pulse markets were mixed into the close last week. Exporters are now nominating wheat vessels out of northern NSW due to the softer than expected chickpea demand from India. Faba beans continue to firm in both the north and the south as multiple exporters chase supplies for boats. There were signs the market was topping out late in the week with early harvest in the south coming in better than expected.

Export Stem & Ocean Freight Market Update:

Australian exporters have reportedly made reasonable wheat sales and that is reflected in the stem. China is seen to have bought 500-600 thousand metric tonne (KMT) of Aussie wheat in recent weeks, as well as some barley. Other Asian wheat buyers have also been active with reports of sales to Indonesia, Philippines and South Korea. As a consequence, shipping stem nominations are gradually picking up. There was 693KMT of wheat added to the stem in the past week alone.

Australia exported 998KMT of wheat in September putting the 2023/24 national wheat exports at 19.8MMT. Indonesia was the largest destination with 161.5KMT followed by Philippines with 157.3KMT. Barley exports for Sep were 349KMT. This put the national 2023/24 Oct/Sep barley exports at 7.9 MMT. Sorghum exports were 340KMT. September canola exports were 406KMT. This puts the national Oct/Sep canola exports at 6.15MMT.

It was another challenging week for owners in the Supramax and Handysize sectors in both the Atlantic and Pacific. Generally speaking, we are experiencing a lack of fresh cargo appearing in the market to counteract growing tonnage lists. Charterers are holding the whip hand and bidding well below last done levels with owners having no other choice but to engage to find coverage. Since mid-October, the Supramax index in the Pacific has dropped roughly 30% while the Handysize has experienced an 11% contraction for a Pacific round. By contrast, the Panamax sector is starting to show signs of recovery. The Atlantic is seeing more cargo demand appear in traditional loading areas. It is slower in the Pacific however there has been a recent push on grain clean loaders ex NoPac which is helping to lift the overall sentiment.

Australian Weather:

Wet weather is likely to slow harvest activity next week in NSW. The rain is forecast to start on Monday in southern NSW and spread into the centre and north west through the week. Wheat harvesting in NSW is advancing quickly in the western areas but is only just getting started elsewhere in the Riverina. Overall, wheat yields are coming in as expected or slightly better in southern NSW so far.

Weekly Rainfall to 19th November 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker again to close last week when valued against the USD at 0.6453. The Australian dollar may face continued challenges due to recent weak domestic and Chinese economic data.

Australian Crop Update – Week 44, 2024

Tue, 05 Nov 2024 05:46:24 GMT

2024-25 New Season - USD FOB Indications

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

Australian Grains Market Update

Australia’s winter crop harvest started to advance quickly last week. Barley and canola harvest is well underway in all states, but the wheat harvest is yet to start in earnest in Victoria (VIC) or South Australia (SA). Queensland (QLD) harvest is more than 50% complete while the New South Wales (NSW) harvest is around 10% complete and in Western Australia (WA) the harvest started slower than previous years due to the late rain.

Despite some bullish cuts to the crop, notably by the USDA and Rabobank last week, we and our analysts AgScientia have been impressed by the wheat yields seen so far. Wheat yields of 4-5 t/ha have been common thus far for wheat and across much of the growing regions with barley yields even higher. Chickpea crops have also performed well with many crops in the 2-3 t/ha range. As a result, our collective inclination is to call the crop above 31 million metric tonne (MMT). That is before we have adjusted WA numbers, which will have benefited from the late rain, so we could move towards 32MMT again in the coming weeks. We are also hearing that VIC is marginally better than expected and certainly a crop tour we carried out a few weeks ago suggested wheat was being relatively resilient, and that canola was most effected by frosts.

From a quality perspective it is too early to call any definitive grade spreads, but higher yields suggest a lower protein crop and there is certainly a fair amount of ASW hitting the bin, although AH2 is the dominant crop in NSW at the moment. There is some higher protein wheat, but one trader described receivals as “skinny” at the moment. From a barley perspective, reports are coming in of higher screenings and this might push the feed/malt equation in favour of feed this year. Time will tell.

In general, on the cash side we are seeing nothing bullish, and we are starting to see some pressure come into this market as global prices, particularly Russian, turn lower and new domestic supplies come in. However as always with the Australian market it pays to pay attention to logistics. We are seeing, and the market is reporting, that the early stem is filling up with pulse demand from the Indian Subcontinent and Egypt, and canola from Europe. There are also reports China did a sizeable clip of ASW for Feb/March 2024 so logistics for the harvest slots are starting to fill up. Remember, it is not just about wheat in Oz – it is about elevation margins, and so far, wheat is a distant third in that race with pulses and canola in first and second place, on the east coast at least.

Regarding pulses, it would seem ABARE have underestimated the NSW fava bean crop with three boats confirmed on the stem and two more talked about. Beans have filled gaps caused by subdued chickpea demand as the Indian Subcontinent looks for better value offers.

Export Stem & Ocean Freight Market Update:

The Pacific market again lacked inspiration this week. The Smax and Handy sectors faced another challenging week which was further disrupted by the mid-week holidays in Singapore. Few new orders meant owners were competing for business and therefore putting pressure on spot rates.

Handy vessels continue to ballast from India which has put further strain on the Pacific & Aussie market as owners resort to Aussie business to get their ships back to Asia. It was a similar story in the Atlantic whereby market fundamentals eased which in turn saw rates soften in the Cont/Med/USG.

Shipping stem additions are gradually increasing for the new season. In the past week there was 262 thousand metric tonne (KMT) of wheat was added to the stem, 127KMT of barley, 110KMT of canola, 100KMT of chickpeas and 30KMT of faba beans.

The wheat consisted of 176KMT in WA, as well as 56KMT at Pt Kembla and 30KMT at Melbourne. Most of the WA wheat was Geraldton for a late Nov loading.

The barley was also WA dominated with VIC adding 15KMT.

The canola was split between Pt Kembla and Geelong.

There was 100KMT of chickpea vessels nominated last week split between central QLD, Brisbane and Newcastle.

Another 30KMT of faba beans was added to the Newcastle NAT stem.

The monthly breakdown of the stem by ETD shows there is 558KMT of wheat scheduled to be shipped in November (1.1MMT last year), 614KMT of barley (873KMT last year) and 706KMT of canola (543KMT last year). There is also 150KMT of chickpeas scheduled to sail in November.

Australian Weather:

The warm, dry weather should see WA ramp up their harvest reasonably quickly from about 1MMT a week to 2-3MMT a week towards the end of Nov. Similarly, warm weather will allow the NSW harvest to advance quickly as well. We expect it will be a relatively quick harvest, weather permitting, because of the smaller crops in VIC and SA. They are usually representing some of the latest crops harvested in Australia, but these areas will come in more quickly this year.

8 day forecast to 12th November 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 5th November 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to close last week when valued against the USD at 0.6574 as traders responded to polling suggesting the “Trump Trade” was a possibility along with stronger USD and continued scepticism surrounding China's economic stimulus initiatives. Weak manufacturing data from China has weighed on the Australian dollar, which is heavily influenced by China's economic health.

Obviously, the US election is the elephant in the room and recent polling suggests swing voters maybe breaking for Harris but all other things aside 0.6500 is the next level of support for bulls to defend and bears’ target.

Australian Crop Update – Week 43, 2024

Tue, 29 Oct 2024 05:41:46 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Australian harvest progress pressured Australian cash markets last week. It was a dry week which is allowing more farmers to start harvest. In addition, USD values for Australian grain were helped by a softer AUD.

Wheat and chickpea values were softer with harvest pressure in Queensland (QLD) and northern New South Wales (NSW) which is showing better than expected yields. There are plenty of reports of wheat yields in the north above 4t/ha and even larger barley yields. Early reports from southern QLD and northern NSW have also showed good amounts of APH13 and AH12 which is pressurising protein premiums. However, it is still early days in terms of the wheat harvest with QLD progressing well, NSW 10 percent done, and Victoria (VIC), South Australia (SA) and Western Australia (WA) just getting started. It is certainly too early to make a call on likely grade splits but the yields being seen in the north make us more confident that the wheat crop will come in well over 30 million metric tonne (MMT) despite smaller crops in the south.

Pulses Update

Australia’s prices for chickpeas delivered to QLD sites have fallen by up to USD150 per metric tonne (/MT) in response to harvest pressure, and India’s continued absence from the market. This is despite it removing its tariff on chickpeas, which was expected to prompt a fast and furious shipping program bookended by the start of the QLD harvest and the closure of the tariff-free period on 31 March 2025. Trade sources say Pakistan has emerged as the destination for the first two new-crop cargoes shipped this month from QLD, and that prices have now fallen to a level expected to attract buying interest from India and Bangladesh, as well as Pakistan. Trade sources say the price drop has occurred in response to volume selling from growers at higher rates. With around one third of the Australian crop forecast at 1.5-1.7MMT now harvested, the trade is now confident that volume to supply prompt shipment cargoes is available.

Elsewhere, the northern fava bean crop is being bid up by some export shorts and the southern crop is getting some early support by some who are concerned about a smaller crop however rain last week was helpful to the VIC crop at least.

Export Stem & Ocean Freight Market Update:

It was a tough week for owners in the Pacific and Indian Ocean last week. Tonnage lists began to grow from Monday and with little fresh cargo hitting the market, it didn't take long for the sentiment to turn negative and rates to start contracting especially for Handysize where many owners had to start entertaining lower than last done levels to get covered. Southeast Asia and F East were noticeably quiet as rates dropped $1-$2kpd across the board for Handies and Supra/Ultra. The Panamax sector followed a similar trend in both basins – subdued seemed to some up the market nicely.

More new crop wheat, barley and canola was added to the shipping stem in the past week, but it was all in WA. This comprised of 240 thousand metric tonne (KMT) of barley, 170KMT of wheat and 55KMT of canola. The increased wheat volume suggests exporters are connecting with Asian buyers at current values particularly in the lower protein grades. However, the softness in the cash markets indicates volumes are modest which makes this commentator think talk of Chinese import interest is mainly focused around barley. There was also 30KMT of chickpeas added in central QLD.

Australian Weather:

Harvest was in full swing last week as the country remained dry with no rainfall of significance reported. This week looks somewhat similar.

8 day forecast to 5th November 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 28th October 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

All major currencies were weaker against the US dollar in European and US trade. The AUD in particular fell for a fourth week in a row and closed beneath its 200-day SMA on Friday. Election speculation around Trump rising in the polls and higher US yields appear to be behind the ‘risk-off’ moves for AUD/USD. In Australia we have the CPI read this week although commentators doubt it will make a material impact on the RBA who are still mulling over whether a cut or hike is more likely, if or when it happens at all.

Australian Crop Update – Week 41, 2024

Tue, 15 Oct 2024 05:38:44 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Rain has slowed harvest activity across southern Queensland (QLD) which has offered some mild support to the nearby prices. Exporters are comfortable to wait for harvest to get well underway and are not chasing prices higher at the moment.

APW bids are generally around the $270-275 FOB equivalent which puts values around $295 CFR Asia. Australian wheat is now competitive with Black Sea and South American wheat into Asian markets.

There will be updates to production estimates next week (mid October). Production numbers will be reduced, however it is expected that the national wheat crop will hold slightly above 30 million metric tonne (MMT). Weather forecasts continue to offer widespread rain for QLD, New South Wales (NSW) and Victoria (VIC) next week, and possibly South Australia (SA). Rain is expected to start building in north east NSW on Tuesday and this will broaden in the later part of the week as it connects with a southerly front that comes through SA and VIC. Rain will still benefit most crops in NSW, VIC and some in SA.

Pulses Update

Australian chickpea prices declined 2% last week while lentils increased around 3% due to the recent frosts and dry weather in VIC and SA. Rising freight costs and increases in prices are making it challenging for exporters to be competitive for new season pulses into the subcontinent.

Export Stem & Ocean Freight Market Update:

There was 290 thousand metric tonne (KMT) of barley added to shipping stem in week 41 which makes it the largest weekly addition in 12 months. This included 240KMT in Western Australia (WA) (4 x 60KMT) as well as 50KMT in Geelong. The 60KMT vessels look like they could be heading to China. There was also 121KMT of canola put onto the stem with 61KMT in WA and 60KMT in Geelong, VIC. There was 128KMT of wheat put on the stem.

In the ocean freight market, the anticipated bounce-back after Chinese Golden Week celebrations failed to materialise for the Supramax and Handysize markets, however we did witness some positivity in Asia on Panamaxes. There was a notable uptick in demand from Australia, Indonesia and Nopac on Panamaxes which helped the overall index end the week in the green. The Supramax sector was generally flat and balanced throughout the week. Australia and Indonesia were fairly quiet throughout the week, while little fresh demand appeared from Nopac.

Australian Weather:

There was approximately 50mm of rainfall received in parts of the cropping regions in QLD over the past seven days while most of the rest of Australia remained dry. Rainfall is only required now for the southern growing areas while it needs to remain dry for harvest in the north. The Australian Bureau of Meteorology is forecasting a 50% chance for exceeding median rainfall across November and December which will affect harvest momentum but will be supportive of a summer cropping program.

8 day forecast to 22nd October 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 15th October 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to finish last week when valued against the USD closing at 0.6725. The Australian dollar recovered some ground against the Greenback on Friday after a measure of prices paid by producers reaffirmed that inflation is coming down, warranting further easing by the Federal Reserve. Inflation expectations have decreased to a three-year low of 4% in October, providing a somewhat positive signal.

Australian Crop Update – Week 40, 2024

Tue, 08 Oct 2024 05:36:11 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Harvesters have just started rolling in the western regions of New South Wales (NSW) and Queensland (QLD) with early crop barley the first to come off. This is slightly earlier than expected but the past week of warm weather and limited rain has brought the crop in early. As expected, initial yields in these areas are good and quality so far has held up even with the dry finish. Chickpeas in southern QLD and northern NSW are two to three weeks away from harvest starting and the market is keeping a keen eye on the weather forecast as a cold change is due late this week with associated rain

Domestic markets were firmer last week across all states. ASX wheat was only modestly higher for the week. Track markets were firmer in all states. In general, domestic trade has been slow to engage with both grower and domestic trade, are keen to see what quality profile eventuates before extending coverage.

We will update our balance sheets in mid October, but we still expect the crop to be modestly higher than 30 million metric tonne (MMT). We expect the dry finish and frosts has probably taken about 1MMT off the NSW crop in the past month from our 11.9MMT forecast in mid September.

Light showers last week are helping the slow decline in veg index levels across southern QLD and NSW. Yield potential has declined in the recent weeks but remains high. Showers in the Murrumbidgee (5-10mm) steadied veg indexes and they were increased in central Victoria (VIC) (5-10mm LW). The big issue for NSW is how much crop has been lost to frost. We’re expecting there could have been ~0.5MMT of wheat production lost (15% Murrumbidgee, 5% Murray and 5% Central West). Anecdotally, canola and barley losses are worse than wheat. VIC veg index ratings were steady in the Mallee/Wimmera and slightly better through central VIC. Overall VIC measures are slightly better than average. Drive by reports from VIC support the average outlook. Observers have reported significant variability amongst the crops within regions just depending on where the showers have fallen. South Australia (SA) NDVI measures continued to tumble last week (29 Sep to 6 Oct). Murray Mallee and YP/Lower North are -8% below average while the northern area is -15%. 2018 looks to be the analogue season where the Mallee and northern will be doing well to average 1.0t/ha. Large areas won’t be harvested. On the Eyre Peninsula (EP), crop conditions declined on the upper EP, but the lower EP benefited from showers. Overall, the EP veg index ratings are slightly above average. A reasonable EP should help the total SA wheat output hold above 3.0MMT. Western Australia (WA) veg index measures were also close to unchanged last week except for Esperance which fell. The Great Southern was 2% higher following last week’s showers. Geraldton, Midlands and upper Great Southern are all 7% above average which is good for the first week in Oct. The mild finish has helped crops in WA. The dry finish has trimmed yield potential, but we are still expecting above average yields across most of the state.

Australia’s export competitiveness into Asia is improving based on Black Sea wheat values firming rather than the local basis tumbling and this continues to suggest the Australian grower is a reluctant seller. It is still difficult to connect with overseas buyers, but the gap is closing. Another factor that may support Australian export sales in the coming months is the freight risk for getting Black Sea wheat into Asia which is increasing with the conflict in the Middle East. An increasing number of owners are now refusing to send their vessels through the Suez and Red Sea route. Interestingly, the consumers attitude seems to be at least accepting that the seasonal low is now in place and price risks lay more to the upside.

ABS released the August grain exports last week. There was 1.212MMT of wheat exported in August down from 1.478MMT in July. VIC was the largest wheat export state in August with 375 thousand metric tonne (KMT) followed by WA with 330KMT. This lifts Australia’s Oct/Aug wheat exports to 18.8MMT with one month remaining in the 2023/24 marketing year. Wheat shipments to China have collapsed in recent months. There was 10.9KMT of wheat shipped to China in Aug following the 3.7KMT in July. Philippines was the largest destination with 257KMT followed by Indonesia with 231.5KMT. Yemen was the only other destination with more than 100KMT (105KMT).

Barley exports were 310.5KMT, modestly higher than the 303.7KMT in July. Malt barley exports exceeded feed barley shipments for the second consecutive month.

There was 294KMT of sorghum exported in August. China accounted for 265KMT of this with 25.3KMT also shipped to Japan. There was 131KMT shipped from Brisbane, 33KMT from Gladstone, Newcastle 112KMT and 16.5KMT from Sydney.

Canola exports for August were 375.5KMT, slightly down on the 386KMT in July. WA shipped 155KMT and VIC 150KMT. Japan was the largest destination with 120.1KMT, the UAE with 90.7KMT, then Pakistan with 95KMT followed by Bangladesh with 55.5KMT. No canola was shipped to Europe.

Pulses Update

While plans are being made to export a mammoth chickpea crop out of NSW and QLD – consumers need to be aware that this may keep wheat off the stem until January.

The fava bean crop is a tale of north v south. In the north farmers started to take in the crop and reports on the quality received are encouraging. However, in the southern states farmers are battling the elements and although it has remained cool, some of the crop has already been turned over to livestock – particularly in Mid North SA. Elsewhere the plants are still looking for another drink as rain forecast after rain forecast fails to deliver the necessary moisture.

Lentils are facing a similar story.

Ocean Freight Update:

It was a subdued week for the shipping market with the Chinese Golden Week celebrations. Panamaxes lost ground in both basins at the start of the week before rallying on Thursday and Friday to end the week on a positive note.

It was a challenging week for the Supra/Ultra owners as we saw rates gradually decrease from Monday to Friday. The Pacific was noticeably quiet because of the regional holidays and owners had to entertain lower than last done levels to get covered.

The Handy market performed the best as we saw rates hold and even improve in some areas. Period levels remain firm with owners not willing to part way with tonnage for any less than 15-16k for large Handies and 16-17k for Supra/Ultras.

Export Stem Update:

There was 164KMT of wheat, 120KMT of canola, 54KMT of barley and 30KMT each of sorghum and chickpeas added to the stem in the past week. Just to be clear on methodology, we try to wait until there is an ETD of the vessel for a slot before we add a vessel to the stem.

Australian Weather:

Weather models have added rain for this week for central and eastern Australia, but models vary on where it will fall. Storms will develop north of Brisbane in the next 24 hours, and this will also influence the northern NSW coastal areas. A developing trough from northern Australia is expected to pull moisture across central Australia early next week. Models are mixed on where this will fall and should get some clarity through the week. The ACCESS and ECMWF have most of the rain along the northern coastal areas with the GFS calling for inland rain (which is influencing the multi model). Interestingly we are seeing relatively cool temperatures through most growing regions and this leads us to believe yields are being pulled back too quickly by some, and that, in fact, this crop is in general being allowed to mature gracefully rather than being given a short hard finish. Time will tell on that one.

8 day forecast to 15th October 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 8th October 2024
Source: http://www.bom.gov.au/

Australian Crop Update – Week 39, 2024

Wed, 02 Oct 2024 05:33:17 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Domestic grain markets were mostly steady over the past week. Early barley harvest has started in southern Queensland (QLD) which has pressured local markets for harvest deliveries as old and new crop prices merge. Australian wheat basis vs CBOT has come under pressure with the rally in CBOT. This isn’t making it any easier to sell Australian wheat, but it does ask the question of consumers who are sticking with hand to mouth purchases while missiles are flying in the Middle East and dry weather is threating the new crop Black Sea production outlooks through reduced planting.

Wheat harvest is still another one to two weeks away from starting. Early yields in southern QLD have been variable ranging from above average to well above average. It’s going to be a large crop in QLD and New South Wales (NSW) with a large export surplus. Exporters are showing no willingness to chase farmer purchases with Asian markets still reluctant buyers. In addition, farmer selling is very limited across the board and values won’t get tested until we get closer to harvest which is still a few weeks away in the main areas. Sentiment seems to suggest that the crop that does come out of South Australia (SA) will be higher protein. Western Australia (WA) is shaping up to be low protein crop, and there is still a lingering concern that the La Nina could lead to downgrades in NSW if the rains come at the wrong times.

There were a couple of other interesting developments during the week. Cargill agreed to sell GrainFlow sites at Maitland, Crystal Brook, Mallala, Pinnaroo and Dimboola in Victoria to Viterra. Cargill also sold its mobile ship loader at Port Adelaide to Viterra. Viterra said they would incorporate the facilities into its existing SA network. The Dimboola site will give Viterra significantly more exposure into Victoria. In addition, the government extended the Wheat Port Code for another two years. The government said the extension to the code would give the industry more time to come up with an alternative framework to replace the code.

Pulses Update

Lentils have jumped USD50 per metric tonne (/MT) in the past three weeks on expectations of significant frost damage particularly to the stressed SA crop. ABARES put the combined Victorian (VIC) and SA lentil output at 1.65 million metric tonne (MMT) in the September Crop Report, but it’s now expected to fall well short of this with losses of over 500,000MT being talked about.

We just spent some time travelling from Adelaide to Melbourne and can report that crops on the SA side of the border are struggling but central and southern western VIC seem to be in better shape from a pulse perspective.

Export Stem and Ocean Freight Update:

There was 121 thousand metric tonne (KMT) of wheat, 30KMT of barley and 13KMT of canola added to the shipping stem in the past week. Additions are for a late October to early November loading.

As expected, the shipping market was active at the start of the week with participants eager to be covered early before tapering off as the Chinese Golden Week neared.

In the Panamaxes we did start to see rates ease after a couple of weeks in the green in both basins as negative sentiment creeped in with the impending holidays. There was a lack of urgency from charterers to engage which caused owners to start revising their offer levels down in the hope of getting booked.

The Supramax sector in the Atlantic found support in the USG however the other regions struggled with little fresh cargo appearing to maintain the levels. The Pacific found support early in the week, especially in Southeast Asia, with a notable increase of Indonesian coal which caused rates to improve by 2-3kpd for rounds. But again, by weeks end, this activity slowed and we found rates retract to their initial levels.

The Handysize experienced moderate gains over the week with increased levels of fresh cargo appearing in both basins. With China being off this coming week we are expecting fixing activity to slow down for the remainder of the week.

Australian Weather:

NSW received some rain last week recording 10-30mm. Southern QLD also received some light showers with most seeing 5-15mm. VIC cropping areas largely missed out apart from some light showers of 2-4mm. SA was much the same where most areas saw 2-5mm. The WA Great Southern and Esperance zones have received ~10-12mm of rain over the past week. Not as much as farmers wanted to see, but still beneficial for crops. Nonetheless, any rain is beneficial, and it will help fill crops which have been starved of moisture during September.

Veg index data showed a general improvement in NSW (week of 21-28 Sep). The northern half of the state is 13-15% better than average at the start of October and it saw rain last week. the southern half of the state isn’t as good, but the Murrumbidgee region received rain last week. This should lock in a big NSW crop. VIC veg index measures were steady last week but it’s not as bad as SA’s Murray Mallee, Yorke Peninsula (YP), Mid North (MN) and northern areas where some crops won’t get harvested and sheep are already in the paddocks. VIC will still benefit from October rain. SA conditions, apart from the Eyre Peninsula (EP), were sharply lower last week. The Mallee and YP/MN conditions declined sharply last week which reflects crops are running out of soil moisture. The EP veg indexes improved last week and most areas apart from west of Minnipa are better than average.

WA veg index ratings declined but are above average at the start of Oct. Geraldton, Kwinana and northern Great Southern (GS) zone are well above the average. Southern GS and Esperance are holding above average.

8 day forecast to 9th October 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 2nd October 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was stronger to finish last week when valued against the USD closing at 0.6898. The AUD/USD gained traction on Friday. Optimism surrounding China's stimulus measures, including monetary easing by the People's Bank of China (PBOC), provided support to the Australian dollar and boosting risk appetite among investors.

Australian Crop Update – Week 38, 2024

Tue, 24 Sep 2024 00:36:14 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian domestic markets are becoming more volatile in the past week following frost damage across New South Wales (NSW) and parts of Victoria (VIC) and South Australia (SA) plus ongoing dryness in the south. Old crop supplies are hard to buy which is creating a premium again for old crop values vs new crop and making it difficult to secure logistics before the end of November/December. New crop values were generally steady in Queensland (QLD), NSW and Western Australia (WA) but stronger in SA and VIC where production estimates have been hit hardest by the drought and frosts. An absence of farmer selling has also contributed to markets firming as well as the domestic market paying more attention to the recent frost damage in the east and concerns about a major rain system moving across the country. This rain system should impact eastern states from Thursday and could bring more than 25mm to cropping areas with amounts increasing toward the coast. This could be followed by more rain for eastern states around the 4th October. In short, after regaining a level of export competitiveness in late August, Australia has added the premium back in with a dry September and the spectre of rain at harvest and is once again well above Black Sea values into Asia and the Middle East. That said we cannot take our eyes off the fact that Australia is still making a large crop even if there have been some yields affected.

Pulses Update

According to reports, faba bean crops in southern NSW lost flowers to recent frosts while crops in central and northern NSW and southern QLD are generally looking at above-average yields. Most are at the flowering stage and because of their much greater biomass than lentils, anything less than a 20mm-plus rain would do little to rebuild yields following losses of flowers and setting pods. In early September ABARES revised up its forecast for new-crop lentils to 1.7 million metric tonnes (MMT), up around 100,000 metric tonnes (MT) from the previous estimate released in June. However, recent reports also suggest some yield has been lost due to frost and dry weather. That said, SA and VIC will still have plenty of lentils to load on to early shipments, with the Lower Eyre Peninsula in SA and Wimmera in VIC faring the best in terms of yield outlook.

Australia Supply and Demand Update (AgScientia)

Our analysts made some significant changes to the 2024/25 wheat and barley production estimates this week trimming yields in most states. Reductions came from high levels in QLD and northern NSW where forecast yields remain well-above average. The southern parts of NSW didn’t enjoy the same amount of autumn and winter rain and conditions have dried out more quickly. Dry September weather has further lowered yield expectations in SA and VIC. SA has been the most adversely affected but yield expectations in VIC have also fallen in the past month. In WA, yields have lifted on the back of the high sub-soil moisture levels following the well-above average July and August rainfall. Conditions have started to fall in September however the above average yield forecasts in the northern cropping areas are still justified.

Recent frosts in southern NSW, parts of VIC and SA are also likely to reduce yields in these areas in recent days. We won’t know the full extent of the frost damage until harvest reports start to come through but the temperatures that have fallen to below -3 C will do yield damage to crops that were susceptible when they hit. Anecdotal reports from SA indicate that crop conditions have fallen away sharply in the past 10 days. We put this down to crops running out of soil moisture and starting to dry off. National wheat production is back under 33MMT from 33.3MMT in August.

National barley production is down 300 thousdand metric tonne (KMT) to 11.7MMT from 12.0MMT in August. Barley production will feel even smaller due to the smaller crops in SA and VIC which are normally important export states.

Exporters are under sold on wheat and barley heading into harvest and farmer selling is also well behind normal heading into harvest. This time last year China had already bought significant volumes of Australian wheat and barley, but exporters are saying they are showing limited appetite to secure volume ahead of harvest this year.

Domestic demand assumptions remain unchanged. Domestic demand will be strong driven by record high cattle on feed numbers, large poultry usage as well as normal demand from pigs and dairy. Food grain demand for wheat and barley will be steady. The smaller SA grain crop is likely to increase interstate flows as feeders chase interstate grain but also as Viterra looks to draw in supplies to keep assets busy.

Export Stem and Ocean Freight Update:

Despite regional holidays in Asia at the start of the week we found market activity to be higher than anticipated.

Panamaxes gained for the second week. The Atlantic was well supported by fresh fronthaul cargoes appearing in both the north and south which in turn helped trans-Atlantic rounds firm again, with owners having more options to look at. The Pacific was understandably quieter throughout the week but surprisingly the rates didn’t lose any ground as demand remained steady.

Supramaxes were busy in the Atlantic all week with plenty of fixing at last done levels. The Pacific came to life once participants came back to office on Thursday and we saw higher than last done levels on pacific rounds as demand ex Indonesia/Aussie/Nopac remained strong.

It was a mixed week for the handysize market. South Atlantic was quiet and lost ground while USG and Cont/Med was busy with moderate gains achieved. The Indian Ocean was quiet while in the Pacific has seen a clear out of prompt tonnage which has caught some charterers out who were hoping for a cheap deal around the holidays.

Looking forward, we are now on the doorstep of China's Golden Week holidays next week so we are expecting activity to remain high in the near term.

Weekly shipping stem additions remain quiet, which is to be expected for the time of year.

There was 84KMT of wheat added to the stem. This was made up of October loadings from Newcastle NAT (59KMT) and 25KMT of wheat for a late October loading from Albany.

There was 60KMT of canola put on the stem which was in two vessels for a late October loading from Kwinana and Esperance.

There was also 50KMT of sorghum put on the stem for Newcastle NAT (late Sep load).

Australian Weather:

Unseasonally heavy rain is already falling in WA and is forecasted to develop into a deepening broad low-pressure trough through the week bringing widespread rain to central and eastern Australia in the next 10 days. Although forecasts are varying daily, they are consistently predicting heavy falls for most of SA, VIC and NSW cropping areas. They are less certain about how much rain WA’s cropping areas will see, if any.

The nearby models continued to bounce around on where the rain will fall. The trough is expected to start developing in central NSW by the middle of the week and then draw moisture from central Australia across the state and then expand across the eastern seaboard.

Forecast from 22/9/2024 to 1/10/2024

Forecast from 22/9/2024 to 7/10/2024

8 day forecast to 1st October 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 24th September 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was slightly weaker to finish last week when valued against the USD closing at 0.6789. Despite the mixed Australian economic outlook, the Reserve Bank of Australia's (RBA) hawkish stance on inflation has led to market expectations of a modest 25-basis-point rate cut in 2024.

Australian Crop Update – Week 37, 2024

Thu, 19 Sep 2024 00:30:17 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Australian grain cash markets were firmer across all states last week aided by the strengthening US wheat futures coupled with nearby shorts taking cover and limited farmer selling as well as the ongoing dry weather across southeastern Australia. New crop ASX wheat was up 2.5%. The weather in the worst affected areas of South Australia (SA) and Victoria (VIC) offer no relief over the next couple of weeks which supports the case for further upside on pricing in those zones. We have heard of some grower washouts occurring which is never a good sign. The time for some unlikely yield saving late rains for VIC and SA is rapidly running out. Lentils in VIC and chickpeas in Queensland (QLD) were also firmer for the week.

Elsewhere, crop conditions are very good to excellent. However, absence of early spring rain is expected to curb yield potential compared to some of the big crop seasons that we have seen in recent years, and we will be updating our supply balance sheets in the next couple of days to reflect that – please check your inbox in the coming days.

NDVI anomalies in the most northerly cropping areas in QLD, northern New South Wales (NSW) and Western Australia (WA) seasonally retreated last week as crops turn following several weeks of dry weather and warming temps. NDVI ratings remain historically high for this time of the season, but crops are getting beyond the point where rains will benefit yields (in the north).

Australian Export Update:

Australia exported 1,495,368 metric tonnes (MT) of wheat in July, up 20 percent (PC) from the 1,246,642 MT shipped in June, according to the latest data from the Australian Bureau of Statistics. Containerised export volume was biggest to Asia with little separating the three biggest destinations, namely Malaysia at 28,793MT, Thailand at 27,043MT and Vietnam at 26,799MT.

Bulk export volumes showed Indonesia as the largest receiver of Australian wheat importing 265,701MT, followed by Yemen at 219,430MT and the Philippines at 198,486MT. Australia was expected to export approximately 1 million metric tonnes (MMT) of bulk wheat in August, dropping to 851,000MT in September.

The additions to the stem last week were small which isn’t unusual for this time of the year where ships are being added for early new crop slots. Most of the wheat added in the past week is for an October loading from VIC which will be old crop wheat.

Ocean Freight Market Update:

The market has found its floor in the short term. Rates have stabilised for the most part and are even starting to turn the corner for some. Panamaxes bucked its recent downward spiral and ended the week in the green in both basins. More demand appeared in the Atlantic where we saw better than last done levels being concluded for transatlantic trips, while in the Pacific, owners were happy to see increased enquiry from Australia and Nopac by the end of the week.

It was a mixed bag on the Supramax sector. The Atlantic activity remained slow throughout the week however the rates were able to show some resistance and hold steady. Whereas in the Pacific, Supramaxes found support in Australia and NOPAC which pushed rates up 1-2kpd for pacific rounds.

The Handysize activity has remained subdued in both basins however there has been a clear out of prompt tonnage which has been helping to alleviate the recent downward pressure.

Going forward there is a general sense of optimism for the next couple of months before the usual Christmas slowdown.

Australian Weather:

An Antarctic blast bought a heavy frost across NSW over last few days which will no doubt cause some bullish flutters. At this stage, the crops are not stressed and are dense so we think the damage may be limited.

Elsewhere, weather conditions were mild and mostly dry last week. Temperatures started to climb across the northern WA cropping areas late in the week. It appears that cropping areas may not see any meaningful additional finishing rain that would offer additional yield benefits. Forecasts remain mostly dry for the next 10 days which takes us to late in September. The 16-day forecast is showing some rain for WA cropping areas at the end of September but it’s a long way off and the model forecasts have been bouncing around. Traders are saying barley harvest in southern QLD should kick off in early October and we expect wheat will be late October to early November.

There are growing signs Australia's most impactful climate driver, La Niña, will develop during the coming months. La Niña refers to an altered state of the tropical Pacific, lasting anywhere from months to years, when cooler-than-average waters combine with changes in the overlying atmosphere to disrupt global weather patterns. For Australia, La Niña would increase the prospects of a wet spring and summer, and to a lesser degree, potentially subdue extreme summer heat. Another La Niña this year would be the fourth in just five years — well above the average of one every four years, and a frequency only previously seen twice since 1900.

8 day forecast to 26th September 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 18th September 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was slightly weaker to finish last week when valued against the USD closing at 0.6688. The AUD is finding support from a hawkish tone in the latest RBA Minutes, which highlighted discussions among members about potentially raising the cash rate target. The minutes emphasised persistent inflationary pressures should lower market expectations of possible rate cuts in late 2024 at a time when the US is signalling it is about to ease rates.

Australian Crop Update – Week 36, 2024

Tue, 10 Sep 2024 03:46:34 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Global wheat influences saw the cash market consolidate last week. However, the underlying issue remains finding demand and then making sales.

Northern grain markets continued to edge higher on slow farmer selling. Barley was a reluctant follower after reports that China is trying to slow feed barley and sorghum imports. Exporter bids and track markets are showing little interest in chasing values higher where competitiveness into Asia is back under pressure following the recent $15-20 per metric tonne (/MT) rally in the east coast cash markets.

Two weeks of hot, dry weather in Queensland (QLD) has seen traders become more cautious about production expectations and grower selling. Last week’s windy weather has also taken a toll on crops in Victoria (VIC) and South Australia (SA), robbing crops of their limited subsoil moisture. Traders are reporting that crops are visibly struggling after last week’s dry, windy weather. Temperatures have moderated in QLD following two weeks of well above average weather.

NDVI anomaly measures for Australia’s cropping regions improved in central QLD last week and the northern and central cropping regions in Western Australia (WA). South west QLD slipped following the recent heat, but the Downs was unchanged. Northern New South Wales (NSW), central west NSW and the Riverina conditions slipped 2-3%, albeit from record high levels for this time of the year. Conditions remain excellent. In VIC, the Wimmera and Mallee were unchanged and remain 3-4% above average but crops remain vulnerable due to the absence of soil moisture reserves. NDVI’s in the Loddon and the Goulbourn fell, presumably following last week’s winds. Measures also fell in all the SA cropping regions. The northern region fell 3% for the week and is back to the recent lows 8% below average. SA yield potential falls without September rain. WA’s Geraldton, Midland and Upper Great Southern are reflecting record high NDVI anomalies for this time of the year. Our analysts were surprised that the NDVI measures held up as well as they did last week after the dry, windy weather over the past week. However, time is running out for yield saving rain in SA in particular.

ABARES released its September Crop Report early last week. National wheat production was raised to 31.8 million metric tonne (MMT) from the previous 29.0MMT. Barley production increased to 12.2MMT and canola was pegged at 5.5MMT. On the pulses, lentil production was put at 1.8MMT and chickpea output at 1.3MMT. At the state level, winter crop production in NSW and QLD is forecast to rise to near record levels following the favourable autumn and winter. WA winter wheat crop production was lifted to above average following the excellent rains in July and August. ABARES lowered production estimates in SA and VIC on the dry conditions and poor crop establishment. ABARES also raised the 2024/25 winter crop plantings.

We are higher than ABARES in NSW on the back of the excellent conditions. There is evidence of opportunistic larger plantings in north west NSW, further west than the normal planting areas following the good autumn rains. WA has potential to climb from ABARES 10.4MMT (we are currently 10.5MMT) based on the record/near record NDVI ratings.

ABARES did some juggling in the pulse area estimates. ABARES has piled 200,000 metric tonnes (MT) on to its national chickpea estimate thanks to a stellar growing season in QLD and NSW. It is expected to see Australia produce 1.3MMT of chickpeas, up 18 percent from its initial June estimate of 1.1MMT, up 171 percent from the 2023-24 crop, and 70pc higher than the 10-year average to 2023/24.

ABARES forecast for lentil production is up 6pc, or 100,000MT, from the initial forecast to 1.7MMT. “This is more than double the 10-year average to 2023/24, with the expansion in area planted to lentils expected to more than offset lower yields.”

Australian Export Update:

Australia shipped 1.495MMT of wheat in July up from the 1.25MMT in June. WA was the largest export state with 440 thousand metric tonne (KMT), which is it’s the smallest monthly shipments since November 2021. It was closely followed by VIC with 435KMT and SA 404KMT. The NSW wheat export tail continues to wag with a further 193KMT shipped in July. Australia has shipped 17.6MMT for the October 2023 to July 2024 with another two months remaining in the 23/24 marketing year. Indonesia was the largest wheat destination for July with 282KMT followed by Yemen with 219KMT and then Philippines with 209KMT. China exports were only 4.2KMT. Wheat exports to the Middle East (Yemen) and Africa have climbed in June and July.

National barley exports for July were 311KMT and this was reasonably evenly split between feed barley and malting barley. It lifts Australia’s October 23 to July 24 barley exports to ~7.3 MMT which is made up of 4.6MMT of feed barley and 2.6MMT of malting barley. There was 287KMT of barley shipped to China which included 185KMT of malting barley.

A further 304KMT of wheat was added to the stem in the past week following the previous week’s 268KMT. WA accounted for 249KMT of the weekly wheat additions with the other 55KMT added in SA. The wheat additions are now for an October loading. We see the recent kick in wheat additions as confirmation that exporters are connecting with buyers at current price relativities with Black Sea values. Anecdotal evidence indicates that demand remains very comfortable to continue with the very nearby hand to month purchases.

Ocean Freight Market Update:

It was another sluggish week for shipping. Rates continued to slide as fresh cargoes entering the market are being outpaced by growing tonnage lists. Panamaxes were under pressure all week in the Atlantic, especially in the south. In the Pacific it was a quiet start to the week however by Friday, sentiment started to turn positive with an uptick of fresh demand appearing in key loading areas. Not helping the cause is the Aussie market which has remained quiet with most operators opting to schedule own tonnage for liftings. Surprisingly, it was the Far East market that showed the most resilience this week with owners less willing to discount.

Australian Weather:

The Multi model has added rain for NSW in the later part of next week which is consistent with the BOM’s ACCESS-S forecasts. It’s trimmed the amount of rain that SA will see. Another bout of windy weather is set to hit southeastern Australia over the next two days. Crops in these areas are already struggling with the dry weather and lack of subsoil moisture and the wind is making it worse. Damaging wind gusts are likely to redevelop in some areas of VIC on Thursday night before becoming more widespread over southern, central, and eastern VIC on Friday.

New Paragraph

Weekly Rainfall to 10th September 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was stronger to finish last week when valued against the USD closing at 0.6664. The AUD/USD pair surrendered its intraday gains and turned negative in Friday’s North American session in the aftermath of the United States (US) Non-Farm Payrolls (NFP) data for August, which increased buying interest of the US dollar. Reserve Bank of Australia released new data showing Australia's economy was growing at its slowest pace since the 1990s recession, as households cut back significantly on spending. The economy grew by 0.2 per cent in the June quarter, and by just 1 per cent over the last year, according to the Australian Bureau of Statistics (ABS).

Australian Crop Update – Week 35, 2024

Tue, 03 Sep 2024 03:43:15 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian grain markets have reacted to hot, dry weather with reports surfacing of emerging export demand late in the week. Local values have plunged over the past six to eight weeks as the prospect of a bigger crop comes closer to reality. Domestic buyers have looked for extended coverage at current price levels given the Black Sea wheat markets look to be establishing seasonal lows and Australian new crop prices are down to levels which should buy Asian demand when carries to current Black Sea prices are considered. Australia’s wheat is no longer expensive against the Black Sea into Asia. Similarly, tighter Black Sea export supplies surpluses to Asia are likely to be felt from November forward if current export pace is maintained. Interestingly, the “canary in the cage” container exports are already starting to connect with Asian buyers in the past week to 10 days as we expected. Southeast Asian bulk buyers are also running their eyes over current new crop values, although they still seem happy to be patient and will have taken comfort from an article from Bloomberg last Thursday reporting that China was seeking to halt further feed barley and sorghum imports amid softer local demand and improved domestic crops. The article said Beijing convened a meeting with top grain importers and suggested they halt feed barley and sorghum imports. China’s domestic grain markets haven’t been immune from the downturn in global markets which are the lowest since 2020. Low prices are hurting farmer profitability around the globe and Chinese farmers will be feeling the same. Australian exporters appear to be adopting a cautious approach with new crop feed barley prices back 3-6% for the week. Although demand for the malting industry would seem to be unaffected.

Crop conditions remain extremely favourable in Queensland (QLD), northern New South Wales (NSW) and Western Australia (WA), according to the latest NDVI data. They also improved in Victoria (VIC) and South Australia (SA) last week following recent rain. Overall, QLD and northern NSW remain at record NDVI levels for this time of year. WA readings have also climbed to record or near record levels. VIC is up to average, while SA is average to below average. Poor soil moisture levels are now the major problem for SA and VIC. Recent rains have given crops a timely lift, but they need rain to finish, or yields will suffer.

Export Stem & Ocean Freight Market Update:

Last week was a negative week for shipping. Panamaxes continued their recent slide with rates coming under pressure all week. In the Atlantic, the USG market struggled off the back of minimal fresh cargoes appearing in the market. ECSA demand remained steady, but rates were affected by the week’s end due to the negative sentiment in that basin. The Pacific followed suit. Supramaxes were slow all week with minimal fixing activity reported as Charterers opted to sit and wait rather than commit at last done levels. The Handies held ok in the Atlantic, but the Pacific players are starting to feel the pinch on the back of growing tonnage and less demand, especially from Australia and New Zealand.

It’s been a relatively active week for shipping stem additions for this time of the season. This included 268 thousdand metric tonne (KMT) of wheat additions, 177KMT of barley as well as 60KMT each of canola and sorghum. There were also lentil additions in VIC. The QLD forward stem is booked out with chickpeas which will be the first of the new crop production to be exported from Australia.

Australian Weather:

QLD temperatures were in low to mid 30’s for all last week which is approximately 10 degrees Celsius (C) above normal for this time of the year and about +5-8C higher for northern NSW. It is not as hot in the north this week. Hot weather is not an immediate concern as crops conditions are outstanding in QLD and NSW and they have plenty of sub-moisture. The concern however is that the hot weather will lower yield potential if the hot, dry pattern was to persist into the second half of September. Big crops need ongoing moisture to maximise yield potential, and more importantly mild temperatures. Prolonged heat is the larger concern as it will push the crops to maturity earlier than normal and not allow them to make the most of the excellent start, as they did in 2021 and 2022.

Cropping areas aren’t expected to see any significant rain over the next week. SA may pick up some light showers at the end of the week which could benefit the Mallee regions most. The BOM’s ACCESS-S is forecasting an improved chance of rain for the east coast and WA for the second week.

The Australian Bureau of Meteorology issued its latest September-November seasonal update late last week where they forecast above average rain for much of eastern Australia, while WA trends dryer. Rainfall is likely (60 to 80% chance) to be above average for most of eastern Australia. The chance of above average rainfall has increased over much of eastern Australia during the last week but decreased in southwest WA. Average maximum temperatures are expected to be warmer than normal across most of Australia although southeast WA’s cropping regions are expected to be shielded where average temps are expected to be near normal.

8 day forecast to 10th September 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 2nd September 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was stronger to finish last week when valued against the USD closing at 0.6756 after it pushed through 68 cents earlier in the week. The Aussie dollar declined by 0.70% in Friday's session as the USD strengthened in response to July's Personal Consumption Expenditures (PCE) figures. Despite this, the Reserve Bank of Australia's (RBA) hawkish stance, suggesting interest rates will stay stronger for longer, may limit further declines in the AUD versus the USD. Last week, Australia’s monthly Consumer Price Index (CPI) jumped by 3.5% in the year to July, compared to a 3.8% increase seen in June, according to the data published by the Australian Bureau of Statistics (ABS). The increase was slightly higher than the 3.4% economists had expected, suggesting interest rate cuts may still be months away.

Australian Crop Update – Week 34, 2024

Tue, 27 Aug 2024 05:43:15 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian grain market continued to soften throughout last week on expectations of a large Australian wheat crop and a further weakening in global values. The cash market appears to be trading a 32-33 million metric tonne (MMT) wheat crop with the belief the crop will continue to climb with a soft spring in Western Australia (WA). Across all grades, markets were lower by some USD7-10 per metric tonne (/MT) on FOB equivalents with the largest declines on the east coast. The only grade holding the same values were the higher protein grades as the expectation of the crop profile is that the significant proportion of the crop will be lower protein.

In terms of Vegetive Indexes, northern New South Wales (NSW) and central NSW are at or near record highs for this time of the year and southern NSW is improving. Queensland (QLD) saw solid weekly gains following rains last week and Victoria (VIC) improved last week but from a low base. Lack of soil moisture is leaving yields vulnerable in the south, but rains are keeping values stable for now. WA’s crop potential is staring to climb with NDVI measures as high as the 2022 crop at an equivalent time of crop progression.

Last week, our analysts released un updated Australian wheat and barley Supply & Demand report (it should be in your inbox, or you can read it here). Yields were raised in NSW, QLD and WA following the good rains received during August. NSW wheat production has been raised 1.6MMT to 12.2MMT. QLD is up 0.2MMT to 2.2MMT and WA is up 1.0MMT to 10.4MMT. VIC and South Australia (SA) were trimmed on the back of continues below average rainfall through winter. This lifts the national wheat crop to 33.2MMT from the previous 30.7MMT forecast.

National barley production has been raised to 12.0MMT. Northern NSW wheat yields have been lifted to around 3.4-3.5 tonnes per hectare which is close to the record highs seen in 2020/21 and 2021/22. It is understood that some individual farm yields are on track for significantly higher yields than this but the average yields that come through the ABARES and ABS data, even in the recent record yields came in well below the anecdotal numbers reported. Ultimately, this year’s yields are relative to previous years and the recent bumper crops just a few years ago offer recent benchmarks.

Australia’s 2024/25 wheat exports are raised to 24.1MMT on the back of the bigger crop. This included ~6.0MMT from NSW and 10MMT from WA. East coast wheat exports are forecast at 10.1MMT. This is a big number in the current soft demand environment where importers are in control and are trying to pull values lower.

Export Stem & Ocean Freight Market Update:

Another lacklustre week for shipping across the board. The Atlantic appears to still be affected by the traditional summer holiday period with little urgency to try push activity along. The Pacific is suffering from low demand and growing tonnage lists. Panamaxes had a disappointing week where we saw limited activity in the Atlantic causing rates to drift as the week progressed. The Pacific didn’t fare any better with NOPAC and Aussie markets being quiet and the little demand that did appear from Indonesia was absorbed at rates below last done levels. Supramaxes found some support in the Atlantic on the back of more US Gulf cargoes which help pushed rates up by circa 2-3kpd in this region. The Pacific was subdued with tonnage lists growing throughout the week which made charterers reluctant to engage initially as they felt they had both time and plenty of candidates to choose from. The Handy market followed a similar trend to the Supramaxes. An uneventful week for bunkers where VLSFO is still averaging between 550-600pmt in most major ports.

It was a very lean week for shipping stem additions. There was 45 thousand metric tonne (KMT) of wheat and 38KMT of canola added to the stem in the past week.

Australian Weather:

WA received more rain last week. This included 20-35mm across the Geraldton zone, 5-20mm across the Kwinana zone, 20-50mm in the Great Southern and 20-40mm around Esperance. SA received light showers although falls were limited to 2-5mm in most cases. The VIC southern regions received its best rain in months last week with 15-25mm received. Last week’s rains across WA reinforces the case for a large WA winter crop.

Month to date rainfall - August 2024
Source: http://www.bom.gov.au/

8 day forecast to 3rd September 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 26th August 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was stronger to finish last week when valued against the USD closing at .6778. This upward move comes as the US dollar weakened following Federal Reserve (Fed) Chair Jerome Powell's dovish speech at Jackson Hole where he effectively confirmed the markets expectation of US interest rate cuts in September and beyond. The Australian dollar, by contrast, was bolstered by last week's Reserve Bank of Australia (RBA) meeting minutes, which reveal a reluctance to ease monetary policy soon. The RBA projects inflation to stay above the 2-3% target until the end of 2025, suggesting interest rates may remain elevated for an extended period. Governor Bullock has recently stated that the bank has no plans of cutting in the near term. In all likelihood, incoming inflation data will neither justify a cut or a hike. So once again, we must watch, but it is unlikely to change the course of the RBA’s 4.35% interest rate.

Australian Crop Update – Week 33, 2024

Tue, 20 Aug 2024 05:24:56 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Negative global influences pressured the Australian cash markets last week. Rains across Queensland (QLD) and most of New South Wales (NSW) have all but locked in bumper yields for the north and as a consequence, old crop markets are giving up the inverse and the two cash markets are starting to trade on a par in the east.

Australian domestic consumers have become increasingly comfortable with old crop supplies and the prospects for a large new crop and are buying hand to mouth. Last Friday, the Grain Industry Association of Western Australia increased their Western Australia (WA) grain forecast to 17.4 million metric tonne (MMT) from 16.3MMT in July after improved rainfall. Wheat was slightly increased to 10MMT, with barley increasing to 4.27MMT. We will look to update the balance sheets later this week

Due to dry weather, The South Australian (SA) Faba Beans market is firm; they need more rain to get growers to sell.

Soil moisture levels were close to or above the median in all states except Victoria (VIC). The first week of August showed a reduction in soil moisture in SA and VIC.

Ocean Freight & Shipment Stem Update:

The market is still struggling to find its direction, not helped by another week scattered with holidays in both the Atlantic and Pacific basins. Panamaxes are facing soft sentiment which is gently eroding rates across the board as owners struggle to find a positive note to halt the decline. In the Atlantic, a lack of fresh demand has caused the market to be nervous about the near-term future. However, it should be noted that grain round voyages are still trading at a slight premium to other rounds. So if we do see demand pick up in the traditional grain loading areas, there should be a steady floor for rates to push again. The Pacific will be looking (rather hoping...) to find something similar this week. The Supra/Ultra market was largely uneventful throughout the week with rates generally trending sideways. The Handy market was quiet but steady.

There was 216 thousand metric tonne (KMT) of wheat and 81KMT of canola added to the stem in the past week

Australia exported 725,085 metric tonnes (MT) of barley and 249,071MT of sorghum in June, according to the latest export data from the Australian Bureau of Statistics. The feed barley component at 485,276MT was more than double the 216,118MT shipped in May, with shipments to China accounting for 79 percent of the total.

Australian Weather:

QLD and northern NSW received good rains throughout last week. This included 30-50mm in QLD and 15-30mm in NSW. Southern NSW farmers are looking for rain ahead of spring to maintain the well-above average yield outlook. Rainfall tallies across VIC cropping areas for the week were disappointing. There was only 5-10mm received and more is needed in August otherwise yields will suffer. SA received good rains with 15-25mm falling while lighter totals were seen in WA cropping areas.

Overall, Australia experienced higher precipitation than forecasted (134% vs. 120% of the median forecasted) in July, mainly due to increased rainfalls in WA and SA (144% vs. 89% of the median forecast in WA). The latest August 2024 forecast indicates higher figures compared to the previous estimate (139% vs. 11% of the median previous forecast), driven by an increase in rainfalls in in SA, VIC, and WA.

Looking forward, most forecasts predict more of the same.

8 day forecast to 27 August 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 19th August 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was stronger to close last week when valued against the USD closing at 0.6644. Last week on the data front Australia’s unemployment rate ticked higher last month, even as employers added about three times as many jobs as expected. The job gains will probably discourage the Reserve Bank from cutting its key interest rate in the near term.

Australian Crop Update – Week 32, 2024

Wed, 14 Aug 2024 05:21:59 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian old crop cash markets have firmed over the last week on short covering for both domestic and export contracts.

The biggest variable for the next crop is the uncertainty over yields in South Australia (SA) and Victoria (VIC) with the very late start and the lack of soil moisture heading into spring. VIC is slightly better situated than SA but is in a similar situation where crops are two to four weeks later than normal and soil moisture reserves are limited. Both states need a soft spring to achieve average to near average yields. The concern is that yield potential will fall away quickly without soaking rains by the end of the month.

Ocean Freight & Shipment Stem Update:

There was 399 thousand metric tonne (KMT) of wheat, 113KMT of canola, 90KMT of sorghum and 22KMT of barley added to the shipping stem in the past week. It was the largest shipping stem additions in more than a month with more than half in Western Australia (WA) and the rest in VIC and SA.

Another 60KMT of canola was put on the stem in Port Kembla New South Wales (NSW) as well as 50KMT in WA.

All of the sorghum was added in Queensland (QLD).

It was a quiet week in shipping where activity levels struggled to kick into gear with much of the northern hemisphere in summer holiday mode. The week started with panic in the global stock markets and ended with the Singapore National Day holiday, so it wasn't a great surprise that participants had other things on their minds. Panamaxes drifted in both basins with a lack of fresh cargo appearing. As the week progressed, charterers began reducing their bid levels as tonnage grew and owners had to reluctantly accept lower bids.

Australian Weather:

WA is forecast to see more showers this week with between 5-10mm predicted across the growing regions. SA is forecast to remain dry through next week with nothing on the horizon for the following week either. VIC is a chance for some showers late next week for a possible 10-20mm. NSW is forecast to be mostly dry next week, and southern QLD will see rain of 15-30mm.

8 day forecast to 21 August 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 13th August 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was stronger to close last week when valued against the USD closing at 0.6572. Economists expect the Reserve Bank of Australia to deliver its first post-pandemic interest rate cut in February 2025, lowering the cash rate to 3.6 per cent by the end of next year. The RBA on Tuesday pushed back its timeline for getting inflation back to the mid-point of its 2 to 3 per cent target band until December 2026, six months later than forecast in May and has warned the market about getting ahead of itself on rate cuts.

Australian Crop Update – Week 31, 2024

Wed, 07 Aug 2024 05:18:58 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian grains market was quiet last week with many market participants at the Australian Grains Industry Conference in Melbourne. Cash values did drift lower reflecting the broader view that prices need to soften to re-engage Australia’s wheat export customers for the 2024/25 season. Forecasters and analysts are all now comfortable quoting a 30 million metric tonne (MMT) plus harvest for wheat and a 22MMT plus export surplus as we head into Spring.

The favourable outlook is triggering old crop farmer selling in southern New South Wales (NSW). In Victoria (VIC) wheat farmers are still holding reasonable volumes. New crop selling remains slow in all states where farmers are baulking at starting the season’s selling program at current prices. The consensus sentiment from the conference is that basis needs to fall $15-20 per metric tonne (/MT) for Australia to regain export competitiveness into Asia to move wheat. The lack of export competitiveness was highlighted in the June exports, where wheat shipments to China, Indonesia and Vietnam were disappointing. These countries are critical to moving large volumes of Australian wheat into Asia and without engaging them with price, exports will remain slow. Australia’s June wheat exports would have looked even worse if it wasn’t for feed wheat shipments (likely) into the Philippines and South Korea. While the mood of the conference was broadly bearish from a price point of view there was an expectation that Asia will be looking for good volumes of Aussie wheat for December onwards when the competition from eastern Europe and the Black Sea subsides due to smaller export programs and a smaller, poor quality EU wheat crop. Our sense is that Australia could also compete into East Africa and the Middle East if China remains absent from the wheat market into Q1 and Q2 of next year.

Our Analyst, AgScientia, updated the balance sheets this week to reflect the improved July rainfall in Western Australia (WA), South Australia (SA) and VIC. Yields have been increased following the improved rain in July and the increases in the NDVI readings that have followed. This has further improved crop outlooks in NSW and Queensland (QLD) which were already very good. These states enjoyed ideal planting times and have been seeing regular top up falls through the winter. NDVI readings in NSW and southern QLD range from well above mean to record highs in areas of north west NSW. Collectively, they are near record high levels for this time of the year. Crop conditions are also improving in VIC and SA, albeit from a poor start. The VIC Mallee NDVI’s are above mean but the Wimmera is below, but improving. This will seasonally continue following the improved July rain, but more rain is required. VIC and SA wheat yields are expected to be no more than average at this stage following the late start and below mean NDVI’s at 2.93 tonne per hectare (t/ha) and 2.05t/ha respectively. These will climb further with a favourable spring. Improved July rainfall, and more consistent rainfall patterns have benefited crops in WA. NDVI’s picked up from below mean in early June to mean in the latest readings slightly above and still climbing.

Extended weather outlooks have also turned more favourable in the past couple of weeks as models incorporate more of the La Nina pattern into the forecast. The BOM’s ACCESS-S2 is forecasting above average rainfall is likely (60 to 80% chance) in an area extending across most of southern QLD, NSW, VIC, and eastern SA, as well as along the south west coast of WA, and north east Tasmania. The monthly precipitation anomaly for the extended Europe model (ECMWF SEAS5) is consistent with the ACCESS showing average to above average rain for Jul-Sep. Altogether, it bodes well for Australian winter crops and justifies the + 30MMT wheat production outlook.

Overall, we have increased the national wheat crop to 30.7MMT. This includes 10.6MMT in NSW and 2.0MMT in Qld. WA wheat production has been increased to 9.4MMT. VIC and SA have been edged higher to 4.3MMT and 4.4MMT respectively. National barley production is up to 11.7MMT and canola at 5.6MMT. Forecasts will continue to climb with a soft spring.

For the most part, the old crop premiums have largely disappeared on paper, although protein is still attracting premiums due to grade shortages.

Australian Pulses Update:

Australia exported 39,718 metric tonnes (MT) of chickpeas and 140,549MT of lentils in June, according to the latest data from the Australian Bureau of Statistics. The chickpea figure is down 9 percent (pc) from the May total of 43,849MT, despite the uptick in exports to India and Nepal.

Lentil exports in June were up 8pc from the May figure of 130,295MT, with rises over the month of 5453MT from Bangladesh, 2578MT from Egypt and 2905MT from Nepal the main drivers.

Shipping stems indicate bulk exports of lentils have slowed right down this month to indicate Australia’s rundown on stocks as Canadian new crop prices hit the markets.

On the other hand, there was much talk at the conference about a record chickpea crop. Export slots booked indicate around 300,000MT in bulk alone will be shipped as harvest rolls south from Central QLD to northern NSW and that is expected to keep other commodities off the early season stem as things stand.

Chickpea crop conditions are very good to excellent in all major desi-growing regions.

Australian Export Update:

National wheat exports slipped to 1.26MMT in June down from 1.59MMT in May. The June wheat exports were lower in all states than last month. The Philippines was the largest destination with 271.4 thousand metric tonne (KMT) followed by South Korea with 151.7KMT and then China with 134.7KMT. It was the smallest monthly wheat exports to China in 12 months and the 96.6KMT shipped to Indonesia was the smallest since October 2020. Wheat exports to Asia in July fell back to around 1.0MMT which is just about back to drought levels seen in 2020. Barley exports for June were 725.5KMT up from 363.7KMT in May. China took 530.2KMT which puts the Oct/Jun at 5.48KMT. Malt barley exports to Latin America remain healthy with Mexico taking another 33KMT, Peru taking 17KMT and Ecuador taking 7KMT. There was 251.1KMT of sorghum exported in June. China took ~222KMT and Japan took ~22KMT.

Ocean Freight & Shipment Stem Update:

A balanced week again as we saw rates trend sideways. A mixed bag for Panamaxes where we saw tight tonnage in North Atlantic but was counter-acted by slow South Atlantic demand which proved to be the main driving force across the week. The Pacific didn’t fare any better across the week. There was healthy demand out of Indonesia and Aussie but growing tonnage lists in the Fareast helped put a halt on any potential gains. The supra/ultra market was largely uneventful throughout the week in both basins. Fresh cargo was minimal, and tonnage lists grew longer causing rates to come offer roughly 1-2kpd for rounds. Northern hemisphere summer holidays combined with Singapore National Day on Friday could see another quiet week ahead.

Pressure on the Australian container market has increased with heightened tension in the Middle East and Red Sea continuing to affect services and box locations. Container pricing has increased on average by 100-150% since April from Australian ports, and this has naturally affected our competitiveness.

There was 205KMT of wheat, 144KMT of canola, 85KMT of barley and 53KMT of sorghum added to the stem in the past week.

Australian Weather:

Good July rainfall in WA has bolstered the chances for average to above average winter crop yields. SA and Vic received improved rain in July, however these areas have limited subsoil moisture and require soaking rains ahead of spring to achieve average yields. NSW and QLD remain on track for well above average yields following the wet start to the season.

8 day forecast to 14 August 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 6th August 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to close last week when valued against the USD trading a low of at 0.6496 but has since rebounded over .65. The RBA will keep the cash rate on hold at 4.35 per cent after figures last week showed underlying inflation continued to ease in the June quarter. While markets expect the RBA will cut interest rates by February 2025, a handful of analysts think the central bank could act as soon as November.

Australian Crop Update – Week 24, 2024

Wed, 31 Jul 2024 04:11:36 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Australian cash markets remained under pressure last week with increased grower selling after the recent rain in Western Australia (WA). Declines in global markets also weighed with CBOT wheat finishing the week down 2.3% and KC off 5.7%. There is no doubt that Australian market participants are becoming more comfortable with a reasonable production outlook for the 2024/25 crop. We have had a favourable start in New South Wales (NSW) and Queensland (QLD) and the late rains in WA, South Australia (SA) and Victoria (VIC) have settled nerves there.

SA’s PIRSA is pegging SA’s wheat crop at 4.8 million metric tonnes (MMT), barley at 2.1MMT and canola at 476 thousand metric tonnes (KMT). This numbers are slightly higher than ABARES

In the last week, old crop wheat grades were approximately USD5 per metric tonne (/MT) lower for FOB positions with new crop January also down USD6/MT. New crop bids however are hard to find with the trade a willing seller but there hasn’t been much farmer engagement. Demand has been an issue. Most of the Islamic world was heading into Eid holidays and the Asian buyer has covered his nearby requirements with cheaper Black Sea wheat were possible. The result is a wide bid / offer spread.

Looking forward, the Australian Bureau of Meteorology (BOM) issued its updated outlook for July to October on Friday, which showed the drier patterns for VIC and SA are expected to continue. For July, rainfall for much of Australia is likely to be typical for the season, however below average July rainfall is likely (60 to 70% chance) along the western slopes of the Great Dividing Range, and across much of southern Australia including Tasmania. The July to October forecast is drier than last week’s run.

Australian Pulses Update

Australian chickpea markets declined 1.5% last week with minimal trade reported in the domestic and international markets. Lentil trading was also muted. India’s Ministry of Agriculture released its third estimate for their domestic pulse crop. Total production this season is estimated at 24.5MMT which is down 6% from last year. This will no doubt prompt the importers to look at new crop supply from Australia and other origins to fill the short fall of domestic consumption.

PIRSA’s Lentil plantings are forecast at 332.4k ha which is 90k ha or 38% up on last year and 140k ha on 2022/23. They are forecasting a lentil crop of 511KMT up from 362KMT last year. PIRSA’s lentil forecasts are larger than ABARES, who also made significant increases. The increased lentil plantings are coming from other pulses but also barley. PIRSA made its assumptions and forecasts based on May 15, and flagged the dry start could jeopardise the current forecasts.

Ocean Freight & Shipment Stem Update:

After the recent decline in Ocean Freight, there is a consensus that the dry bulk market has turned the corner off the back of more demand appearing in the Atlantic. The Panamaxes in the Atlantic were well supported in the major grain loading areas causing rates to spike, which in turn helped push the Pacific rates up with the option to ballast to EC South America more appealing. A similar story developed for the Supra/Ultra market whereby the Atlantic led the way, especially the USG market which saw a week-on-week gain of 25% on the index. We haven’t seen USG Supra market at these levels since back in March. The Pacific market was more subdued but talks of a floor being found after the recent decline grew louder as the week progressed.

The transit concerns through the Red Sea and subsequent disruptions and congestion in Singapore have translated into container capacity shortages as well as significantly increased freight rates to European, Middle East and African destinations. In recent weeks, many shippers have struggled to secure capacity at agreed contract rates, faced peak season surcharges and general disruption to their supply chains caused by port delays. Once again, the sensitivities of the market to imbalance have been exposed and consumers and Australian shippers are once again facing nearby contract execution challenges.

In terms of export stem, weekly wheat additions climbed to 400KMT last week with 140KMT of this in VIC. Nonetheless, additions have slowed for the Jul/Sep quarter. There was 55KMT of canola added to the stem in WA.

Australian Weather:

WA has enjoyed some heavy rain over the past 10 days in the northern regions with falls ranging from 70mm to more than 140mm. Rainfall totals tapered away in the southern part of the state, but these areas received sufficient rain early to germinate crops. WA has had enough rain to germinate >95% of dry planted crop and now looks for top up rain to keep crops watered. WA crops have germinated quickly because of the unseasonably warm soil temperatures which is helping to make up for the late start. The state appears to be on track for an average year following the recent rains, despite the late start.

SA received light showers late in the week between 2-15mm. VIC also received some rain on Thursday/Friday last week ranging between 5-20mm in the cropping areas.

Forecasts are offering more rain for WA and SA this week.

8 day forecast to 25th June2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 18th June 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was slightly weaker to close out last week when valued against the USD trading at 0.6602. The AUD experienced additional losses against the US dollar on Friday despite strong labour market data from Australia reported earlier in the week, which prompted a more hawkish Reserve Bank of Australia (RBA). The RBA met yesterday, leaving interest rates on hold at 4.35%. Markets are now pricing the first rate cut will now only occur in May 2025.

Australian Crop Update – Week 29, 2024

Wed, 24 Jul 2024 04:25:42 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian domestic grain prices remained under pressure in all states last week. Canola was the exception with bids stronger in old and new crop positions. The old crop premium to new crop is shrinking for wheat and barley. Sorghum pricing is easing as well, as exporters are covered for nearby shipments and China bids fade for new demand.

Overall, crop conditions improved last week. Large crops in New South Wales (NSW) and Queensland (QLD) are now assured with enough soil moisture to carry the crops to harvest. Western Australia (WA) is on track for average to slightly above average crops, but this is dependent on spring rains as soil moisture reserves are low. South Australia (SA) and Victoria (VIC) are also improving but they will need good spring weather if they are to achieve average yields.

Extended weather models are now pointing towards wetter than normal weather for the August to October as they factor in more of the expected La Nina influence.

Ocean Freight & Shipment Stem Update:

It’s been another quiet week for shipping stem additions which is to be expected as markets transition towards new crop and values compete against northern hemisphere new crop. Only 155 thousand metric tonne (KMT) of wheat was added to the stem in the past week down from 426KMT a week earlier. There was 69KMT of barley and 35KMT of canola added as well.

We are still in a balanced market. Panamaxes saw some support in North Atlantic with more cargo appearing in the market against tonnage lists tightening early in the week, while the South Atlantic cooled slightly across the week. The Pacific remained stable across the week with supply/demand equation holding steady. The Supras/Ultras was fairly uneventful throughout the week. However, interesting to note, that there were some rumours of Charterers willing to fix in period tonnage again which could point to a sense on optimism for Q3 and Q4. Handysize followed the same path of the bigger sizes and trended sideways for the most part. This week has started on the same note so without more cargo appearing or tonnage list growing we are expecting another steady week.

Australian Weather:

WA received beneficial rain last week. This included 20-30mm across all zones. SA also received another round of showers to support the later plated cropping areas. Lighter falls were seen in VIC with 5-15mm and NSW received some light rain for the week, although nothing significant. Improved rain across WA, SA and VIC is being reflected into the normalized difference vegetation index (NDVI) readings. Overall, QLD and NSW NDVI anomalies are well above average. Nothern NSW is near record high, the Central West and Southern NSW is well above average. Anomalies are improving in VIC.

8 day forecast to 31st July 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 24th July 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to close last week when valued against the USD trading at 0.6670. The AUD saw considerable losses falling below 0.6700 due to the strengthening of the US dollar amid increased risk aversion. Commodity prices are affecting the Aussie dollar with Iron Ore prices plunging 1.70%, extending their losses for the last two weeks to more than 3.70%.

Australian Crop Update – Week 28, 2024

Thu, 18 Jul 2024 04:22:29 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Local cash market bids continued to slide last week with falling global values and the stronger Australian dollar. The Aussie dollar was 0.6% higher for the week and is now up 2.2% in the past four weeks and seems set to break out of its range against USD weakness. Farmer and trade selling is slow but there appears to be some steady volume as some participants come to the realisation the weakness in values may continue as the northern hemisphere harvests are bought in.

More scattered rain fell across the Australia’s cropping regions last week. The heaviest of the falls were in the northern cropping zones in Western Australia (WA) and the east coast with lighter falls across the southern cropping zones. In WA, there was 15-40mm in the Geraldton zone. South Australia (SA) also picked up more light showers which will benefit crops, but it falls short of the soaking rains needed to build soil moisture reserves. In New South Wales (NSW), there was 20-40mm across the north west of the state and up to 20mm across the south and central west. The central and western Darling Downs received 5-15mm for the week.

Overall, the northern cropping zones enjoy above average moisture, but the southern cropping zones are looking for more rain to build moisture reserves ahead of spring.

Ocean Freight & Shipment Stem Update:

The Market over the past week (possibly months now...) has been steady with no huge gains or losses on any sectors. Panamax in the Atlantic showed some improvement of the back on more demand ex east coast South America. The far east was more subdued but there has been more cargoes appearing ex Nopac and Aussie so rates have remained stable. On the supra/ultra sectors in the Pacific we saw improvement on the back of more Indonesian coal cargoes appearing while the far east was also supported with fresh steel and backhaul shipments. The handysize market was stable over the week, and we saw owners being able to consolidate previous gains without really being able to push the market further on. We await some clearer market direction because, at the moment, we are close to range-bound particularly on the smaller tonnage.

Container Freight Market Update:

The Red Sea crisis continues to upset the supply and demand balance in container shipping. Since the conflict started, shippers have had to contend with soaring spot rates on the Asia to North Europe and Asia to US West Coast which have risen 53% and 79% of 2020 peaks respectively.

Global container port congestion is worsening reaching 9 million TEU which is close to the peak of 9.6 million TEU seen during the COVID-19 pandemic. The ongoing Red Sea situation has forced container ships to detour around the Cape of Good Hope adding approximately 12% to TEU-mile demand. Rising congestion is driven by strained port infrastructure and the logistics of vessel re-routing amidst strong year-to-date trade volumes. At the Port of Singapore, the busiest container ship in the world, up to 61% of calls were delayed with transhipped and outbound containers experiencing a 10-day dwell time.

Data released toward the end of June indicated the revenues of the Suez Canal have fallen to $337.8 million in May. The figure is 64.3% lower compared to revenues of $648 million achieved in May 2023. Falling revenues follow a decrease in the number of vessels transiting the Suez Canal due to re-routing around the Cape of Good Hope. Vessel crossings have dropped from 2,396 ships in May 2023 to 1,111 vessels in May 2024. Equally, bulk cargo volumes through the Canal have dropped by 68.5% from 142.9 million tonnes to 44.9 million tonnes.

Australian Weather:

The Australian Bureau of Meteorology (BOM) extended rainfall forecasts are now showing above average precipitation for NSW, SA and Queensland (QLD) for August to October. This is consistent with the extended European model with is now pointing to above average rain for July-September. The BOM’s extended climate outlook remains on a La Nina watch but it appears to be adding in more of the La Nina pattern into the late winter and early spring rainfall patterns.

8 day forecast to 25th July 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 13th July 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was stronger to end last week when valued against the USD trading at 0.6780 at the close. The AUD has risen from just over 64 US cents in mid-April to around 67.80 US cents in recent days on the back of an expected rate cut in the US in September. China has announced its Trade Balance data for June showing a trade surplus of $99.05 billion, a significant increase from the previous figure of $82.62 billion.

Australian Crop Update – Week 27, 2024

Wed, 10 Jul 2024 04:19:40 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian cash market was mostly steady to softer last week, although the extent of the changes varied between port zones. Exporters are trying to pull bids down to regain export competitiveness into key markets but grower reluctance to sell is working against this. Canola bids were $10-15 per metric tonne (/MT) higher for the week on the back of the 6% rally in Matif with the gains tempered by the 1.2% strengthening in the AUD.

Forecasters lowered Australia’s 2023/24 wheat exports due to the slower than expected shipping pace in the third quarter of our marketing year which finishes in September. Australia’s wheat prices need to reconnect, although it’s difficult to see where the motivation for selling will come from this early in the crop. Australian wheat is expensive compared to Black Sea supplies landed into Asia. Russian 12.5 pro was quoted at $220 FOB on Thursday by IGC which is around $260-265 c&f Asia.

ABS reported 1.6 million metric tonne (MMT) of wheat exports in May down from 1.85MMT in April and 2.57MMT in March. The Philippines was the largest destination at 334 thousand metric tonne (KMT) followed by Indonesia with 259KMT, South Korea with 170KMT, Yemen with 156KMT and China with 137KMT. Australia’s Oct/May wheat exports for 2023/24 are 14.85MMT which is 39% down on last year’s 22.8MMT. In percentage terms, wheat exports to Asian destinations have declined more than the Middle East and Africa. This is partly due to the heavy reliance on China in 2022/23, where exports are back 42%. But it’s not just China. Exports to South Korea, Thailand and Vietnam are back by a combined 3.5MMT on the same time last year.

Barley exports fell to 330KMT, less than half of the 697KMT in April. Barley exports to April fell to 218.9KMT which was the smallest since the 55.7KMT in August last year, which was the first month of exports after the import tariffs were lifted.

Sorghum exports were 325KMT with 320KMT of this going to China. Most of the exports were shipped from Brisbane with 203KMT followed by Newcastle with 86.4KMT and then 34.5KMT from Sydney.

Canola exports were strong at 677KMT up from 648KMT in April. Europe accounted for 243KMT of the exports followed by Pakistan with 181KMT, Japan 133KMT and 93KMT going to the UAE.

Australian Pulse Market Update:

Yield prospects for Australia’s lentil and faba bean crops have brightened considerably in the past month now that rain has fallen in South Australia (SA) and Victoria (VIC).

Chickpea crops in Queensland (QLD) and northern New South Wales (NSW) are looking like being big with above-average yields expected.

Shipping stems indicate a faba bean cargo which left Port Adelaide on the weekend bound for Egypt has wound up Australia’s 2023/24 bulk program. Prices for faba beans in the prompt market remain high. Trading in the new-crop market remains subdued as production concerns continue to take precedence in growers minds. Regular rain will be needed to see liquidity improve.

Crops in SA have mostly had enough rain to get them into August, but heavier soils in the VIC Wimmera and the state’s south-west need more rain very soon.

Australia exported 45,056 metric tonnes (MT) of chickpeas and 139,011MT of lentils in May, according to the latest data from the Australian Bureau of Statistics. The chickpea figure is roughly double the 22,048MT shipped in April, and reflects India’s long-awaited removal of tariffs on Australian chickpeas. Exports of Australian chickpeas to India jumped from just 270MT in April to 21,916MT in May. India imported 65,529MT of lentils and was the biggest market for May-shipped product, followed by Bangladesh on 39,457MT and Sri Lanka on 14,617MT.

Ocean Freight & Shipment Stem Update:

At the risk of sounding like a broken record, there is still a noticeable absence of fresh cargo leading to a gradual decline in freight rates across the board. Panamaxes continued to decline with little sign of support. The Ultramax/Supramax market also followed a similar path although the US Gulf showed some resistance where rates managed to push 2-3k per. The Indian market continues to struggle with spot tonnage lists beginning to grow. The Australian coast on the other hand is bucking the trend with fixtures now reported in the mid $20k's back to Spore/Japan range. In the Atlantic, the Handy market was uninspiring given the general lack of activity.

There was 604KMT of wheat put onto the shipping stem in the past week. This made it the biggest week for wheat additions since February. The surge in wheat additions should be taken with some caution as there were several ports that had held additions and chose to put them into the stem this week. Nonetheless, 604KMT is a large number when you look at the May wheat exports of 1.6MMT.

Australian Weather:

Weather patterns were little changed with limited relief to the ongoing dry in the southern cropping zones. There was some rain across the parts of Western Australia (WA), SA and parts of VIC but the falls were light and will not build soil moisture. However, the Geraldton zone did receive some useful rain earlier in the week. NSW crops are in very good shape with some farmers quietly hoping for a week of dry, sunny weather.

Forecasters are back peddling on the strength of the La Nina forecasts and what that means for Australian rainfall. The BOM has a La Nina watch, but it doesn’t guarantee a La Nina.

8 day forecast to 17th July 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 10th July 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was stronger to close out last week trading at 0.6730. The AUD held its ground against the USD on Friday, which weakened following soft US Nonfarm Payrolls (NFP) figures but stands at its highest level since early January 2024. Last week the minutes of the Reserve Bank of Australia’s (RBA) June monetary policy meeting showed Tuesday that the “board judged the case for holding rates steady stronger than for hiking.” Members observed that inflation was still above central bank targets in most economies, and services price inflation had generally been stronger than expected since the start of the year.

Australian Crop Update – Week 26, 2024

Wed, 03 Jul 2024 04:17:11 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian cash markets were steady to softer last week as they responded to more rain and offshore weakness. Old crop premiums for the higher grades are starting to come under pressure amid limited demand and overseas competition but on the other hand, supply is increasingly limited. In general, market participation is very limited with the nearby shorts sufficiently covered after the increased selling through June, while farmer selling has slowed.

The trade was bidding much lower over the last 10 days as buyers reacted to stiff global export competition into Asian destinations as the new crop northern hemisphere harvest pressure is felt. It’s difficult to see this changing in the near term with the northern hemisphere harvest set to continue through July and into August which will keep the pressure on the c&f markets. Export sales are hard to make at the widening price relativities.

Australia’s markets have ignored a lot of the decline in US wheat futures in June which has seen the Australian basis rally by USD$22 to 30 per metric tonne (/MT). Australian farmers are slow sellers of old and new crop, and this is unlikely to change until we get to spring. At the same time, exporters are finding it difficult to connect with overseas buyers with the widening spreads between Australia wheat and Black Sea wheat landed into Asia and other destinations. History shows the spread between Aussie wheat and Black Sea wheat must narrow to find demand, but it may not happen until we get closer to the new crop positions.

Western Australia’s (WA) Geraldton zone received more beneficial rain last week, but limited rain fell across WA’s southern cropping areas. Falls in the Geraldton zone ranged from 10-50mm with most areas seeing 20-30mm. Falls tapered away in the Kwinana zone with most areas only seeing 5-15mm.

South Australia (SA) also picked up showers through the week. The coastal areas on the Eyre Peninsula’s (EP) west coast and lower EP saw the best of it. There was a general 10-15mm on the Yorke Peninsula and 5-12mm in the Lower North and the Murray Mallee. There was some patchy rain in Victoria (VIC) with the Wimmera picking up 5-15mm, but only 1-5mm in the Mallee.

Ocean Freight & Shipment Stem Update:

A quieter week for bulk shipping but rates appear to be holding steady for now, largely underpinned by tight tonnage supply. Panamax continued to struggle with the Atlantic proving the more positive basin on the back of some fresh enquiry. Supra/Ultras in Asia are still trading around 16-18kpd for Pac/Aussie rounds. The handysize market demand/supply remains balanced and rates have overall held their levels.

On the Aussie coast, we saw a few prompt ships cleared early in the week which in turn helped stabilised the rates.

On containers, Singapore port has experienced severe congestion over the past few weeks and this is leading to substantial vessel delays for ocean carriers and a sharp increase in container rates for shippers who are already dealing with the difficulties created by cancellations and diversions away from the Red Sea.

The Shanghai Containerized Freight Index (SCFI), which is considered a benchmark for container freight, rose from USD 2,305/TEU on May 10 to USD 3,475 on June 21, an increase of 50%.

Reports indicate that nearly half a million containers are currently stuck at the port of Singapore. According to Drewry’s Ports and Terminals Insight, in the first five months of the year, throughput at the port of Singapore grew 8% year-on-year but is not enough on its own to challenge existing handling capacity. However, the rerouting of container vessel services away from the Red Sea in response to the Houthi attacks resulted in a 22% increase in average parcel sizes in the period between January and May and this has created efficiency bottlenecks which are, according to some reports, spreading to other Asian hubs.

To address the bottlenecks, the Maritime and Port Authority of Singapore (MPA) has reopened the previously shuttered Keppel Terminal. This move has increased weekly throughput from 770,000 TEUs to 820,000 TEUs, offering some relief to the port terminals and yards. In addition, to alleviate the severe congestion, Singapore also plans to expedite the opening of new berths. Terminal operator PSA will inaugurate three new berths later this year to boost overall port handling capacity and it is hoped things start to ease in Q4 of 2024. However, none of this helps the issue of container lines not being able to call in the Red Sea. That issue seems set to continue without an end or solution in sight.

Last week was another week with limited activity for the shipping stem additions. There has been about 250 thousand metric tonne (KMT) of wheat added to the stem in the past week, 60KMT of barley and 30KMT of canola. The wheat additions were split between WA and VIC with a 25KMT vessel added in SA. May wheat exports are expected to be down on April’s 1.86 milliom metric tonne (MMT). Australia’s grain exports are expected to remain slow until new crop supplies come on stream.

Australian Weather:

The Bureau of Meteorology (BOM) released its Jul/Oct forecast last week, which shows a continuation of the drier than normal pattern in Australia’s southern cropping zones. For July, much of Australia is expected to see typical rainfall for the month, although the dryer than normal pattern continues in the south with a 60-70% chance of normal rain across far southeast Australia.

8 day forecast to 8th July 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 30th June 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar (AUD) was slightly stronger to close out last week when valued against the US dollar (USD) trading at 0.6670. Friday's session recorded a significant uplift in the AUD against the USD following an unexpected inflation reduction in the US in May. On the data front, last week Australia’s monthly inflation rate increased to its highest level in 2024 in the latest indication that the Reserve Bank won’t be cutting interest rates soon and might yet hike again.

Australian Crop Update – Week 25, 2024

Wed, 26 Jun 2024 04:14:45 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian cash market was sharply lower over the past week with the biggest declines in New South Wales (NSW) where the winter crop is off to a favourable start. Limited new crop selling has been the main catalyst for the declines, but this has also flushed out old crop sellers who are keen to make the most of the old crop premiums. Declines in barley were also less than those seen in wheat.

At this stage of the year, it is hard to buy and equally hard to sell. Exporters have been quick to pull bids to realign local markets with overseas values after the late May and early June rains secured germination in Western Australia (WA), South Australia (SA) and VIC. Markets are comforted that the crop has been planted and is mostly germinated, albeit some parts of SA and VIC remain anxious for more rain to consolidate the late, dry start. Declines in Australian wheat is not keeping pace with the falls in global markets which is making local wheat even more expensive into key Asian markets and Middle East markets were exporters were already struggling to make sales against cheaper northern hemisphere competition.

On pulses. In the north, growers have taken advantage of good moisture to plant one of the biggest chickpea crops seen for some time while in the south, growers have planted more lentils in less than favourable planting conditions. On Favas, the northern crop is well established while in the south, we are again in watch and wait mode for reports on its progress.

Ocean Freight & Shipment Stem Update:

A week of stabilisation in the shipping market. The recent strength in the Atlantic has cooled while in the Pacific, more demand appeared to stem the recent downward pressure. Supra’s in the Pacific are achieving around 15kpd for Pac rounds and slightly more for Aussie. Ultras are able to achieve 16-17kpd depending on the specifics on the requirement. Aussie coastal tonnage showed some resistance this week with larger handies not willing to go below the low 20k's for outbound trips while supras were targeting closer to mid 20k's for same. The exception to the norm was the Panamax which experienced softening throughout the week in both basins. The main reason was a reduction in demand in the Atlantic main loading areas which in turn seeped through to the Pacific which was unable to maintain its levels. Bunkers prices have creeped back up to the low 600's pmt for most major ports in Asia.

The slowdown in shipping stem additions continued this week. There was 193 thousand metric tonne (KMT) of wheat put onto the stem in the week, 60KMT of barley (SA) and 24KMT of canola.

Australian Weather:

Weather forecasts are little changed for the upcoming week. WA is forecast to see another rain front late next week. Models vary on how much rain this will offer but it could be 15-20mm. The forecast is rain for SA and VIC next week but the Australian Bureau of Meteorology is only predicting light showers. This will keep markets comforted that the 2024/2025 crop is off to a reasonable enough start.

8 day forecast to 1st July 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 24th June 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was slightly weaker to close last week when valued against the USD closing at 0.6627. The Reserve Bank has kept interest rates on hold at 4.35 per cent. The cash rate target has been steady for seven months now. Interest rates will remain at this level for another six weeks at least, until the RBA Board's next meeting in early August. The RBA board said the path of interest rates that would ensure inflation returns to target in a reasonable timeframe remained uncertain and further rate hikes could be on the cards.

Australian Crop Update – Week 23, 2024

Tue, 11 Jun 2024 04:07:25 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian cash markets had a weaker week last week. Better US production figures plus news Turkey had banned imports from Russia to support local prices saw the market sell off through the week. Although this was partly offset by a 1% decline in the AUD. On a positive note, further rain fell across parts of Western Australia (WA), as well as northern New South Wales (NSW) and Southern Queensland (QLD). Sellers emerged on the old crop and new crop in the eastern states, but most consumers seemed happy to sit on their hands for the time being in the international markets – no doubt waiting for some market consolidation. WA remained firm against exporter short covering.

South Australia (SA) received some early week showers. This included 3-8mm across most of the Eyre Peninsula but it remains and is in need of more rain to ensure a complete germination.

Australia’s April wheat exports fell to 1.86 million metric tonne (MMT) in April down from 2.57MMT in March. This lifts the Oct/Apr wheat exports to 13.26MMT. Wheat exports to China were 549 thousand metric tonne (KMT) down from 740KMT in March. Yemen was the next largest with 184KMT followed by Indonesia with 155KMT and then Philippines with 136KMT.

Barley exports for April were 697KMT up from 627KMT in March. This puts Australia’s Oct/Apr barley exports at 5.9MMT up from 4.7MMT at the same time last year. Malting barley exports are up by 1.52MMT while feed barley exports are down 284KMT. Among the barley exports for April was 70KMT of malting barley shipped to Europe (Netherlands). China was the largest destination with 478KMT shipped in April. Barley exports to Japan remain strong at 99KMT.

Canola exports for April were strong at 648KMT with all the production state’s shipping multiple cargoes.

Lentil exports continue to impress with a further 117KMT shipped in April. This lifts the Oct/Apr exports to 944KMT up from 818KMT at the same time last year (+15%). ABARES lifted its 2023/24 lentil production in the recent update to account for the larger exports.

Ocean Freight & Shipment Stem Update:

Last week started off on a sluggish note and never really kicked into gear causing freight rates to soften across the board. The Panamax market was noticeably quiet in both basins with minimal fresh demand appearing throughout the week. Tonnage on the coast appears to be growing for end June/early July dates so without more demand it is likely these rates may ease further. Minimal period fixing heard this week however owners were less reluctant to revise their asking in the hope this week is an anomaly rather than the new norm. Bunkers have been easing over the past few weeks and have settled a tic below 600pmt in most major bunkering ports in Asia.

It was a very quiet week for stem additions. There was 212KMT of wheat added to the stem and 10KMT of canola.

Australian Weather:

WA received soaking rains in the past week over several days. Weekly falls were a consistent 50-100mm for most areas. This should be enough to get 90% plus of the dry planted crops in the region germinated. SA received some showers early in the week up to 3-8mm across most of the state. SA and VIC remain dry and in need of more rain to ensure a complete germination. Rainfall has been light and patchy over the past couple of weeks through SA, VIC and even parts of southern NSW. Falls over the past couple of weeks have been around 8-20mm with most areas seeing 15mm or less.

Parts of NSW received more rain last week adding to the favourable start. Heavy rain fell along the southern coast but falls in the cropping regions were limited. There was 15-25mm across the southern and central growing areas. Southern QLD also received showers last week with up to 5-15mm recorded.

Forecasts for the upcoming week remain drier than normal for SA and VIC. High pressure cells have returned to the south and there is one siting over central Australia, both of which are making it difficult for southerly fronts and rain systems to push into the southern cropping zones.

8 day forecast to 18th June2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 2nd June 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar closed last week having clawed back losses suffered in the wake of stronger than anticipated US non-farm payroll print. An upside surprise in job creation and strong wages growth pushed global yields upward, driving the USD higher against all majors through trade on Friday. The AUD slipped off highs approaching US$0.6680 as market participants cut expectations for Federal interest rate cuts.

Australian Crop Update – Week 22, 2024

Wed, 05 Jun 2024 04:05:09 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Domestic markets are softer following last week’s rain with more in the forecast for later this week. Traders are reporting more offers coming forward from growers. Buyers have backed away as more offers have emerged. Numerical models are forecasting 15-40mm across most of the Western Australian (WA) wheat belt this week. However, forecasts remain dry for South Australia (SA) and Victoria (VIC), apart from possible traces. SA’s Eyre Peninsula picked up some more light showers which will help with emergence.

Wheat and barley prices were down USD3-5 but are still holding above levels that have more international engagement. Markets in some areas however remain firm where farmers are still looking for more rain to ensure all crops are germinated. The Australian market is very much in a holding pattern with a full export program for existing crop commitments, awaiting further rainfall to define ideas for the production of the season and lower carry stocks underlying prices for those with any length. The industry is therefore looking at the weather carefully over the next four weeks and beyond ahead of any new crop business which is expected to start harvest in October 2024.

The Bureau of Meteorology (BOM) issued its latest climate update last week where they said rainfall for parts of eastern Australia is likely to be below average in June, while in July and August, rainfall for parts of the interior is likely to be above average. For June, they said, there is no strong signal towards above average or below average rainfall for the month, however below average June rainfall is likely (60 to 70% chance) for parts of eastern Australia. They said climate models suggest that ENSO will likely remain neutral until at least July 2024. Early signs of La Niña are most relevant to the climate of the tropical Pacific; the long-range forecast for Australian rainfall and temperature provides better guidance for Australian climate. BOM isn’t saying it, but their wetter forecast is being influenced by the La Nina bias.

ABARES released its initial 2024/25 Australian winter crop estimates. Australia’s wheat production for 24/25 is forecast at 29.1 million metric tonne (MMT), barley at 11.5MMT and canola at 5.4MMT. The area planted to wheat is forecast to rise by 3% year on year to 12.7 million ha in 2024/25, and barley area at 4.3 million ha is seen as being up 3%, mostly reflecting an increase in Queensland (QLD) and northern New South Wales (NSW) area after a dry season last year. The area planted to canola is forecast to fall 9% to 3.2 million ha, with lower relative expected returns have also seen some substitution towards other crops, including wheat, barley and pulses. Large planting will see pulse production climb in 2024/25. ABARES is forecasting chickpea production at 1.1MMT and lentils at 1.6MMT. Area planted to chickpeas is forecast to increase by around 80% to 730,000ha in 2024/25. The increase reflects the high prices and a favourable start to the cropping season in QLD and NSW. The area planted to lentils is forecast to increase further in 2024/25 to a record 885,000 ha, reflecting high lentil prices. Lentil production is forecast to remain steady on last year at 1.6MMT, following last year’s bumper yields. ABARES also raised its forecast for the 2023/24 lentil crop to account for the stronger than expected exports.

Ocean Freight & Shipment Stem Update:

A quiet week. The Panamax suffered from minimal fresh enquiry in both basins, albeit Pacific faired better by weeks end with more demand appearing ex Aussie and Nopac which helped steady the rates. The Ultra/Supra market followed suit where we saw an oversupply of tonnage worldwide with rates generally easing by 2-3kpd across the board. The Handies in the Altantic have continued the recent downward trends, especially in the Cont/Med areas where owners are having to settle sub 10kpd for quick Atlantic rounds.

In terms of export stem additions there was 256 thousand metric tonne (KMT) of wheat, 135KMT of barley, 88KMT of canola and 32KMT of sorghum put on the shipping stem in the past week.

Container shipping rates are on the rise once more. This rates surge is due to a limited supply of containers caused by rerouting around the Red Sea and healthy demand in multiple regions associated with the traditional northern hemisphere summer surge. The busy season has started early, pushing rates on major east-west routes to their highest levels since September 2022. This boom is affecting nearly all routes, including those to Latin America, Africa, and within Asia.

Australian Weather:

WA received enough rain last week to germinate crops (>12mm). This region accounts for around 40% of the Australian wheat output so it is critical for Australian export that rainfall is received. WA is forecast to see more rain this week with 10-20mm expected across the northern cropping areas. Last week’s rainfall was disappointing for most areas of SA and they require more rain for a uniform germination of winter crops with most areas seeing 10-15mm. They need another 5-10mm to ensure a uniform germination. Forecasts are mostly dry for the next week. VIC rainfall was also lighter than what was expected whereas NSW and QLD received general rains supportive of the area planted.

The weekly rainfall map below includes Sunday’s rains across NSW.

8 day forecast to 10th June2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 2nd June 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was slightly stronger to close out last week when valued against the USD closing at 0.6651. The AUD/USD pair traded about a half of a percent higher on Friday as the Aussie dollar continues to rise following a bounce from the May lows. Last week on the data front Australia’s CPI rose by 3.6% year on year in April, up from 3.5% in March and higher than the market estimate of 3.4%. This was the highest reading since last November and was driven by higher food prices and clothing. Core CPI, which excludes food and energy, remained unchanged at 4.1%. This marks the second straight month that CPI accelerated and beat the estimate and that could give the Reserve Bank of Australia reason to delay rate cuts.

Australian Crop Update – Week 21, 2024

Wed, 29 May 2024 06:20:25 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Russia, and more recently Ukrainian, weather challenges continue to drive the global markets higher. Recent gains in Australian wheat have been less than those in both the US and EU and as a consequence, Australian basis is looking cheaper than it has done for some time. In terms of demand, the markets are on edge with international consumers, for the moment, unwilling to feed the rally. However, some demand for nearby and food security positions are appearing in Middle East.

Buyers continued to pay up for grain with growing tightness in old crop supplies and dry weather concerns for the new crop slowing farmer selling in both the old and new crop. Markets remain firm, and supplies are hard to buy with farmers now expecting the rally may have further to go as dry weather continues to fuel values.

In Australia, growing conditions in Queensland (QLD) and New South Wales (NSW) are close to ideal. However, sizable parts of Victoria (VIC) are dry and even some parts of southern NSW have been forced to plant dry. Western Australia (WA) and South Australia (SA) are very concerned about the dry weather where crops have been planted dry and farmers are waiting for rain to germinate crops. The good news is most models now call for rain later this week and next week across most growing areas.

Our analyst's, Ag Scientia, balance sheet analysis indicates Australia will end up with tight carry over supplies heading into the 2024/25 season at the end of September. We expect this tightness in QLD and NSW will be acute. It’s going to be a similar situation for barley.

Australian Pulses Market Update:

Chickpea prices increased 5% over the week after demand continued to increase from India due to government regulation changes. Australian farmers have increased their plantings of desi chickpeas for the new season as they have seen prices increase 20% since April 2024. Analysts are forecasting a deficit of 2 million metric tonnes (MMT) in India for the 2024/25 season which is unlikely to be satisfied by chickpea imports, with peas needed as substitutes. As a result, the Australian market is preparing for upside in prices.

Ocean Freight & Shipment Stem Update:

There is a sense of uncertainty in the ocean freight market after a rather subdued period as holidays in Asia last week and Europe had an impact on recent activity levels. The Panamax market in Asia has held with enough demand to keep rates steady. However, the Atlantic basin continued to disappoint (particularly trans-Atlantic business). The lack of activity also filtered through to the smaller sizes as the Ultramax and Supramax sector was starved of any momentum as an oversupply of tonnage became more and more apparent. Although period interest has slowed on the handysize, rates have generally maintained in the Pacific with the lack of tonnage outweighing any influence a lack of fresh enquiry might have.

The container market is continuing to struggle with the challenges set by global conflict, weather issues and the northern summer demand. This means that rates are likely to remain high for a sustained period. Particularly as there are still some dislocation, box location issues caused by the Red Sea attacks, Panama canal and low US inventories.

In Australia, It was a busier week for shipping stem additions. This comes as no surprise given the market strength in WA. There was 303 thousand metric tonne (KMT) of wheat put onto the shipping stem in the past week as well as 132KMT of barley and a further 29KMT of canola.

Australian Weather:

The major models are now in agreement that WA and eastern Australia will see general rain later in the week and early next week. Australia’s ACCESS is forecasting general rain for QLD, NSW and the eastern half of VIC as moisture is drawn down from north west WA across to eastern Australia. The rain is forecast to reach NSW and QLD on Friday and through the weekend. Southern WA will also see a series of cold fronts which started on the weekend but will continue through to next week. The stubborn high-pressure system that has sat over the southern waters for weeks, preventing the cold fronts from making it to WA, looks to finally move this week. This allows the cold fronts to reach WA, offering the best chance of rain for the winter cropping season so far. Most areas are forecast to see rain later in the week.

8 day forecast to 4th June2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 27th May 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was slightly weaker to end last week when valued against the USD 0.6620. The AUD lost 0.20% against the US dollar for the third straight day on Friday as investors digested the latest S&P Global PMI report in the US. The first support for AUD/USD is at 0.6600 and if this level is breached, it will expose the 100-day moving average (DMA) at 0.6562. Last week the RBA board kept the cash rate on hold at a 12-year high of 4.35 per cent, citing that recent data still pointed to an easing in inflation. Looking ahead this week all eyes will be on the release of the Consumer Price Index (CPI) which is expected to fall from 3.5% to 3.4%.

Australian Crop Update – Week 19, 2024

Wed, 15 May 2024 06:17:36 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

Australian cash wheat was up by around US$7 while the new crop for January was US$11 FOB higher over the last week as the local market responded to continued dryness in Western Australia (WA) and South Australia (SA) and global weather concerns. The sharpness in the Chicago rally is outpacing the local market which is making the basis look cheap at the moment and may encourage some basis buying. Markets are tight and exporters continue to short covering against sales commitments. More domestic demand has surface as domestic customers become increasingly nervous about the old crop supply outlook.

Australia exported 627,353 metric tonnes (MT) of barley and 100,734MT of sorghum in March 2024, according to the latest data from the Australian Bureau of Statistics.

Feed barley exports at 390,828MT were down from 415,454MT shipped in February 2024, with China on 384,651MT the destination for 98% of the March 2024 volume.

Malting barley exports at 237,055MT more than doubled over the month from the 117,338MT shipped in February 2024. China was also the major destination for malting barley exports on 185,299MT, followed by Vietnam on 21,768MT and Peru on 19,800MT.

Sorghum volume also surged, almost doubling from 50,766MT shipped in February 2024, with China on 92,224MT the biggest market, followed by Taiwan on 6,850MT and The Philippines on 1,569MT.

Australian Pulses Market Update:

Chickpea prices have jumped to around USD800 per tonne FOB following India’s announcement of an immediate removal of tariffs until March 2025. There are reports that a cargo of Australian chickpeas, which was sailing to other destinations, has been diverted to India. Lupins values have jumped in recent weeks and continue to firm which is reflective in the increased farm feeding with the dry weather. Bids are up to US$400 FOB Melbourne.

Ocean Freight & Shipment Stem Update:

There was 332 thousand metric tonne (KMT) of wheat, 210KMT of canola and 70KMT of barley put on to the shipping stem in the past week. Two thirds of the wheat was added in Victoria (VIC). A further 68KMT of wheat was added into Port Kembla in New South Wales (NSW) which will further tighten the NSW supplies. There was also 55KMT added in WA which was a mix of Geraldton and Kwinana. WA accounted for 145KMT of the weekly canola additions.

On current pace, Australia’s final 2023/24 wheat exports will exceed 20 million metric tonne (MMT) and barley exports will be around 7MMT. Stem and exporter short covering indicates Australia’s Apr/Jun exports will remain solid and this leaves a relatively easy task to achieve the mentioned targets with more modest shipments in the Q4 (Jul-Sep) quarter expected given northern hemisphere competition.

In terms of ocean freight, the dry bulk market has firmed steadily over the past week, primarily led by strong demand in the Pacific on all sizes. Panamaxes were well supported in the Pacific with significant uptick in demand ex Indonesia which in turn helped lift the rates for Supra/Ultras tonnage in Southeast Asia. By the end of the week, there had been multiple fixtures reported in the mid 20k's for Indonesia rounds on Ultras/Supra. A jump of roughly 4-5kpd week-on-week. This increase started to trickle down to the Handy tonnage who managed to secure 16-17kpd for a Pacific round.

In contrast to the Pacific, the Atlantic was rather subdued throughout the week with rates for Panamax/Ultra/Supras trending sideways and actually lost some ground on Handies. USG market has been quiet while the ECSA market has been steady.

Period enquiry has sprung back to life in the Pacific with Ultramax now fetching 19-20kpd for short/medium period and Handies achieving 16-17kpd for same. Contrary to vessels rate, bunkers have either held or eased slightly over the past week helping stall freight rates climbing too fast.

Australian Weather:

NSW received general rain through the week with more expected in the coming days. There was 15-30mm across the North West. Some of the best rain has been in the western areas, which will encourage large plantings in some of the more marginal areas where rains can be more problematic. There was 20-60mm across the Central West of the state. Queensland (QLD) didn’t see much rain last week. VIC received some patchy rain on the tail end of the NSW system. SA remained dry throughout the week. WA saw some patchy rain, with the southern coastal cropping areas enjoying the best of it. There was 2-10mm in the Great Southern. The coastal fringe areas in the south saw 10-15mm with the odd 20mm. There is some useful rain starting to creep into the 14 day forecast for SA which will need to be watched.

8 day forecast to 20th May 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 13th May 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was slightly weaker to end last week trading at 0.6591. The USD held its ground on Friday but seems stuck as markets await drivers to continue placing their bets on the next Federal Reserve (Fed) decisions. The US economy remains on shaky ground, and markets are expecting signs of decelerating inflation, which gives the Fed confidence to start cutting. In the meantime, the bank’s officials remain hawkish.

Last week the Reserve Bank of Australia left its cash rate on hold at 4.35% for a fourth consecutive meeting on Tuesday in a result that was widely expected.

Australian Crop Update – Week 18, 2024

Thu, 09 May 2024 03:10:19 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian domestic markets were stronger again last week. Traders are saying barley is now being drawn up from southern New South Wales (NSW) to apply against commitments into the Darling Downs in Queensland (QLD). Cattle on feed numbers are expected to remain high despite the high grain prices. Feedlots have reportedly been active buyers of wheat and barley.

NSW wheat exports continue to move along which will leave the ending stocks extremely tight at the end of September. Exporters have been active buyers into the Port Kembla zone in recent weeks consuming stocks in NSW. It is expected that wheat held in NSW will end up back into the domestic market as traders take advantage of the old crop premiums.

South Australia (SA) and Western Australia (WA) APW prices were also higher, up some USD8-12 per metric tonne (/MT) on exporter short covering. The strength in the SA and WA wheat values indicates the exporters have a sizeable commitment for May and June and most likely into July. Strong exports and dry weather are putting upward pressure on prices.

2.57 million metric tonne (MMT) of wheat was exported from Australia in March 2024. Container wheat exports were strong at 238 thousand metric tonne (KMT) which is the most since May last year.

Barley exports remained strong at 628KMT with 436KMT of this coming from WA. China accounted for 570KMT of the exports. A further 524KMT of canola was shipped in March. Pulse exports were very strong. This included 210KMT of lentils, 368KMT of chickpeas and 283KMT of faba beans.

Australian Pulses Market Update:

Last Friday, the Indian Government announced it has removed its tariffs on desi chickpeas until March 2025. Believed to be effective immediately, the much-anticipated announcement has come ahead of planting, which will start later this month in southern and central QLD and northern NSW.

India’s tariff on desi chickpeas has equated to around 66 percent of the price. It was imposed after much of Australia’s record 2016-17 crop of 2MMT had been exported. Challenging seasons and the Indian tariffs mean no crop since has exceeded 1MMT. Excellent subsoil moisture in Australia’s major growing regions, as well as anticipation about the reopening of the Indian market, mean a crop of more than 1MMT seems certain this year.

Planting of the lentil and faba beans crops is well advanced with area on track to at least match last year’s crop. Prompt prices for chickpeas and lentils have firmed in the past month based on bulk and containerised demand for dwindling current-crop stocks.

In the case of faba beans early indications are its area will be down on last season’s due to a swing into lentils in the state’s lower-rainfall areas and current dryness in South Australia the main export state.

Ocean Freight & Shipment Stem Update:

There was around 215KMT of wheat added to the Australian shipping stem last week. This included 115KMT in VIC, and around 50KMT each in WA and SA. A further 195KMT of canola was put on the stem as well and 30KMT of sorghum in Newcastle.

With Japanese Golden week as well as Labour Day and Greek Easter holidays last week, the market took a breather as we saw a drop in activity levels from the previous few weeks. There was an expectation rates would ease off slightly as a result of the holidays, but as the week progressed, we saw rates hold/trend sideways.

The panamax market was noticeably quiet compared to other segments and rates drifted in the Atlantic as a result of minimal fresh activity. The Pacific market showed more resistance with rates tending to hold steady.

Handysize remained healthy off the back of more TC orders appearing, especially ex Australia.

Australian Weather:

WA received light showers and isolated storms through last week but no significant rain. There were some isolated heavier falls associated with the storms in the south west of the state. Farmers are content to plant dry, but the dry weather market anxiety is building. NSW received rain on over the weekend, but the best of the falls were west of the cropping areas. More rain is expected for NSW over the next week, but this doesn’t offer any rain for VIC and SA.

The Bureau of Meteorology released its latest seasonal update. This forecasted a continuation of the dry pattern through May before improved rain in June. A drier May is likely to be followed by more typical conditions to start winter in June. Forecast rainfall for May is likely to very likely (60% to greater than 80% chance) to be below median for most of Australia. During June, there is a shift to roughly equal chances of above or below median rainfall for most of the country. For scattered areas for the southern mainland, forecast rainfall is likely (60 to 80%) to be above median. May to July maximum and minimum temperatures have an increased likelihood of being unusually warm for most of Australia.

8 day forecast to 13th May 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 6th May 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar had a stronger week closing at 0.6606 against the USD. The AUD continued its strengthening for the third successive session based on the hawkish sentiment from the Reserve Bank of Australia (RBA) although they kept rates on hold on Tuesday. Inflation has come in higher than expected during the March quarter, dampening expectations of interest rate cuts later in the year. The sentiment is that there are no expected rate cuts until at least the 4th quarter of 2024.

Australian Crop Update – Week 17, 2024

Tue, 30 Apr 2024 03:35:25 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

The Australian grains market continued to strengthen in all states last week. All grades from ASW, APW, H2 and AHP2 are up 8% in the past two weeks on the back of higher global futures as the dry weather in Kansas and southern Russia triggered investor short covering. Australian wheat markets were further supported by the dry weather concerns in Western Australia (WA) and South Australia (SA) and to a lesser extent Victoria (VIC). In addition, many farmers were absent from the market due to a long weekend last week for ANZAC day, continued planting in all areas and the usual tax year considerations. There is no doubt some trade shorts have been flushed out by the recent market moves to further add support to the rally.

We expect markets remain supported now until there is some broader rain across WA, SA and VIC.

Ocean Freight & Shipment Stem Update:

There was 318 thousand metric tonne (KMT) of wheat, 206KMT of canola, 105KMT of barley and 30KMT of sorghum added to the stem in the past week. Canola additions have been strong with 500KMT put onto the stem in the past three weeks with most of this in WA. Barley additions have slowed as supplies become more difficult to secure.

Ultramax/Supramax

It was a solid week for the sector overall. Although, as the week ended, some felt that a ceiling had been reached in the US Gulf and South Atlantic. From Asia, there was a good amount of fresh enquiry from Southeast Asia with a plentiful supply of Indonesian coal and nickel ore cargoes. With the upcoming holidays in China, it remains to be seen if this moment will continue and certainly it feels like the market is moving up too quickly given the fundamentals. Visible activity was muted across the Handysize sector, with a mixed week in the Atlantic as the Pacific showed more promise.

Australian Weather:

Weather forecasts remain mostly dry for the next 7-10 days in Australia. South West WA is seeing some light showers with some thunderstorms over the southern inland. Rainfall amounts have been light and limited to a patchy 1-3mm across the inland. Drier weather will then return for most of the state on the weekend before another similar system arrives next week. The Bureau of Meteorology has predicted some showers for New South Wales (NSW) which is forecast for later in the coming week. WA, SA and VIC remain mostly dry.

8 day forecast to 6th May 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 29th April 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was stronger to finish the week when valued against the USD trading at 0.6524. The AUD strengthened on the back of rising yields in Australian government bonds, with the 10-year yield hitting a 21-week high of 4.59%. On the data front, last week Australia’s inflation rate slowed less than expected in the March quarter as rents and education costs increased, dimming hopes the cost-of-living crunch was easing and lessening chances of a 2024 cut in official interest rates.

Australian Hay Update – Monday 29th April 2024

Mon, 29 Apr 2024 05:02:48 GMT

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.

Harvesting:

A drier season and reduced rainfall can facilitate the oaten hay harvesting process. When there is less rainfall, the hay can dry faster in the field, allowing for earlier cutting and baling while maintaining the crop quality. This is crucial as excessive moisture in the hay can lead to mould and spoilage, reducing its quality and market value. If hay is baled above an acceptable level (14% Export Standard / 18% Domestic Standard) then heat pockets may be prevalent leading to internal combustion and result in a hay stack or shed catching fire.

Quality:

Oaten hay is valued for its high nutritional content and suitability as livestock feed. When hay is harvested in drier conditions, it tends to have a lower moisture content, resulting in better preservation of its nutritional value. Hay baled with lower moisture levels is less prone to spoilage, maintaining its quality and nutritional composition for longer periods. When baling, a drier crop will pack more densely leading to higher bale weight, less shrinkage and a more efficient storage life.

Field Management:

Less rainfall reduces soil moisture, which can be advantageous for oaten hay crops. The drier conditions make it easier to manage field operations such as irrigation, fertilisation, and weed control. Farmers have more control over the amount of water supplied to the crop, preventing excessive moisture that could lead to root rot or other fungal diseases.

Reduced Disease Pressure:

Certain diseases and pathogens thrive in wet conditions. With lower rainfall, there is typically a decrease in the prevalence of diseases that affect oaten hay crops. Fungal diseases, such as rust or leaf spot, are less likely to develop and spread in drier conditions. This can result in healthier crops and higher yields.

It's important to note that while less rainfall can have benefits for oaten hay crops, the absence of rainfall altogether or prolonged drought conditions can be detrimental. Adequate moisture is still necessary for plant growth and productivity, so a balance is required to ensure optimal crop development.

The team at Basis Commodities is available to discuss fodder requirements and also to support our clients with technical information. Our close association with BALCO Australia will ensure the appropriate information is shared to nutritionists and the livestock output is at the optimal levels.

Please follow the link and enjoy this video detailing the support from Basis Commodities and BALCO Australia.

Please contact Nader Hassan, Musab Jafar or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
E: steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

Musab Jafar
Dubai, UAE
M: +249 91 233 0244
E: musab@basiscommodities.com

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Australian Crop Update – Week 16, 2024

Wed, 24 Apr 2024 03:31:54 GMT

2024 Current Season – USD FOB Indications

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

Australian Grains Market Update

As we approach ANZAC day, which is traditionally seen as a time when Australian farmers get out into the paddocks and start planting next seasons crop, the east coast has plentiful soil moisture, South Australia (SA) has plentiful sub soil moisture but limited topsoil moisture, but Western Australia (WA) is dry and still waiting for seasonal break.

In terms of the cash market, the last week saw markets firm across all port zones on thin farmer selling. This was seen in pulses more than cereals. Victorian (VIC) lentil bids are $50-60 per metric tonne (/MT) higher in recent weeks.. Export grade faba beans are also $40-50/MT higher over the same period. Cereals were steady to firmer, with the extent of nearby shorts being the major determinant of the gains. Further declines in the AUD, which finished the week down nearly 1% against the USD, offered some support. In short, markets are fickle with the nearby needs dictating most of the price activity.

Australian Pulses Update:

In discussions with market participants, we sense it is becoming difficult to gather faba beans from the growers in Australia as liquidity in the market is extremely low. ABARES estimates the most recent Australian faba bean harvest yielded 528,000 metric tonne (MT), and something similar is unofficially expected from the upcoming season.

Considerable amounts of lentils remain in grower hands. Tightening Canadian stock is allowing Australia to price into the subcontinent despite a firming local price. ABARES estimates Australia’s current lentil crop at 1.4 million metric tonne (MMT), and unofficial estimates say the crop about to planted should be able to equal that.

India's total pulse imports remained very strong according to market commentary. Continued strong imports bode well for the prospect of a possible removal of the 44% duty on Australian chickpeas. Indian stocks of pulses are thinning due to government procurement campaigns. The import of duty free yellow peas has helped India limit local insufficiencies. Expectations are rising for the government to extend its duty free policy further indicating strong continued pulse demand.

2024 / 25 Crop Forecast (Agscienta) & Supply & Demand Sheets:

According to our analyst, the 2024/25 winter crop production estimates and balance sheets have been issued during the week with forecasts showing the 2024/25 Australian wheat crop at 27.5 (MMT), barley at 12.1MMT and canola at 5.0MMT. Overall, the Australian winter crop area is expected to be little changed on last year. This could change with the dry weather in WA, SA and even parts of VIC.

Ocean Freight & Shipment Stem Update:

The recent positive sentiment spruiked by owners have now translated into physical gains in the ocean freight market. The Panamax sector was well supported by more cargo and shrinking tonnage lists in the Atlantic, and the Pacific was underpinned by fresh cargo ex Australia and Indonesia. The Atlantic saw sustained interest from the US Gulf and healthy demand from the Continent and Mediterranean, while the South Atlantic saw reasonable levels of fresh enquiry. A steady supply of Indonesian coal demand helped maintain rates from South Asia, while further north, brokers spoke of a healthy volume of NoPac and backhaul business.

The Ultra/Supra market in the Pacific has now jumped back up to 17/18k. Handies in the Pacific found a new sense momentum off the back of more demand appearing from Aussie and NZ as the cargo-to-tonnage balance changed in the owner's favour.

The recent Iran/Israel conflict has yet to deliver any material changes in the shipping market. Most people are now anticipating minimal (if any) new impacts if the situation remains "as is" given the major disruption has already occurred (ie vsl's avoiding the Red Sea/Suez transit).

It’s been a quiet week for shipping stem additions. There was 200 thousand metric tonne (KMT) of wheat added to the stem in the past week. Canola additions were strong at 245KMT.

USDA Summary:

Australian Weather:

WA and SA are still waiting for an autumn break in the weather. VIC has seen some light showers in early April, however it wouldn’t be described as a break to the season. This triggered early crop plantings, but the moisture quickly disappeared as most areas hadn’t seen any significant rain for 2-2.5 months. WA and SA farmers have also started dry planting crops in expectation of a break during May.

8 day forecast to 30th April 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 22nd April 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to end last week when valued against the USD closing trade at 0.6411. The AUD fell on Friday below 0.6400 as riskier assets faced pressure due to heightened geopolitical risk across financial markets. Last week on the local front, Australia's unemployment rate rose slightly to 3.8 per cent after 6600 jobs were lost in March, a stronger-than-expected result that will likely end any chance of a mid-year interest rate cut.

Basis Commodities expands service offering to soybeans.

Thu, 18 Apr 2024 02:38:51 GMT

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

Vessel loading soybeans from Romania to Egypt in late 2023

Chris Whitwell
Sydney, Australia
M: +61 419 833 356
E: Chris@basiscommodities.com

Steven Foote
Sydney, Australia
M: 0408 308 908
E : steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E : nader@basiscommodities.com

Musab Diab
Dubai, UAE
M: +971568303164
E: musab@basiscommodities.com

Australian Crop Update – Week 15, 2024

Wed, 17 Apr 2024 03:30:39 GMT

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

Australian Grains Market Update

The Australian cash markets were mostly firmer last week despite the 2% drop in the AUD against the USD towards the end of the week. The biggest gains were in the sorghum bids after recent heavy rain across Queensland (QLD) and Northern New South Wales (NSW) resulted in widespread quality downgrades. Wheat values were also broadly firmer across most port zones on exporter short covering.

Sorghum harvest is just getting started again following the widespread rain received the week before last. Southern markets were quiet with farmers busy with early planting for canola and barley crops for the 2024/25 season.

Australian Crop Forecasters has released its preliminary estimates for the crop now being planted, and puts national wheat area at 13.6 million hectares (Mha), up from last year, barley at 4.4Mha, up 3%, and canola at 3.2Mha, down 4%. Our analysts see planting up in QLD and NSW, unchanged in South Australia (SA) and Victoria (VIC) but down in Western Australia (WA) as things currently stand.

Australian Export Update:

Australia exported 2.312 million metric tonne (MMT) of wheat in February down from 2.621MMT in January. WA accounted for 941 thousand metric tonne (KMT) followed by SA with 630KMT, VIC 428KMT and NSW with 301KMT.

Container wheat exports were strong at 223KMT which is the most in nine months.

China was the largest destination with 589KMT although Indonesia wasn’t far behind with 545KMT. This included 92.3KMT of durum to Algeria.

National barley exports fell to 499KMT in February down from 926KMT in January. China was the largest destination in February with 384KMT, Japan was the next largest destination with 100KMT.

There was 56KMT of sorghum exports in February. This included 24.1KMT to China and 24.6KMT to Japan.

Canola exports jumped to 763KMT in February up from 425KMT in January. About 44% of the exports went to Europe. Japan was the next largest with 164KMT followed by Mexico with 86KMT.

Lentils exports remain strong at 128.6KMT. India was the largest destination with 68KMT followed by Pakistan with 28KMT.

Australian Pulses Update:

Australia exported 53,818 tonnes (MT) of chickpeas and 128,620MT of lentils in February, according to the latest data from the Australian Bureau of Statistics. Chickpea volume was up 44% from the 37,449MT shipped in January, with Pakistan on 22,690MT the major market. This was closely followed by the United Arab Emirates on 21,436MT, with Bangladesh on 3671MT the third-biggest chickpea market. February 2024 chickpea exports were well down from the 78,213MT shipped in February 2023.

Lentil exports posted a 61% jump from 80,134MT shipped in January, with India once again the major market on 68,431MT. Pakistan on 28,383MT and Sri Lanka on 14,949MT respectively were the second and third-biggest markets for February-shipped lentils. The February 2024 lentil figure is well below the monthly record set in February 2023 when 196,224MT was shipped.

Ocean Freight & Shipment Stem Update:

With the regional holidays over the past few weeks behind us, the freight market once again has pushed for higher rates. The Panamax sector has led the way off the back of more demand appearing in South America causing the tonnage list to start decreasing across the week. The Pacific has been slower to follow suit, but an uptick on cargo ex Australia has started flowing. The Supra/Ultra market is improving with more cargo appearing ex Australia and Indonesia helping support the renewed push. As a result, owners are choosing to sit and wait rather than engage charterers, particularly given the market is keen to gauge the fall out, if any, from the Iran/Israel escalation over the weekend.

There was 668KMT of wheat added to the shipping stem in the past week, which is the most in more than two months. WA and VIC accounted for most of the wheat additions, each with 260KMT. There was also 314KMT of canola put onto the stem and 91KMT of barley.

USDA Summary:

Wheat futures were pressured following a largely subdued WASDE report by the USDA on Friday. Wheat futures rallied off the back of ongoing reports that Russia continues to hold up the departure of vessels carrying wheat from Russian ports.

Corn futures led the CBOT grains higher on Friday, reversing Thursday's decline after the USDA's WASDE estimates showed less in the way of changes for South American production than expected, as well as little stress to U.S corn production.

Australian Weather:

Weather forecasts remain dry for this week and next. This is beneficial for sorghum harvesting and early winter crop planting on the east coast but it’s not good for WA and SA, where they are still awaiting an autumn break to the season. WA and SA remain dry for the next week at least. The extended ACCESS outlook is calling for the dry pattern to continue through May which will add to the growing weather tensions. VIC planting moisture will disappear quickly given they only saw light showers of 10-20mm and following 2-1/2 months without much rain and it needs more. NSW and QLD are in good shape and the grower will plant onto good moisture.

8 day forecast to 22nd April 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 15th April 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar had a weak finish to last week closing at 0.6458 against the USD following the release of weaker Chinese trade data. In addition, the U.S. dollar rose to its highest since November on Friday, boosted by safe-haven demand amid geopolitical tension in the Middle East as well as increasing divergence in monetary policy between the Federal Reserve and other major central banks. U.S. inflation is holding at 3.5% which is expected to delay the timing of interest rate cuts.

Australian Crop Update – Week 13, 2024

Wed, 03 Apr 2024 03:26:08 GMT

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

Australian Grains Market Update

The Australian Domestic markets remain very quiet with few participants willing to chase offers higher as the overall demand is comfortable with the existing old crop supplies. The shortened Easter holidays made it even quieter with the four day weekend and also the Ramadan period in the middle east meant that there was little activity.

The southern Qld Downs wheat and barley bids remain firm amid an absence of sellers. WA was also firmer at times through the week on exporter shorts although the bids cooled by the end of the week as soon as the sellers emerged. Domestic market influences remain unchanged with buyers only chasing the bid for nearby shorts, otherwise they are content to see the farmer carry it. Also, there is limited willingness to chase the new markets either.

Farmer selling in the north is slow on relatively tight supplies and they are occupied on summer crops. Sorghum harvest is advancing, and yields remain strong in Southern Queensland (QLD) and Northern New South Wales (NSW). We expect the national sorghum crop will top 2.2 million metric tonne (MMT) based on the strong yield results so far. A crop of this size would mean another large export year of >2.0MMT. Selling in the south has also slowed to a trickle, as the focus switches to autumn rain. Victorian (VIC) farmers are anxious for rain following two and half months with little to no rain.

Ocean Freight & Shipment Stem Update:

There was 421 thousand metric tonne (KMT) of wheat, 101KMT of canola and 65KMT of barley put onto the shipping stem in the holiday shortened week. Western Australia (WA) accounted for more than half of the wheat additions followed by South Australia (SA) with 85KMT and then NSW and VIC chipping in. VIC accounted for 55KMT of the barley additions and 56KMT of the canola.

Australian Weather:

Remnants of ex tropical cyclone Megan delivered patchy rain for Southern QLD cropping areas ahead of the winter crop planting window. Southern Central QLD received lighter showers for the week with 20-60mm. South QLD cropping areas received good falls with 50-150mm across the growing areas supporting planting for the next season winter wheat and pulses crop. Falls were lighter in NSW with most areas limited to light showers. Nonetheless, most parts of NSW have seen scattered showers through March amounting to 30-120% of the monthly average leaving them well positioned winter crop planting. The Australian Bureau of Meteorology (BOM) is forecasting more rain for Northern NSW in the week ahead with 10-20mm. Forecasts have also improved for VIC with most models now predicting a general 10-20mm across the state early in the week. SA and WA remain dry. The BOM’s latest April-June outlook has intensified expectations of dry conditions over Western VIC and Southern WA.

8 day forecast to 9th April 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 2nd April 2024
Source: http://www.bom.gov.au/

Elsewhere, VIC is relatively dry as is WA. Although inevitably some people are getting concerned about a slightly drier long term forecast.

Longer term - The US CPC (weather agency) said the current El Nino conditions are rapidly weakening and said the ENSO conditions should return to neutral by the end of April and through the second quarter of 2024. They expect a La Nina to develop by the US summer and continue through the autumn months. Some respected meteorologists are leaning towards the development of a La Nina in the Australian spring. Both the SOI (atmospheric pressure off Darwin) and Nino3.4 (SST in mid Pacific) are pointing in this direction.

AUD/USD Currency Update :

The Australian dollar is weaker to start the week when valued against the USD trading at US$0.6486. The AUD resumed its bearish trend on Monday, weighed by the US dollar’s strength following better-than-expected US manufacturing data. The AUD/USD pair is now testing support at US$0.6480, which closes the path to the big target, at US$0.6440. To the upside, the mentioned reverse trendline, at US$0.6530 is the immediate resistance before US$0.6555. Looking ahead this week the Reserve Bank of Australia (RBA) will release the Monetary Policy Meeting Minutes, a detailed record of the RBA Reserve Bank Board's most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates.

Australian Crop Update – Week 12, 2024

Wed, 27 Mar 2024 03:22:52 GMT

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

Australian Grains Market Update

News surfaced in the Australian market last week that Chinese wheat importers have cancelled or postponed about 1 million metric tonne (MMT) of Australian wheat purchases. In discussions, rolling rather than cancellation has been the preferred route which sets up an interesting dynamic towards the end of the year. News of the Australian wheat delays or cancellations came after a reported cancellation of more than 0.5MMT of U.S. wheat exports last week to China. As a result, buyers pulled back their bids by USD20 per metric tonne (/MT) to the farmer but, in reality, Australian values are still some way above those needed to pick up the export pace. There has already been around 1.7MMT of wheat shipped to China from Oct-Jan for the 2023/24 season.

The cancellations have freed up shipping slots allowing fresh sales to be made in the nearby positions.

There were reports of fresh export sales through the week at significantly cheaper values than are currently being quoted by IGC. However, the sense we have is sales were limited. Domestic consumers remain well covered in. Trade remains very thin as growers finish their fieldwork ahead of the main planting window opening.

Ocean Freight & Shipment Stem Update:

The shipping market appears to be settling at its new equilibrium after the recent fireworks. Hire rates on the Panamax have softened a touch over the past week but healthy demand levels remain, which is a good sign that the market won't collapse going forward.

We think that generally improved supply levels will make it hard for the Panamax market in the nearby to support the >20k levels priced by FFAs last week. Although, the well documented demand disruptions that are reducing ton/miles available to the market will keep the market well supported until the middle of the year. The general consensus is the market should hold within its current range until mid year and then the predictions start to differ depending on who you speak with.

It’s been a lean week for shipping stem additions to Australian Ports. There were 440 thousand metric tonne (KMT) of wheat added to the shipping stem in the past week with 165KMT of this in South Australia (SA) and 80KMT WA with the remaining 50KMT in Victoria (VIC).

There was 85KMT of barley added to the stem in the past week, all in WA.

The question stemming from the past couple of weeks is how the Chinese wheat postponements/cancellations will impact the 2023/24 export program. The expected size of the cancellations as opposed to postponements has most likely been overstated. It is estimated that some small cancellations have occurred, however most adjustments were shipment deferrals potentially into later positions.

Australian Weather:

Patchy rain fell in southern New South Wales (NSW) early last week. The best of the rain was around the Young, Wagga Wagga and areas to the east which saw 10-30mm. Temora and Ardlethan only received 10-15mm while areas to the west were less than 10mm. it was all helpful though. Southern Queensland (QLD) and parts of Northern NSW are on track to see 15-40mm starting on Sunday and extending through the first half of next week. It is expected farmers in the north will plant more chickpeas at the expense of other winter crops including wheat and canola.

8 day forecast to 1st April 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 25th March 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to end last week when valued against the USD closing trade at 0.6508 which is closer to the bottom of its multi-week range after positive US data led to a reversal in the pair. Looking ahead this week, all eyes will be on the Australian Bureau of Statistics monthly release of Consumer Price Index (CPI) which is expected to rise from 3.4% to 3.5%. Consumer prices account for a majority of overall inflation.

Navigating Through Troubled Waters: Adjusting to New Insurance Realities Amidst the Red Sea Crisis

Mon, 25 Mar 2024 10:37:57 GMT

Navigating ocean freight is an intricate task. It isn’t as simple as auguring grain into a boat and you are on your way. It requires a specific set of skills and knowled ge and is a time consuming task at the best of times. Navigating ocean freight during the ongoing conflict in the Red Sea is even harder. It has not only disrupted global shipping routes but has also led to significant changes in the maritime insurance landscape. A recent announcement from several leading insurers underscores the evolving nature of risk and coverage in this strategically important region. Several insurers have issued a 7-day Notice of Cancellation for all War and Strikes risks in specific areas of the Red Sea and surrounding waters, affecting their Combined Annual Cargo policies. This decision reflects the heightened risk profile and underscores the insurance industry's cautious approach to the escalating tensions. It also highlights the importance of having the right people to assist in the process.

What does the 7-day Notice of Cancellation mean?

This means that insures are issuing their notices on say the 20 ^th of March and advising that cover will cease on the 27 ^th of March. The reason for this is to ensure businesses have time to make other arrangements.

Understanding the implications?

The areas affected by the cancellation are geographically defined, encompassing key parts of the Red Sea and adjacent waters. This move by the insurers highlights the insurance industry's response to the increased risk of war and strikes in the region, with the potential for a significant impact on shipping operations and global trade.

Image caption: example of geographically defined location affected by cancelation.

Note: While one insurer has indicated that restrictions to cover apply within the specified Geographical Coordinate System (GCS), it is crucial for stakeholders to consult directly with their respective insurers. This ensures the most accurate and up-to-date information regarding the commencement points for individual restrictions of cover.

For charterers and ship operators, this development signals a critical shift. Most insurance policies that previously covered War and Strikes risks in these areas have had this coverage cancelled. Reinstatement of coverage is contingent upon discussions with insurers and may require the payment of additional premiums.

Precautions and Steps Forward for Charterers

Given these changes, it is essential for charterers to consider the following steps:

Enhanced Risk Assessments: Continual monitoring and reassessment of the geopolitical landscape are crucial. Charterers should stay informed about the latest developments in the region and adjust their operational plans accordingly.
Route Alteration: Consideration of alternative routes is advisable, despite potential increases in travel time and fuel costs. The safety of the crew and cargo should be paramount, with decisions made based on comprehensive risk analyses.
Security Enhancements: Implementing additional security measures, such as onboard security personnel or adherence to Best Management Practices for Protection against Based Piracy (BMP5), can help deter attacks. For more information on BMP5, follow this link .
Insurance Review: Engaging with insurers to ensure that policies adequately cover the specific risks associated with the Red Sea transit is essential. This includes clarifying any exclusions and understanding the extent of coverage for piracy, terrorism, and related perils.
Crisis Management Preparedness: Developing and regularly updating crisis management plans, including crew training on emergency procedures, is vital. Effective communication strategies and coordination with international maritime security forces can enhance response capabilities in the event of an incident.
Collaboration and Information Sharing: Participating in industry-wide information-sharing initiatives can provide valuable insights into potential threats and best practices for navigating the region safely.

Conclusion

The Notice of Cancellation by insurers is a stark reminder of the complexities and risks of operating in geopolitically sensitive areas like the Red Sea. It underscores the need for charterers to be agile, informed, and proactive in managing risks and insurance coverage. As the situation evolves, the maritime industry must navigate these challenges with a strategic approach, balancing operational needs with the imperative to ensure the safety of vessels, crews, and cargoes. Adapting to the new insurance realities is not just about managing costs but about ensuring continuity and resilience in the face of unprecedented challenges.

When engaging Basis Commodities to assist with your export needs, you are also gaining the many years’ experience in managing insurance and the risks associated with chartering freight into the Middle East from our partners HMD Insuranc e and MR Shipping. To learn more about our service offering, give the Basis Commodities team a call on the details below.

Chris Whitwell
Sydney, Australia
M: +61 419 833 356
E: Chris@basiscommodities.com

Steven Foote
Sydney, Australia
M: 0408 308 908
E : steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E : nader@basiscommodities.com

Musab Diab
Dubai, UAE
M: +971568303164
E: musab@basiscommodities.com

Australian Crop Update – Week 11, 2024

Wed, 20 Mar 2024 03:04:30 GMT

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

Australian Grains Market Update

Relative Export Pace:

Ocean Freight & Shipment Stem Update:

It was a tale of two stories in the Pacific shipping market last week. Monday through to Wednesday was quiet compared to the last few weeks causing many players to believe the recent bull run at come to its end. However, by the time Thursday and Friday arrived the activity levels had ramped up again giving a new sense of optimism to owners. The Atlantic market was the main driver with gains seen across the board but especially by Panamax off the back of healthy fronthaul demand. This filtered through to the Pacific by the end of the week where owners were holding their asking levels with the growing temptation of ballasting back towards the Atlantic helping underpin the market.

Looking forward, owners have begun to increase asking levels again in an attempt to push the market to the next level and there have been some early signs that some charterers are willing to entertain to cover prompt requirements. Tonnage lists remain tight which is helping the owners cause and there has been a healthy supply of fresh inquiry.

On the other hand, there are early indications that spot supply is increasing from its recent lows, which may limit further rate rises.

There was 594 thousand metric tonne (KMT) of wheat added to the stem in the past week, which is the most in five weeks. 80% was in Western Australia (WA). There was also 70KMT added in Victoria (VIC) and 30KMT in Queensland (QLD).

A further 274KMT of canola was put on the stem in the past week. The distribution of this was mostly VIC and New South Wales (NSW) which both added around 120KMT.

There was also 246KMT of barley added to the stem with around 80KMT added in South Australia (SA), VIC and WA.

Australian Weather:

Two tropical lows are dominating weather patterns in northern Australia, and these are likely to influence weather patterns for the next couple of weeks. The Australian Bureau of Meteorology (BOM) rainfall forecast shows the system is expected to offer some rain for NSW next week as a developing trough draws the moisture southwards.

The 15-day weather forecasts are showing heavy rain for QLD and NSW over the next couple of weeks but the amounts and where the rain falls vary considerably depending on the model.

The BOM’s long-range outlook for April to June is pointing to below average rainfall across most of the north and west, and parts of the south and east of Australia. For April, rainfall is likely (60 to 80% chance) to be below median for most of Australia, except central and eastern NSW, south-eastern QLD, and Tasmania. For April to June, below median rainfall is likely (60 to 80% chance) for most of the north and west, and parts of the south and east of Australia.

8 day forecast to26th March 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 18th March 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to close last week at US$0.6548. The AUD extended Thursday’s sell-off into the weekend feeling the pressure from negative Chinese housing and lending data which indicates the property sector of the world’s second largest economy is in real trouble. China’s struggling real estate developers won’t be getting a major bailout. Authorities have since announced measures to provide some developers with financing. But the national stance on reducing the role of real estate in the economy hasn’t changed. The RBA decided to leave rates on hold for another month at 4.35% where it has been for five months.

Australian Crop Update – Week 10, 2024

Mon, 11 Mar 2024 02:58:00 GMT

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

Australian Grains Market Update

Australian wheat bids tumbled last week as buyers pulled back prices amid the sliding cash markets. East coast wheat bids were back USD5-12 per metric tonne (/MT) depending on the locations. Adelaide zone tracked the east coast values with wheat down USD9-12/MT. Western Australia (WA) saw the biggest declines with bids pulling the calculated FOB values back into line with the South Australia (WA) and Victoria (VIC).

Barley bids were softer but didn’t collapse like wheat. Barley was down USD8/MT equating to around USD225/MT FOB equivalent but this is still far above its Black Sea competition.

ABARES raised its final numbers for Australia’s 2023/24 wheat production by 500 thousand metric tonne (KMT). For winter crops, whose harvest is now complete, the bureau estimated that 26 million metric tonne (MMT) of wheat, 10.8MMT of barley and 5.7MMT of canola were produced in the 2023/24 season.

Australian Pulses Market Update:

There has been limited changes to pulse prices over the last week in the local Australian market. There is continued strong demand in India for pulses and this is maintaining a supportive price environment for lentils and chickpeas. Fava bean demand remains stable as boat after boat leaves for Egypt despite the economic headwinds the country is facing.

Australia exported 41,122 metric tonnes (MT) of chickpeas and 87,055MT of lentils in January, according to the latest data from the Australian Bureau of Statistics.

Export Progress:

Australia’s wheat exports climbed to 2.72MMT in Jan’24 up from 1.38MMT in Dec’23. It was the largest monthly wheat export number in eight months. WA exported 1.29MMT with 678KMT from SA, 435KMT from VIC and 301KMT from New South Wales (NSW). China was the largest destination with 982KMT, the most since April last year. Indonesia was second with 548KMT, which was the most since August. The Philippines and Japan both took more than 200KMT.

Barley exports for Jan’24 were 928KMT with close to 600KMT of this coming from WA and 244KMT from SA. China was the largest destination with 724KMT. Australia has shipped 3.6MMT of barley to China since Sep. Japan was the next largest destination with 91KMT and then Mexico with 61KMT.

Ocean Freight & Shipment Stem Update:

The Pacific dry bulk market caught its breath last week after the rapid rise over the previous weeks. There was a stand off between the owners trying to push the rates to the next level while charterers exercised caution, anticipating the market would settle and correct itself. Towards the end of the week, it felt charterers had a small win in this respect with FFA values coming off a little and owners becoming open to engaging at last done levels rather than push for an additional 1-2K more on hire rates.

The Atlantic market has stabilised over the past few week and seems to have found the floor in the short term. The exception to this remains the USG which continues to ease. With the Ramadan holiday starting, there’s been a noticeable slowdown in the Indian Ocean with rates easing across the board.

It was a good week for stem additions in SA, but not so much in other states. There was 280KMT of wheat, 120KMT of canola and 34KMT of barley added to the stem for total weekly additions of 434KMT. SA accounted for 313KMT or 72%. This was made up of 193KMT of wheat added to the SA stem in the past week and 120KMT of canola. Weekly wheat stem additions of 280KMT were the smallest in six weeks.

Australian Weather:

WA received some patchy rain last week in the cropping areas although it was hit and miss. There was 3-30mm across the Geraldton zone. Most of the Kwinana zone received 15-20mm although it was lighter on the eastern fringe with 5-6mm. There were some patchy storms across the Great Southern ranging from 5-100mm. Most areas seemed to get 15-30mm for the week.

Parts of WA and western VIC have seen limited rainfall since January and some of the zone soil moisture maps from the Bureau of Meteorology are starting to clearly show the drying impact. While some WA farmers caught a break, many cropping regions received no rainfall or are still significantly below the 10 year average rainfall range.

8 day forecast to 19th March 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 5th March 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was stronger to close last week at US$0.6630. The AUD/USD extended its rally while US Treasury bond yields edged lower. Australia's economy grew by 0.2% in the December quarter, the smallest increase in more than a year, but one that pushed the nation to nine successive quarters of growth. On the other hand, Iron Ore was the biggest mover yesterday, dropping 6.6% over the last 24 hours with the Chinese property market debacle impacting demand for the ore and sending stockpiles to the highest levels in a year. The AUD has (so far) managed to largely ignore the move in iron ore but one would suspect a correction should be coming.

Australian Crop Update – Week 9, 2024

Tue, 05 Mar 2024 02:54:11 GMT

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

Australian Grains Market Update

Australian domestic markets continued to grind lower last week and with few exceptions but with little activity. These are difficult markets with demand limited to the nearby positions as buyers surface to cover needs but have limited appetite for deferred positions or significant quantities unless it’s discounted. Equally, farmers are slow sellers with prices now at the lowest levels in 24 months with consequent impact on their gross margins. Selling is limited to nearby positions and usually linked to logistics and growers have little interest in committing to forward sales at current values.

A lack of exporter demand in Victoria and South Australia is making wheat feel very heavy while a more advanced export program is offering a little more support in Western Australia (WA) although there is some talk of exporters walking away from deferred slots in the West. Wheat export demand remains sluggish with traders reporting that buyers are pushing some shipments backwards. The wheat markets in Victoria (VIC) and South Australia (SA) were back 2-3% for the week which is tied to the sliding global cash markets and the slow export pace while WA was steady.

Barley has found export support in recent weeks with reports of further Chinese sales. There are rumours that China may have bought 300-400 thousand metric tonne (KMT) of Aussie barley at USD255-260 CFR China but we think some, if not all, is optionalised so whether it is shipped against the Australian balance sheet is for avid watchers of the Australian stem!

Australian Pulses Market Update:

Australian Grain Export is set to open its next chapter in coming months with the launch of protein-powder production. Co-located with the AGE’s bulk-storage, container-packing and pulse-processing facilities at Dublin on the Adelaide Plains, It aims to produce 5000 metric tonnes (MT) of protein concentrates and 10,000MT of starch concentrates per annum from faba beans. With commissioning underway, Integra Foods is now looking for customers for its protein and starch concentrates in the human-consumption, pet food and animal feed markets.

Otherwise the pulses markets continue to be driven by short covering and further accumulation for future vessels.

Ocean Freight & Shipment Stem Update:

The Pacific market has continued to gain after the Chinese New Year. Activity levels remain high and tonnage lists are getting tigher by the day causing headaches for Charterers trying to cover old cargo bookings. Owners are reluctant to register or stand behind offers for long given the fast moving pace of the market this week. In contrast, the Altantic is trending sideways and may have even lost ground this week. This was a direct result of a lack of fresh demand appearing in the market. Period interest remained strong.

There was 505KMT of wheat, 168KMT of barley and 90KMT of canola added to the shipping stem in the past week. The shipping stem is now far enough advanced to assess how the shipping pace is going against forecasts.

Barley is the most advanced and wheat is the least advanced. Barley is 75% shipped (~5 million metric tonne (MMT) national) based on the exports for Oct/Mar and this is reasonably consistent across the states. The Australian Bureau of Statistics data shows exports of 2.5MMT Oct/Dec. Forecasters had China pencilled in for 3.0MMT of sales prior to the latest round of buying so it’s possible total sales could 3.5MMT plus after the latest round of purchases but if it is optionalised our sense is it may not be that high.

Australia’s Oct/Mar wheat exports are projected at 11.2MMT which includes a projected 7.1MMT in the Jan/Mar. This puts the forecast Oct/Sep exports of 19.4MMT at 58%. New South Wales (NSW) is the most advanced state with 1.1MMT already shipped or on the stem of the projected 1.25MMT. WA is also moving along briskly with 5.4MMT for Oct/Mar which is 64% of the forecast Oct/Sep 8.45MMT. WA only must average ~0.5MMT in the Apr/Jun to achieve the forecast 8.45MMT. SA and VIC export targets will be more of a stretch as both of the states are around 50% of the forecast Oct/Sep which means they will have to maintain the same pace in the second half of the marketing year to achieve the forecast.

Australia is on target to ship about 3.1MMT of canola in the Oct/Mar of the forecasted 4.75MMT. WA will be ~1.75MMT by the end of March which is about 50% of the Oct/Sep forecast. Exporters shorts still look to be chasing canola.

Australian Weather:

WA received beneficial rain in the northern cropping areas last week and over the weekend. There was 20-30mm in the Geraldton zone (80%) and this was expected into the eastern Kwinana zone which received similar amounts in the areas central to the state. Falls were lighter to the west although most still received 10-15mm.

Australia could be heading for its third-warmest summer on record, with many places likely to experience a warmer and drier period than normal from March to May, according to the Bureau of Meteorology’s latest update. There was a 60% to 75% chance of below median rainfall across large parts of the country, including most of the states of NSW, VIC, Queensland (QLD) and the Northen Territory (NT). The chances of above or below median rainfall however were roughly the same elsewhere, such as most of SA and southern and central WA.

8 day forecast to 12th March 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 5th March 2024
Source: http://www.bom.gov.au/

As we prepare for planting, we thought we would share these two moisture profile maps which seem to show a mixed picture. The east and south would appear to be in reasonably good shape and even the west appears to have benefited from rain last week. As things stand, we expect more barley to head into the ground, similar amounts of wheat and we expect pulses to take acres from Canola. Recent hot, dry weather has dried out topsoil moisture in VIC and SA. Farmers will be looking for planting rains in the next 8-12 weeks. The BOM’s ACCESS model is pointing to a slightly drier Autumn.

Source: http://www.bom.gov.au/

Source: https://nasagrace.unl.edu/

AUD/USD Currency Update :

The Australian dollar was slightly stronger to end last week trading at 0.6505 moving higher on Friday from 0.6490 as investors hope the Federal Reserve will start reducing interest rates from the June policy meeting. Friday’s market attention gravitated towards China’s economic performance, with the release of February’s private sector PMIs highlighting the country’s economic dynamics. The data paints a nuanced picture of China’s manufacturing sector, with production reaching its highest rate since May 2023, a resurgence in new export orders for a second consecutive month, and a strategic increase in purchasing activities by firms in light of improved demand.

Australian Crop Update – Week 8, 2024

Wed, 28 Feb 2024 11:33:08 GMT

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

Australian Grains Market Update

Australian domestic markets remain soft. However, slow farmer selling is helping to support values despite world market weakness and consequently, Australian cash remains “relatively” expensive. That said, from a basis perspective, Victoria (VIC) seems to be closer to the world market than Western Australia (WA).

Barley was lower as China came back into the market at much lower levels. Unconfirmed reports of more Chinese barley demand emerging through the week failed to offer support to cash bids.

Domestic demand for east coast grain is edging higher due to slightly larger meat production and cattle on feed numbers. Australia's latest feedlot survey results reveal an increase in cattle on feed to 1,294,531 head in the December quarter, marking a record high.

Australian B alance Sheet Updates (Agscienta)

Australian Pulses Market Update:

Last week, chickpea prices increased around 4% on speculation of Increased Indian demand. Lentils were unchanged while faba beans declined around 4%.

The Indian government has extended its duty free import of yellow peas until the end of April, indicating government concerns remain around the availability and pricing of pulses as we move through 2024. Another factor to consider over the next few weeks for price increases in pulses is the Indian weather as it will determine the support for global prices this year. If the rains are poor and the Rabi crop production is affected, the Indian government may extend the current more flexible duty import program and pulse demand would be supported.

On faba beans, bulk shipments to Egypt are continuing at a steady pace, although containerised exports via the Red Sea have stopped due to the ongoing threat of Houthi attacks.

There has been steady farmer selling, although liquidity is much lower than during harvest

The flat lentils market reflects the shipping stem’s focus on getting wheat and barley out of VIC and South Australian (SA) ports in the next month or two.

Ocean Freight & Shipment Stem Update:

The first trading week after Chinese New Year did not disappoint from an owner's point of view. Activity levels have noticeably increased in the Pacific and rates across the board have improved. Tonnage is tight on prompt dates and some Charterers are still scrambling to cover requirements, with rates now at higher than last done levels. Period interest remained at healthy levels with fixing rates still ranging between 17/18k on supra/ultras for 1yr. The handysize are now fixing at 14/15k levels for same duration (for modern 38kdwt type).

Looking forward, it is still too early to say if this market will continue to push on. Although owners are anticipating a strong market in the Pacific for the next month or two.

A further 235 thousand metric tonne (KMT) of barley, 102KMT of canola and 376KMT of wheat has been added to the shipping stem in the past week. WA accounted for most of the barley apart from 40KMT in SA. WA also accounted for all the canola additional last week. SA was the major contributor to the weekly wheat additions with 200KMT, followed by SA with 140KMT and 36KMT of durum in Newcastle, New South Wales (NSW).

B arley exports are 75% complete based on the accumulative published ABS data for Oct/Dec and the stem projections for Jan/Apr. This is more advanced than wheat and canola which are 56% and 63% respectively.

Australian Weather:

Ex Tropical Cyclone Lincoln brought welcome rain to WA through all the growing regions. General rains brought 25-50mm providing much needed sub-soil moisture ahead of planting for the region's growers. The Australian Bureau of Meteorology is showing a dry outlook over the next three months. There is no rain forecast over the next week on the eastern and southern states however in most areas the moisture profile is relatively full.

8 day forecast to 5th March 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 27th February 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to end last week when valued against the USD. The AUD continued to trade around the psychological level of 0.6500 retracing the losses registered in the previous two days. The Australian dollar may have found some support as the Reserve Bank of Australia reaffirmed the commitment to managing inflation, noting encouraging signs in inflation data. Last week the Reserve Bank left its interest rate unchanged for a second meet ing in a row with the cash rate at 4.35%.

Australian Crop Update – Week 7, 2024

Tue, 20 Feb 2024 11:28:21 GMT

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

Australian Grains Market Update

Australian domestic grain markets fell in all port zones over the week. The biggest declines were seen in the northern areas on the east coast where farmers and traders are struggling for homes within the domestic market and the absence of export demand. The feed wheat market was down USD18 per metric tonne (/MT) for the week as longs finally came down to levels to uncover fresh consumptive interest.

Barley was also pressured lower, but not to the same extent as wheat due to northern barley suppliers remaining tight. Exporters have had little interest in buying at these levels from farmers as they struggle to garner export interest. Prices however are falling where we could see more exports. Overall, demand is soft and when it does emerge it's only for nearby needs.

Nearby demand is more intent on swapping supplies to more efficient export execution locations rather than adding to length, which is expected to reflect the lacklustre demand seen from Asian wheat importers. The same is said for barley which had previously been supported by the large China sales and the advanced export pace.

Ocean Freight & Shipment St em Update:

Lacklustre shipping stem additions in the past week is offering support for exporter prices. Only 356 thousand metric tonne (KMT) of wheat was put onto the stem in the past week compared to the 4-week average of 532KMT. This included 189KMT in WA and 117KMT in VIC as well as 50KMT in Port Kembla, New South Wales (NSW). There was 106KMT of canola put on the stem which included 76KMT in WA and 30KMT in South Australia (SA). There was also 85KMT of barley put onto the stem made up of 60KMT in WA and 25KMT in SA.

Houthi rebel attacks on the Red Sea have led to Suez Canal revenues dropping by half in January. The major shipping companies have chosen to divert their vessels away from the Red Sea and the Suez Canal. Income at Suez Canal has dropped from $804 million in January 2023 to $428 million in January 2024, according to the Suez Canal Authority. The total number of vessels transiting through the Suez Canal dropped from 2,155 to 1,362 in the same period. Many carriers have re-routed vessels to the longer and more expensive route round the Cape of Good Hope. The Suez Canal offers the shortest route between Asia and Europe. Charter rates are rising as owners become more bullish and are pushing for higher-than-last-done levels across segments and regions.

Australian Weather:

More general rain fell across northern Australia last week which is supporting the summer crop outlook. Most forecasters are coming around to the view that the sorghum crop may be significantly larger than early projections. We expect the crop will come in north of 2.1 million metric tonne (MMT) which will demand large exports into China. The long term weather outlook for the winter wheat, barley and canola crop looks favourable with general rains across the growing areas of Australia. Last week saw a heat wave across VIC and Northern NSW with temperatures exceeding 42 degrees for much of the week. This week looks favourable again with showers expected in WA and the eastern states.

8 day forecast to 26th February 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 19th February 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar was weaker to close last week when valued against the USD trading at 0.6494. The AUD attempted to move into positive territory after trimming intraday losses early last week. Australian employment was surprisingly weak in January, while the jobless rate climbed to a two-year high in another sign the labour market was loosening in the face of a slowing economy and subdued consumer demand.

Australian Crop Update – Week 6, 2024

Mon, 12 Feb 2024 11:25:11 GMT

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

Australian Grains Market Update

USDA Report:

The recent USDA report from Thursday last week was mixed, but a generally bearish report as any cuts made were less than the market expected. Wheat saw more production (with Australia unchanged) which was matched with a similar increase in consumption, leading to a marginal decrease in stocks. USDA did cut internal US food consumption, so the report was more bearish for the US traders than the global traders.

On the surface, corn was bullish with less production and less stocks than last month. However, the market took the report as bearish since USDA only cut the Brazilian crop by a mere 3 million metric tonne (MMT) which is much less than local analysts there believe. Once again, the US saw a more bearish picture than global traders as domestic US stocks were up.

Beans were a subdued and bearish affair too, even if Brazilian production was cut by another 1MMT, we still saw an increase in ending stocks of 1.4MMT. We did see USDA increase local US crush to record levels which is of interest.

Ocean Freight & Shipment St em Update:

There was 710 thousand metric tonne (KMT) of wheat put onto the stem in the past week. This included 255KMT in Western Australia (WA) and 240KMT in Victoria (VIC). There was also 140KMT added in South Australia (SA) and a further 75KMT in New South Wales (NSW).

There was 135KMT of barley added to the stem in the past week and 96KMT of canola, which was all in Pt Kembla, NSW. Barley exports on the stem are close to 70% of the expected exports for the season of 6.6MMT. It would be 88% of the USDA forecast of 5.7MMT which they raised by 500KMT in the Feb WASDE.

Barley shipping is the most advanced, followed by canola and then wheat.

Pressure remains throughout the Red Sea as disruptions to the corridor persist with conflict and the absence of insurance underwriters willing to reinstate the coverage for vessels. There has been an increase in airstrikes within Gaza by Israel and in Iraq by the US which only inflates the conflict within the region. Peace and cease-fire talks appear to be a long way off for Israel and Hamas which will continue to keep freight rates firm and route transits affected to avoid any concerns for transits.

Australian Weather:

The Australian Bureau of Meteorology (BOM) is forecasting the El Niño-Southern Oscillation (ENSO) drivers to return to a neutral phase. However, the BOM's ACCESS model only projects forward to Apr/May/Jun’24. Some of the models they forecast into Australia's spring are saying it will move into La Nina again. The seasonal outlook is pointing to normal to slightly above normal precipitation across Australia's cropping areas through the autumn, winter and spring. All of this is positive for Australia’s 2024 winter crop production prospects.

Minimal rainfall was recorded last week across Australia’s west and east coast cropping regions. Temperatures in parts of WA cropping regions topped 40° over the past week. According to the BOM, the week ahead will see more rainfall in Queensland (QLD) and parts of NSW, and limited to no rainfall in VIC, SA and WA.

8 day forecast to 19th February 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 12th February 2024
Source: http://www.bom.gov.au /

AUD/USD Currency Update :

Australian Crop Update – Week 5, 2024

Wed, 07 Feb 2024 11:22:43 GMT

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

Australian Grains Market Update

Wheat and barley bids are holding steady, but canola was mostly down $5-10 yesterday in most port zones. Nearby domestic demand is more intent on swapping supplies rather than adding to length, which is expected given the lacklustre demand seen from Asian importers.

Australia’s wheat exports in December climbed to 1.4 million metric tonne (MMT) up from 1.13MMT in November. Western Australia (WA) accounted for 717 thousand metric tonne (KMT) of the December exports. China was the largest wheat destination with 252KMT followed by the Philippines with 207KMT and Indonesia with 165KMT. China’s Oct/Dec exports of 701KMT are 959KMT less than the same time last year and Indonesia’s Oct/Dec exports of 509KMT are 685KMT less than the same time last year.

Barley exports for Dec were 1.3MMT. WA accounted for 651KMT with 469KMT from South Australia (SA) and Victoria (VIC) 168KMT. China was the major destination with 1.16MMT with 123KMT going to Japan. China has taken 2.52MMT of barley in Oct/Dec and 2.95MMT since exports resumed. Japan has taken 300KMT of barley in Oct/Dec, which slightly down on last year's 334KMT for the same period. Australia has shipped 3.1MMT of barley in Oct/Dec which is 47% of the AGS Oct/Sep forecast.

There was 564KMT of canola exported in Dec with 426KMT of this shipped from WA. WA has exported 1.1MMT of canola in the Oct/Dec.

The Australian domestic markets ended last week mixed. Sorghum values fell USD18 per metric tonne (/MT) to levels we’re export competitive against US sorghum into China. That equates to about USD265/MT FOB vs US Sorghum at USD251/MT FOB Gulf. Yields from the early sorghum harvest in Southern Queensland (QLD) are coming in better than expected and rain is boosting yield expectations for the remainder of the crop, most of which was planted later than normal because of the limited rain in early spring. It is forecast that the sorghum crop will end up being at 2.1MMT due to larger than expected plantings and solid yields.

Australian feed wheat and barley drifted lower last week with the ongoing rain, weakness in sorghum and the slow export sales pace. Wheat in general was lower approximately USD3-4/MT last week. However, traders commented that ASW was up USD2/MT later in the week as container packers chased supplies against nearby commitments. It is reported that other Asian countries are buying ASW at current values and it was reported as being traded into the Philippines at the 288 CFR level.

SA and WA wheat was steady to firmer on exporter short covering. SA wheat is difficult to buy, and exporters are having to work to get coverage against nearby needs. WA appears to be similar as farmers appear to be holding on to their sales as we get closer to sowing and also nearby rainfall.

Australian Pulse Update:

Bulk shipments of Australian pulses are continuing at pace including pre-sold cargoes of faba beans to Egypt taking their normal route via the Suez Canal. Growers are selling modest amounts of chickpeas, faba beans and lentils to traders and export accumulators in a mostly flat market, with activity expected to pick up from March as they look to sell parcels to finance their new-crop inputs. Rain in QLD has lifted production prospects for the mungbean crop now being planted, and prospects for the upcoming winter-crop plant are positive across south and eastern Australia following good rain for most regions since November.

Chickpeas: Chickpea values have dropped USD7 to 14/MT in the past month to reflect a slowdown in accumulation for bulk export ahead of Ramadan. The upcoming harvest of India’s rabi chickpea crop, and of Pakistan’s crop too, has South Asian buyers considering local supply. Australia’s current chickpea crop is estimated by ABARES at 528,000 metric tonnes (MT), and trade sources say carry-in from the previous harvest has mostly been the rain-affected CHKPM.

Faba beans: Three bulk vessels carrying faba beans from southern Australia are currently enroute to destinations in Egypt, and another has departed Port Adelaide last week.

Lentils : Lentil exports in December were almost 240,000MT with India leading the way followed by Turkey and Bangladesh.

Ocean Freight & Shipment St em Update:

With the Chinese New Year holidays on our doorstep, the activity levels in the far east have noticeably started the slow down. Fewer cargoes are appearing in the market and tonnage lists are growing with owners open to taking lower than last done levels to have their positions covered over the holiday period. Bunkers have eased slightly over the past week helping swing the equation more in the charterer's favour. The Atlantic has remained more stable with the grain loading areas again gaining ground over the past week. The optimism on the forward curve remains strong and owners are bullish that the market will start to bounce in the second half of February. The main driver behind this sentiment remains the reduced capacity in Panama Canal and the Red Sea conflicts both helping tighten tonnage supply and increase the tonne-mile ratio.

670KMT of wheat, 26 0KMT of canola and about 140KMT of barley were added to the shipping stem in the past week. Most of last week’s wheat additions were in WA (366KMT) with VIC and SA also accounting for about 130KMT. There was 30KMT of durum added in Newcastle, New South Wales (NSW). WA accounted for 170KMT of the canola additions last week with the other 90KMT in SA.

The barley was split between SA and WA

Australian Weather:

N Summer rains across large areas of Australia’s grain production regions has lifted optimism about the 2024 crop expectations. Above average summer rain means that cropping areas will have the benefit of moisture reserves to draw on, if needed. While winter crop planting is still several weeks away from starting, analysts are already predicting large crops. Commonwealth Bank is foresting Australian wheat production in 2024 at 31.4MMT, up from last year’s crop of around 25.5MMT. They are also tipping large barley and canola crops at 12.7MMT and 5.8MMT, respectively. Fertiliser imports for the 2024 winter crop are reportedly strong with many farmers left short of supplies last year.

8 day forecast to 12th February 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 22nd January 2024
Source: http://www.bom.gov.au/

AUD/USD Currency Update :

The Australian dollar is slightly weaker to start the week when valued against the USD trading at 0.6477. The AUD/USD plunged more than 0.90% on Friday after a robust US Nonfarm Payrolls report triggered a jump in US Treasury yields as investors disregarded a rate cut by the Federal Reserve in March. In a Reuters Poll, analysts unanimously expect the Reserve Bank of Australia (RBA) to keep the interest rate steady at 4.35% in its February policy meeting.

Australian Hay Update - Friday 2nd February 2024

Fri, 02 Feb 2024 04:34:42 GMT

Welcome to the first Oaten Hay report from Basis Commodities and BALCO Australia for 2024. We hope you find this information useful and informative for your fodder requirements.

History of Oaten Hay

Oaten hay has been traded internationally as a feed source from Australia since 1987. It is known by dairy farmers throughout Asia, the Middle East and Australia as a reliable and safe feed which cows will readily eat. By world standards, Australian farming uses low fertiliser and chemical inputs. This is reflected in the quality of Australia Oaten Hay crops.

Australia is characterised by long, hot summers and cool, mild winters. Australia produces one winter crop per year. Dry grown Oaten Hay results in lower yields than irrigated crops and promotes high quality crops through stressing the plant.

Lower potassium levels in Australian Oaten Hay are important for dairy farmers when formulating feed rations. Low potassium diets fed during the close-up phase help increase the reabsorption of calcium for use in milk production. This helps cover the calcium deficiency the cow has Immediately after calving.

The low fertiliser style of farming in Australia produces Oaten Hay low in nitrate nitrogen. The levels in Balco Oaten Hay are well below the accepted cut off point of 500ppm for dairy cows.

Reference: Grains Research and Development Corporation.

Uses of Oaten Hay in livestock feeding

➢ Calves – oaten hay can be used for ad lib intake in milk fed calves or as a chaff through grain mixes.
➢ Heifer and milking cows – total mixed rations (TMR) to add fibre and improve mix consistency when using very wet ingredients. Oaten hay can be a good source of sugar to aid in intake, palatability and dietary sugar levels.
➢ Supplementary to grazing rations to add in fiber and dilute excessive protein levels.

Introducing a digestible fibre source benefits dairy cows at all stages

✓ Calves from 6 weeks to 6 months to enhance growth.
✓ Transition and early lactation to maintain premium animal health and increase early milk yields.
✓ Medium and late lactation to increase milk yield and quality.
✓ Dry cow and close-up increases dry matter intake for reduced metabolic disorders.
✓ Ensures dairy cows reach their maximum production potential.

Balco oaten hay maintains minimal ASH levels, in comparison to other markets. High nitrate levels have a cumulative effect and create the risk of fertility issues. Balco Australia oaten hay test far lower than that of competitor markets. Potassium levels in Balco oaten hay are on average below 2% due to Australia’s low fertiliser inputs.

The team at Basis Commodities is available to discuss fodder requirements and also to support our clients with technical information. Our close association with BALCO Australia will ensure the appropriate information is shared with nutritionists and the livestock output is at optimal levels.

Please enjoy this video detailing the support from Basis Commodities and Balco Australia.

Please contact Nader Hassan, Musab Diab or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
M: 0408 308 908
E : steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

Musab Diab
Dubai, UAE
M: +971568303164
E : musab@basiscommodities.com

Australian Crop Update – Week 4, 2024

Wed, 24 Jan 2024 01:16:48 GMT

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

Australian Grains Market Update

Australian domestic markets were steady to softer last week across most port zones with the 1.4% drop in the Aussie dollar offering limited support. Traders have been unwilling to chase supplies unless it is against nearby shorts. Even then, the trade has been more inclined to swap stocks rather than buy outright which is keeping activity low.

Sluggish demand from China continues to cap global commodity prices. China's influence on global commodity markets can’t be overstated as they dominate global trade. This is true for ag commodities but also across the energy and mineral space. In 2023, China accounted for about 71% of the world's iron ore imports and about 58% of copper ore concentrates. They also import about 26% of the world trade in coal and 12% of the global crude imports. In ag commodities, China takes around 61% of the world's soybean imports, 87% of the sorghum and 29% of the barley. They also account for 12% of the world's corn imports and 6% of the world's wheat trade. In absolute terms, China imported about 103 million metric tonne (MMT) of soybeans in 2023 as well as around 52MMT of corn, sorghum, wheat and barley. China will remain the world's dominant commodity importer in 2024, but a slowing economy takes the shine off the import totals and investors become less willing to chase bullish stories without the backdrop of demand growth from the world's major importer.

Global wheat markets are soft and export sales are difficult to make and there is nothing on the horizon to suggest this is about to change. Australian wheat remains relatively expensive against other origins and core markets in Asia have been taking in supplies from a broad range of origins rather than paying up for Australian. Even local consumers appear to be well covered until April for feedlots and the flour mills.

There is nothing in the domestic supply and demand that suggests buyers should alter their current position of holding back from farmer purchases. Farmer selling remains reserved as well, but the absence of any significant exporter shorts, favourable local weather and sluggish global demand suggest trade buying is likely to remain lacklustre until the local prices come off.

Now that harvest is completed and estimated production data is all but fully reported, the national wheat crop for 2023/24 has been documented at 25.3MMT. Export estimates for this season are at 19.4MMT which is up on previous reports because of the need to shift wheat exports from Victoria (VIC) to avoid large carryover stocks with the bigger crop. Western Australia (WA) however has been reduced with the smaller crop. The national barley crop is 10.2MMT with exports of 6.6MMT. National canola production is 5.55MMT with exports of 4.75MMT.

Ocean Freight & Shipment St em Update:

The Ocean freight market continues to be caught in the usual “hands off” market that proceeds the Chinese New Year. This malaise has been exacerbated by news last week that the JWC (joint war committee), a London based Insurance body placed a large area of the North West Indian Ocean in a “war zone” which makes chartering vessels and insuring cargo through the Red Sea very difficult indeed.

600 thousand metric tonne (KMT) of wheat, 120KMT of barley and 90KMT of canola were added to the stem in the past week. South Australia (SA) accounted for 343KMT of the weekly wheat additions which will give the state’s tally a boost. There was 140KMT of wheat added to the stem in WA as well as 120KMT of barley. Another 60KMT of canola was put on the NSW lineup last week as well as 30KMT of wheat. VIC wheat exports still look slow after the bigger than expected crop.

Australian Weather:

New South Wales (NSW) received more widespread rain last week. There was 15-50mm across most of the state’s cropping areas. Sorghum crops are extremely well-watered and will be on track for well-above average yields. The rain is also reaching the western areas which is allowing farmers to bank soil moisture ahead of winter crop plantings in the autumn, which is reducing the amount of rain they will need at planting to time. Overall, the country has a strong moisture profile ahead of the 2024/25 winter crop promoting optimism for a big wheat, barley and canola season once again.

8 day forecast to 30th January 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 22nd January 2024
Source: http://www.bom.gov.au/

USDA Report Summary:

USDA released a raft of reports last weekend including the Jan 2024 WASDE report, the Dec 1 US quarterly stocks report and the US winter seedings estimate. The reports were broadly bearish with USDA raising US corn and soybean yields and lifting ending stocks. USDA trimmed Brazil’s summer crops and lifted the Argentine soybean crop, but total supplies increased. USDA also raised China’s corn crop by more than 10MMT which pushed global stocks solidly higher.

US wheat inputs were little changed. USDA jiggled around with the previous season's domestic usage which resulted in a slightly smaller carry in stocks. Globally, USDA lifted world 2023/24 production by 1.9MMT which was in Russia and Ukraine. Russian was up 1MMT to 91MMT and Ukraine 0.9MMT larger at 23.4MMT. World exports were raised by 2.3 MMT to 209.5MMT (-10.7MMT year on year (y/y)). Russia increased by 1MMT to 51MMT, Ukraine was up 1.5MMT to 14MMT, Canada was up 0.5MMT to 24MMT and Australia was up 0.5MMT to 19MMT. EU exports were cut by 1MMT to 36.5MMT on the slow export pace. World wheat stocks were raised by 1.3MMT to 260MMT while major exporter wheat stocks were up 3.1MMT to 60.1MMT. EU ending stocks were raised by 2.5MMT to 15.3MMT.

Changes to the corn numbers were bearish on multiple fronts. USDA raised the US 2023/24 US corn yield to 177.3 bpa, a new record high. They lowered the harvested area to 86.5 million acres, but this still resulted in a record crop of 15.34 bill bu. Globally, USDA trimmed Brazil’s crop by 2MMT to 127MMT and left Argentina unchanged at 55MMT. The US crop was up 2.7MMT at 389.7MMT (+41.3MMT y/y). USDA also increased China’s crop by 11.8MMT to 288.8MMT (+11.6MMT y/y). World corn exports were trimmed by 0.7MMT to 190.8MMT on the back of a 1MMT reduction in EU imports. World corn ending stocks were increased by 10MMT to 325MMT (+10MMT in China and +1MMT in the US).

USDA raised the US soybean yield by 0.7 bpa while the harvested area was cut by 400k acres. The total crop was increased by 24 million bu to 4.165 bill bu. Stocks were trimmed slightly. USDA lifted the biofuel demand in the US by a further 1.5% and lowered exports, Biofuels demand now accounts for 48% of the US soyoil demand up from 40% in 2021/22. Globally, USDA cut Brazil’s soybean crop by 4MMT to 157MMT while Argentina was lifted by 2MMT to 50MMT. South America’s (Brazil, Arg and Paraguay) 2023/24 production is 217MMT which is +22MMT y/y. World soybean stocks were 0.4MMT higher to 114.6MMT which is +12.7MMT on y/y.

AUD/USD Currency Update :

Last week we saw the Australian dollar fall from its late December high, however it has since bounced off technical support at 0.6525. The focal point now is on whether the pair can close above the range of 0.6570-0.6580 on a weekly basis. If it does, a potential rally toward 0.6650 and subsequently 0.6700 may be on the horizon.

Australian Crop Update – Week 3, 2024

Thu, 18 Jan 2024 01:11:57 GMT

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 feb/Mar 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

The Australian grains market endured another quiet week as much of the industry is still enjoying the holiday break. Farmers are not engaging in selling, and with the large amount of on farm storage, they are not in a hurry to commit to selling more of this crop despite the perceived weakness in global markets.

ABS published its November export statsistics. There was 1.17 million metric tonne (MMT) of wheat exported in November down from 1.41MMT in October. Western Australia (WA) shipped 758 thousand metric tonne (KMT) so has now done 1.43MMT of its exports in the first two months of the 2023/24 crop year. Other states are less advanced which highlights the lack of engagement from the farmers and making a sale price that works for exporters. South Australia (SA) has shipped 430 KMT in Oct/Nov, while Victoria (VIC) has only shipped 360 KMT.

Indonesia was the largest destination with 217KMT followed by China with 185KMT and then Vietnam with 124KMT. Australia has only shipped 369KMT of wheat to Indonesia in the Oct/Nov vs 815KMT at the same time last year. Australian wheat isn’t competitive compared to the same point last year and consumers are accessing supplies from a much wider range of origin and suppliers.

Australia exported 908KMT of barley in November which was down slightly from the 928KMT in October with China dominating the exports at 722KMT. Australia has already shipped 1.8MMT of barley to China since August 2023. The market consensus is that about 3.0MMT of barley has been committed into China which was made up of old and new crop.

Canola exports were strong in November with 544KMT up from 381KMT in October. WA accounted for 413KMT following the 260KMT shipped in October. It was a mixed range of destinations with about 46% going to France and Germany. About 22% went to the UAE with Japan, Pakistan and Mexico all receiving cargoes.

Overall demand is sluggish and mostly hand-to-mouth, which is making it difficult to get forward sales programs on the books. This is evident in the Australian sales wheat export program where exporters are showing a limited appetite to chase farmer supplies, other than juggling around stocks to cover prompt needs. Asian import programs have been very diversified compared to last year when they were dominated by cheap Aussie wheat. It’s a mix of most origins this year including Russia, Ukraine, EU, Canada and Australia as well as some US. Prices have to be sharp to get the business and it's only for nearby slots with buyers eying off the good start to the Black Sea 2024/25 winter wheat crops. They are hoping for another 88-90MMT Russian wheat crop which would keep global wheat markets on the defensive, despite the overall tight major exporter supplies. Supply problems are needed to change this narrative.

Our analyst released a supply and demand update during the week with some production adjustments based on the final state bulk handler receival data. Overall, wheat harvest in southern NSW and VIC came in better than expected as crops responded to the early October rain. However, wheat and barley crops in SA and WA have come in shy of expectations. The changes put the national wheat crop at 25.3MMT, down from the previous 26.0MMT. We have exports at 19.4MMT which is up on previous estimates because of the need to shift wheat exports from VIC to avoid large carryover stocks with the bigger crop. We also reduced WA exports with the smaller crop. The national barley crop is 10.2MMT with exports of 6.6MMT. National canola production is 5.55MMT with exports of 4.75MMT.

Ocean Freight & Shipment St em Update:

There was 770KMT of wheat placed on the stem in the past week. This included 423KMT in WA and 318KMT in VIC.

The Ocean freight market has adopted a classic profile for the period between Christmas and Chinese New Year. Tonnage lists appear long across both oceans, and rates are heading lower as a result despite the turmoil in and around Yemen. After its recent spike, the Atlantic had the most scope to drop away and that is certainly happening but numbers remain a premium to the Pacific. The market is generally quiet with low levels of enquiry. Pacific round voyage on Panamax remains around the $10k per day level but we expect it to ease over the next couple of weeks. Supramax is a similar story with Atlantic front hauls still above $20k per day and Pacific round voyage drifting sub $9kpd.

The story of the week remains Yemen and whether the impact of air strikes by the US/UK spills over into the Middle East Gulf area. As previously mentioned, most new trans-Suez business is being calculated via Cape of Good Hope except for a minority of owners willing to take the risks into/through the Red Sea. We expect more of the same trends over the next couple of weeks as Chinese New Year approaches.

Australian Weather:

There has been significant rainfall across the eastern states of Australia over the past 7-10 days. Flooding has been seen in the growing regions of VIC with 50mm received for days at a time in Central VIC and Southern NSW. The coastal cities of Brisbane and Sydney have been hit hard with over 100mm received since Friday. Stormy weather is common this time of year with humidity and hot temperatures now pushing to the mid-30’s to 40 degrees forecast for the coming week in the country and on the coast. The weather is supportive of the 2024/25 season crop with strong moisture profiles to start the plant growth off well after sowing.

8 day forecast to 23rd January 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 15th January 2024
Source: http://www.bom.gov.au/

USDA Report Summary:

AUD/USD Currency Update :

The Australian dollar was slightly stronger against the US dollar (USD) last week, shrugging off risk aversion along with softer-than-expected economic data from the United States. The AUD/USD pair closed the week at 0.6696.

Australian Crop Update – Week 2, 2024

Thu, 11 Jan 2024 01:05:19 GMT

Welcome to our first report for 2024 from the team at Basis Commodities. We hope that you have a prosperous and safe 2024 and we are looking forward to working with you and supporting your agri-product requirements.

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 feb/Mar 24 Shipment

Australian Grains Market Update

Australian domestic markets remained quiet last week with many participants yet to return from the holiday window, although there was slightly more activity at the end of the week. Harvest is now complete across Australia. Overall, wheat harvest in New South Wales (NSW) and Victoria (VIC) came in better than expected as crops responded to the early October rain. However, wheat and barley crops in South Australia (SA) and Western Australia (WA) have reported lower than initial expectations, based on bulk handler receivals.

In NSW and VIC, GrainCorp reported its total harvest deliveries to around 4.1 million metric tonne (MMT). Farmers were astounded how well crops had performed given the in-crop rainfall through most of the season. Many are putting the extraordinary yield performance to the mild finish and the early October rains which hindsight indicates were perfectly timed. In WA, CBH has received 12.5MMT of grain deliveries in its storages which is down 45% on last year. Wheat deliveries came in smaller than expected which means the state’s wheat crop is approximately 7.7MMT. In SA, Viterra reported grain receivals were below industry pre-harvest expectations.

Ocean Freight & Shipment St em Update:

There was 520 thousand metric tonne (KMT) of wheat put onto the stem in the first week of 2024. SA accounted for 270KMT of this with 138KMT in WA and 112KMT in NSW. This puts the combined January stem at close to 2.1MMT. Weekly barley and canola additions were modest at 37KMT and 85KMT respectively.

Volatility in the freight market is all due to the conflict in the Red Sea and if there is any escalation with counterattacks in Yemen, then the market will appreciate significantly. War risk premiums for the Red Sea/MEG region have already risen to near $100k from almost nothing two weeks ago. We would estimate that 80pct of bulk owners are now completely avoiding the Red Sea area and calculating new business via Cape Agulas (though some are still performing old cargoes if head owners allow it).

Aside from the Red Sea, the seasonal holiday period went exactly as anticipated - minimal activity and nothing of significant merit to say. We continue to hear rumblings of stimulus packages in China but unless you look at Iron ore prices, there is nothing much else to report. Predictably, the Atlantic came off from the really strong levels seen in November and much of December - though it remains a significant pr emium to the Pacific. This is probably a factor of the western holidays combined with the lead time to Chinese New Year.

Australian Weather:

The growing areas of the eastern parts of Australia have continued to receive significant rainfall which is due to recent tropical cyclones affecting the north of Australia. There has been flash flooding in parts of Queensland (QLD) and northern NSW causing disruptions to logistics and residential communities. However, reports over the next week see the rainfall subsiding. Temperatures across Australia are mild compared to the initial expectation that it was going to be a very hot summer. Average temperatures around 30 degrees are seen in the country while in the south, temperatures are still in the low 20s. Based on the rainfall in the eastern parts of Australia and in the south, the expectation for subsoil moisture has improved and the metrics will be seen in the coming months with the moisture maps being provided by the technical bodies. Based on the long-term forecasts and sub-soil moisture, especially in the eastern states, the Australian grain crop looks to be forecast to have another decent season.

8 day forecast to 18th January 2024
Source: http://www.bom.gov.au/

Weekly Rainfall to 10th January 2024
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar was slightly weaker to close out last week against the USD. The AUD dropped below the crucial support of 0.6700 after a short-lived rally sparked by improving risk sentiment on the back of a better-than-expected print in China’s Caixin Services Purchasing Managers’ Index (PMI) for December. The Aussie has closed in the red for five consecutive trading days, declining nearl y 2.5% from late December’s peak near 0.6870. Looking ahead this week on the data front, investors will focus on monthly retail sales for November, which will be published on Tuesday. As per the estimates, the consumer spending grew by 1.2% after contracting 0.2% in October. This may allow Reserve Bank of Australia (RBA) policymakers to stay with the argument of keeping interest rates elevated for longer.

Australian Crop Update – Week 50, 2023

Tue, 19 Dec 2023 00:58:43 GMT

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

Australian Grains Market Update

A stronger AUD increased Aussie wheat values at the FOB point at a time when, for a variety of reasons, global cash values seem to be strengthening slightly.

The 2023/24 S&D updates for the national wheat and barley production estimates are being updated following the harvest receival data and anecdotal feedback. Our analysts latest view will be published later this week.

The overall impact for national wheat and barley production is little changed where Australian wheat production for the season is at 25.1 million metric tonnes (MMT) and barley at 10.0MMT. Sizable carry in wheat and barley supplies in Western Australia (WA), South Australia (SA) and Victoria (VIC) will help with the export surplus for the 2023/24 season. The estimates show a national wheat carry in at 5.1MMT and barley at 2.9MMT.

The market is forecasting Australia’s 2023/24 wheat exports at 18.6MMT and barley at 6.4MMT. Exporters have already committed large volumes of wheat and barley to China, as well as other routine markets in Asia so we are not predicting too much will make its way to the Middle East this year. It is estimated that more than 70 percent of the 6.4MMT of barley exports are already sold or committed through long term arrangements. Wheat export commit ments are expected to be less advanced than barley with most consumers still buying on a hand to mouth basis and the grower a reluctant seller.

Quality has in general held up well despite the late harvest rains in SA and WA, which has reversed the low protein trend of last year with significant amounts of Australian Hard and APW being delivered.

Australian Harvest Update:

Australian Pulses Update :

Rainfall in SA and VIC has caught the tail end of Australia’s faba bean, lentil, field pea and lupin harvest. The majority of crops were harvested ahead of the rain, with quality and yields generally good. Supply-side pressure from pulses sold directly after harvest has dwindled as growers wait to get a better quality picture after recent rain and storms which have caused some downgrading and yield losses. The upside of the recent rain is that it has bolstered planting and establishment prospects for mungbeans, Australia’s main summer pulse.

Chickpeas - The chickpea harvest finished last month in the key growing regions of Queensland (QLD) and northern New South Wales (NSW). ABARES last week revised its estimate for the crop to 528,000MT, down 5000MT from its September estimate. Shipping stems indicate a maximum of three handymax cargoes will depart QLD ports by mid-January to arrive in South Asia ahead of the start of Ramadan on March 10. Container rates have fallen to levels where they are competing with bulk.

Faba beans - ABARES last week revised its estimate for current-crop fabas to 484,000MT, up from the 447,229MT seen in September. SA and VIC grow the vast majority of Australia’s faba beans for export, and both states have had considerable rain in the last quarter or so of their crop to be harvested. Beans that are still in the field are unlikely to make export specs, and will go into the domestic stockfeed market. Growers with crop left to harvest are concentrating their efforts on cereals to minimise their risk of downgrading. Egyptian demand for fabas is steady, but near-term shipments from Australia are limited as other commodities book out loading slots. These delays, limited selling and steady demand have put good support under the faba market.

Lentils - ABARES last week lifted its estimate for the current lentil crop to 1.39MMT from 1.23MMT previously, and less than one third is believed to have been sold by growers. India accounts for around 60pc of Australia’s exports, and this percentage is expected to lift as currency issues beset other South Asian destinations. Lentils prices are trading sideways for now with the quality generally good.

Ocean Freight & Shipment St em Update:

There was 507 (KMT) of wheat, 115KMT of canola and 97KMT of barley added to the stem in the past week. The most notable feature is that wheat is now being added more readily in recent weeks.

Ocean freight is now being affected by disruption to the Suez and Panama Canal transit routes. This will generate significant additional tonne/mile demand at a time when other parts of the freight market are slowing down for the global holiday season (Christmas and then Chinese New Year). The Atlantic remains very firm compared to the Pacific even if the daily Baltic indices have shown a falling market on routes in that basin. Front-hauls are generating significant numbers at $25kpd (and USG origins significantly more than that) on Panamax and Supramax. Australia is heading into holiday mode with not much happening i n the way of fresh cargoes.

Over the past weeks, we have seen further escalation of piracy in the Red Sea causing owners and container carriers to pull out of the trade lane. If the Yemen situation cannot be managed in the near term, we could see an anti-seasonal escalation in freight rates for this region and this does need to be borne in mind along with raised insurance rates for the Red Sea region.

Australian Weather:

Some of the heaviest rain ever observed in Australia has hit Queensland’s North Tropical Coast during the last few days, resulting in widespread major flooding and landslips. Rainfall has been relentless over northeast Queensland ever since Tropical Cyclone Jasper made landfall on Wednesday, December 13. This 5-day spell of wet weather was exacerbated over the weekend by a slow-moving coastal trough being fed by a persistent stream of tropical moisture. Provisional data collected by Bureau of Meteorology rain gauges shows that two locations in Queensland may have just received the 3rd and 4th highest daily rainfall on record in Australia. There were also four locations that beat the previous national daily record for December. There has been more than 500 mm of rainfall over the weekend with some areas reporting up to 800 mm causing widespread flooding and damage.

Needless to say, all this rain stands in contrast to the Bureau of Meteorology forecast for a long, hot, dry summer but then who would be a weather forecaster anyway. For what it's worth, they are predicting warmer temperatures for January and February so watch this space.

8 day forecast to 26th December 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 18th December 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The AUD did not lift after the USD fell last week and that lack of response by AUD/USD suggests it is facing resistance near 0.6700 level. Predictions of the major banks have shifted to being more conservative for the forecast into 2024. Two of Australia’s major banks, NAB and CBA, have commented that the AUD is likely to remain rangebound over the next 3-6 months between .6500 to .6700 cents.

Merry Christmas and Happy New Year from the Basis Commodities team.

As we wrap up for 2023, we’d like to wish you, your families and loved ones a very Merry Christmas and Happy New Year. For those who celebrate at this time of year, we hope you all enjoy the festive period and have time to relax with family and friends. We look forward to working with you in the new year and beyond.

Australian Crop Update – Week 49, 2023

Wed, 13 Dec 2023 00:53:54 GMT

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

Australian Grains Market Update

The Australian cash market remained relatively steady over the last week as traders and growers alike digested the impact of harvest rains. It is a pattern that we have flagged earlier in the season, i.e. value is being added / lost through cash basis with exporters reluctant to chase rallies in Chicago futures while they continue to struggle to connect with key Southeast Asian destinations.

Barley was steady with the softening on the AUD and Chinese demand still present for more Australian supplies, we hear at between 275 and 280 CFR China.

Canola bids were $15-20 per metric tonne (/MT) lower in line with further losses in Canadian futures.

Australia exported 1.42 million metric tonne (MMT) of wheat in October. China was the largest destination for the wheat exports in Oct with 270 thousand metric tonne (KMT) followed by Philippines with 161KMT, Indonesia with 153KMT and then Vietnam with 145KMT.

Australia exported 930KMT of barley in October which comprised of 713KMT of feed and 222KMT of malt barley. China took 668KMT with 128KMT sent as malting barley and the rest as feed.

There was 385KMT of canola exported in Oct. WA accounted for 260KMT and Vic accounted for 122KMT. France took 98KMT with Japan and Mexico the next largest with around 82KMT each.

Pulse exports are moving quickly with 103KMT of lentils shipped in Oct and 83KMT of chickpeas. India took 60% of the lentils. Pakistan was the main chickpea destination with 42KMT followed by the UAE with 20KMT.

Australian Harvest Update:

Australia’s 2023 winter crop harvest deliveries slowed significantly last week with rain across the eastern seaboard. There appears to be limited downgrades following last week’s rain with most traders reporting wheat is still making to milling grade. However, there was more rain received across the south in the last few days so it is likely we will see more downgrades and we are hearing some grain may have test weight issues. It’s been of little market consequence so far but has reinforced the bearish tonne in the north where feedlots and feeders are covered in the nearby positions and there are still some feed grains looking for domestic homes. We have also heard that some feed sales have been made into export markets.

In South Australia (SA) and Western Australia (WA) harvest will largely be wrapping up this week. There have been some delays in the Eyre Peninsula in SA due to rain and we will need to see if there are some downgrades in this zone.

Australian Pulses Update :

Chickpeas - Queensland (QLD) is forecast to produce 320,000MT of chickpeas this year. This is an increase on both area and production from last year’s crop of 292,000MT. In New South Wales (NSW), a very dry pre-plant and growing season in the state’s north means a reduced area of 150,000ha has just been harvested to yield 165,000MT, with both figures below last year’s flood-affected crop of 160,000ha which yielded 192,000MT.

Faba beans - A much drier growing season in SA has the state forecast to harvest 190,000MT down from a record 300,000MT. Victoria’s faba bean crop is forecast at 175,000MT. The harvest of faba beans in both states is well advanced, and is over in QLD, NSW and WA. Unharvested fabas which suffered significant rain damage are likely to go into the domestic feed market, as they did during last year’s wet harvest.

Lentils - Lentil production in SA is predicted at 715,000MT. This will not get close to challenging last year’s record production of 900,. Victoria’s lentil crop is estimated at 650,000MT. The lentil harvest is well advanced in both states, but unharvested lentils in Victoria particularly have suffered some downgrading after last week’s rain.

Lupin s – WA is forecast to produce 380,000MT down from 925,000MT.

Ocean Freight & Shipment St em Update:

There has been more volatile activity this week especially in the Atlantic basin. It feels like the freight market has peaked for panamax / supramax. As we commented last week, the inefficiencies of the present Panama Canal situation are generating ton-mile demand but also preventing a quick re-balancing of the oceans.

Shipping stem additions are starting to move along at a reasonable pace following a sluggish start. There was 460KMT of wheat, 327KMT of barley and 120KMT of canola added to the stem in the past week. The additions show that sales are moving along well but it also flags supplies could quickly tighten against shipping positions, particularly if farmer selling remains sluggish. Barley appears to have the greatest risk given Chinese demand is reportedly still there at around $275 c&f levels.

Australian Weather:

There is little rain in the forecast over the next 7-10 days with the harvest reaching its final stages in the south. Harvest will conclude earlier than normal this year with an earlier plant, smaller crop and quicker harvesting machinery. There is a tropical cyclone in the north east of Australia that has been downgraded to a category 1 cyclone. This will not affect harvest but promote more rainfall for the summer crop which is off to a good start.

8 day forecast to 18th December 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 11th December 2023
Source: http://www.bom.gov.au /

AUD - Australian Dollar

The AUD was slightly weaker to open the week when valued against the USD. The downward movement can primarily be attributed to robust American labor market data, coupled with escalating U.S. yields, which drove demand for the USD against other currencies. From a technical perspective, support for the Aussie dollar remains at 0.6590. Last week the Australian borrowers were spared a pre- Christmas interest rate rise with the Reserve Bank remaining on hold at its final board meeting of 2023. The RBA left its cash rate at 4.35%, a move widely expected by financial markets and economists after the inflation rate resumed its slowdown in October to 4.9% and the jobless rate ticked higher.

WASDE Summary:

The final WASDE report for the year was released on Friday. Global production was increased by an additional 1MMT to 783.01MMT, with Australia accounting for the bulk of this increase.The oilseed production outlook for 2023/24 is projected at 661.0 MMT, down 0.5MMT from last month. Lower soybean and sunflower seed production are partly offset by higher rapeseed production. Global coarse grain production for 2023/24 is forecast 2.7MMT higher. The 2023/24 foreign coarse grain outlook is for larger production, increased trade, and higher ending stocks relative to last month.

Australian Crop Update – Week 48, 2023

Wed, 06 Dec 2023 00:47:33 GMT

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

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 St em 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 ava ilable 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.

Australian Crop Update – Week 47, 2023

Wed, 29 Nov 2023 10:32:45 GMT

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 Dec/Jan Shipment

Australian Grains Market Update

Australian grain prices were variable last week depending on the port zone. The East Coast focus was on the widespread rain stretching from Queensland (QLD) through New South Wales (NSW) and into Victoria (VIC). The market is settling into the impact the rain will have on pasture availability in the north and associated feed-grain demand, grain quality, farmer selling and trade shorts which are undoubtedly more comfortable now.

VIC is the only state that is still exposed on grain quality as harvest is not yet in full swing. VIC grain markets were generally softer last week with traders showing limited concern, although this may change this week with the additional rain. A lot of the barley and canola has already been harvested and quality was good, but they are only just starting wheat in the southern Mallee and Wimmera. Harvesting was interrupted by rain late last week and could be 10 or more days before farmers restart with the wet weather expected to continue this week. The market in general however on the east was down 2-3% for the week on the back of the solid rainfall.

To that end, farmers in Northern NSW have been actively planting sorghum in recent weeks. New crop sorghum values tumbled with the rain, and this also weighed on broader grain prices in the north. Cottonseed prices have also fallen in response to the rain on expectations the supplementary feeding of cattle will decline. The rain has seen a bottoming in livestock prices. Cattle prices have bounced with the rain on expectations of improved pasture reserves.

Western Australia (WA) wheat prices ended the week higher with most grades up USD4-6 per metric tonne (/MT) for the week on the back of, it seems a surge in Southeast Asian demand caused by the rain concerns in the east and storm damage, reduced logistics/higher prices out of the Black Sea. Australian wheat remains expensive against Black Sea supplies landed into Southeast Asian destinations, but the difference is smaller than it has been for months due to stronger freight and higher FOB prices in the Black Sea. WA barley and canola bids ended the week lower.

Interestingly much has been made of the dominance of China in the export program this year. In discussions with our analyst, it would seem to us that the Barley export program is extremely well advanced for this early in the year with perhaps as much as 4.5 million metric tonne (MMT) already sold, particularly when you include malt sales, out of a total likely program of 6.4MMT give or take.

Wheat – has a lot more work to do both in terms of grower selling and export pace. Patience will be a virtue with this crop.

Ocean Freight & Shipment St em Update:

There was 951 thousand metric tonnes (KMT) of wheat, barley and canola added to the Australian shipping stem in the past week. Barley accounted for 409KMT followed by wheat with 387KMT and 155KMT of canola.

In terms of Ocean freight, we continue to see values firm driven by strong Atlantic demand and the Panama Canal problem. Only 31 vessels a day are now being let through….

In general, it looks like we are in for a strong finish to the year for ccean freight in general. Although Asia remains relatively quiet.

Australian Weather & Harvest Update:

Last week, VIC received 50-70mm of rainfall with more falling yesterday and today. The rain impacted any opportunity for harvest and will also affect harvesting in Southern NSW. The rain is raising questions over the quality of the VIC wheat and pulses crop as well as concerns for export accumulation for logistics and farmer selling. A lot of the barley and canola has already been harvested with good quality but concerns have been voiced for the lentils and fava beans crop. The VIC barley harvest is advanced (>50%), but the wheat harvest is still less than 20% complete. VIC grain quality has been good so far with heavy test weights although wheat proteins are down. If the rainfall slows down the harvest until the start of December, the grain quality will likely lower.

Northern NSW also received soaking rain in the past week with 40-70mm across the region. This included the summer cropping regions central and north of the state. Southern QLD also received good falls for the week with 40-60mm. The national wheat harvest is over 50% complete now with VIC the only state exposed to any significant weather downgrading. The national barley and canola harvest is >75% complete.

8 day forecast to 4th December 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 27th November 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar edged higher through trade to close last week pushing back above US$0.65 amid an improvement in the underlying risk narrative. US equities and risk assets advanced as market expectations for a retracement in US rate hikes through the second half of 2024 grow. Falling global bond yields and rising expectations for rate cuts have forced the USD to give up its highs against a basket of currencies won in October, opening the door for the AUD to rally back above US$0.65. The question now is, can the AUD recovery be sustained and extended while the global growth outlook remains unclear and China’s recovery uncertain. The market remains balanced in answering this question.

Adding Value by Managing Ocean freight risk

Wed, 29 Nov 2023 02:14:29 GMT

Chartering Ocean Freight is no easy task, even for those with decades of experience in the movement of physical commodities. It’s not just the financial risk of the freight you pay versus what was budgeted when taking the FOB position. It is also the non-tangibles like counterparty and execution risk. Having companies with the experience and expertise in this area to help you navigate this complexity can provide significant supply chain savings.

Here is why.

Let’s start with the non-tangibles, like counterparty and execution risk. These can seem irrelevant at times, because ‘it won’t happen to me’. Well, as we’ve seen in the Black Sea over the last 18 months, no one is immune from the non-tangibles and they can cost real, tangible dollars. Counterparty risk is frequently overlooked, even with the most experienced exporters. Questions like ‘Do you know who you are dealing with?”, “How will they deal with your freight?” “How will they respond to issues that arise during the voyage?” and “Is there anything in the transaction that requires particular attention?” often get overlooked.

Now let’s take a look at the general information needed to execute a vessel. Whilst ostensibly there is a lot of market information which provides views on where you sit in the freight cycle, navigating the plethora of information and coming to an informed conclusion that will result in a return on investment isn’t as easy as it sounds. In the end, there is no substitute for an experienced guiding hand to provide context and perspective to the numbers you see on the page and the route you are trying to fix freight for.

Basis Commodities and MR Shipping in Melbourne have been working for several years with some of our clients. Our partnership assists clients successfully mitigate the risks associated with taking on ocean freight exposure from Australia and to help them reduce their supply chain costs.

This is where the partnership between Basis Commodities and MR Shipping can provide real value to clients. Risk management, execution, and reduced cost without the expense of an in-house freight operation.

Basis Commodities and MR Shipping are specialists in their respective fields who provide the holistic end to end approach that mitigates ocean freight risk for our clients and gives them an opportunity to benefit from the cost savings of working on a FOB plus freight basis at the appropriate time. By working together and pooling our expertise on both the commodity and shipping sides of the transaction, clients see real value back to their bottom line.

For more information on Basis Commodities and how we can assist you to reach your goals, be sure to contact us on the details below.

Chris Whitwell
Sydney, Australia
M: 0419 833 356
E : chris@basiscommodities.com

Steven Foote
Sydney, Australia
M: 0408 308 908
E : steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E : nader@basiscommodities.com

Australian Crop Update – Week 46, 2023

Wed, 22 Nov 2023 10:26:25 GMT

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 Nov/Dec'23

Australian Grains Market Update

Australian domestic cash prices remained steady over the last week but implied US$ FOB prices were higher as the AUD rebounded back on further expected interest rate rises at a time when the US seems through the worst. Having just come back from a trip to the middle east it seems this AUD strength is making the export task even more difficult. Australian wheat remains comparatively expensive against Russian / Black Sea values landed into Southeast Asia and if it were not for the strong China sales program, I think we would be beginning to see prices pressure lower.

Barley bids were slightly higher in WA and SA which can be attributed to the underlying China bid at around USD 250 FOB. Queensland (QLD) bids were softer with domestic consumers comfortably covered for their nearby positions and widespread rain in Southern QLD and Northern New South Wales (NSW) has encouraged widespread planting of a summer sorghum crop.

According to industry sources, grower sales of wheat and barley have picked up in the southern market this week, while domestic demand in the north has shrunk as buyers saw the forecast rain depress offer prices.

Traders are confident growers will be pricing more new-crop tonnage to generate near-term cashflow in the coming weeks, with barley likely to be the grain they hold if they deem the bids too low.

From a quality perspective and given the mostly dry growing season which normally translates to high protein, the relatively low proportion of H1 and APH1 grain delivered has come as a surprise. That said, more may be held on farm and according to early milling reports the quality does seem to be exceptional.

While domestic flour millers are covered on high-quality new-crop grain, exporters are yet to see the volume they need to start offering higher-protein wheat to the export market comfortably.

Australian Harvest Update:

In terms of progress, the national harvest will have moved above 50% in the past week with most areas expected to be wrapped up by Christmas.

The harvest in QLD is mostly complete with some deliveries still coming into the bulk handling system. Activity in Northern NSW has also slowed into the key sites around the central part of the state. Rainfall in the later part of the week slowed harvest activity around the north and parts of the Central West, but deliveries picked up again over the weekend. Harvest deliveries are building in Victoria (VIC), Deliveries into the South Australia (SA) network increased during the week with growers delivering over 1MMT, taking total receivals for the season to almost 2.5MMT. SA’s grain deliveries are coming in very quickly, as can be seen in industry reports. Wheat made up just over half of total commodities received. In Western Australia (WA) harvest is slowing in the northern zone but is going strongly in other zones. WA’s grain harvest is set to be all but finished by the end of December, marking one of the earliest end dates in recent years on the back of low yields, an early start and high-capacity machinery in use after two record crops according to GIWAs November crop report.

Australian Pulses Update:

The harvesting of pulses is now fully underway in Australia, with the majority of activity now in Southern NSW, VIC, and SA. The bulk handling sites are now receiving lentils, faba beans, and lupins with significant volumes expected to be seen over the next two to three weeks. Initial estimates indicate a reduction in Australian faba bean production to around 1.6MMT, primarily attributed to a dry finish, resulting in smaller bean sizes. Likewise, lentil production is projected to be lower at approximately 1.2MMT. Grower price expectations remain above export parity however, despite the lack of trading into the sub-continent and the Middle East over the past few weeks.

Ocean Freight & Shipment St em Update:

Coal shipments into China finally sparked the freight market into life last week. China seems to be stockpiling ahead of the winter and this combined with congestion at grain ports in East Coast South America and delays at the Panama Canal are reducing the amount of tonnage available to the market. Fronthaul panamax/supramax rates climbed steeply from the Atlantic. The Atlantic/Pacific market split has a very traditional look to it with big premiums in the former and Asia/Feast firmly discounted. There are some exceptions to the positivity with the Middle East Gulf being very quiet as is the Australian coast for handy/supramax.

Australian Weather

We saw good soaking rains for Southern QLD and parts of Northern NSW for this weekend but otherwise the weather has been kind for harvesting.

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

Weekly Rainfall to 20th November 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

Australian Crop Update – Week 45, 2023

Wed, 15 Nov 2023 10:22:51 GMT

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 Nov/Dec'23

Australian Grains Market Update

Australian grain values were variable last week with the domestic consumption market remaining firm at lower values while the grain bids in Victoria (VIC), South Australia (SA) and Western Australia (WA) strengthened on exporter short covering showing signs buyers were becoming more anxious to garner improved farmer selling. The 2.4% decline in the value of the AUD against the USD was supportive of local grain bids where there is an exportable surplus.

Northern east coast Australia trader buying ideas were USD7-12 per metric tonne (/MT) lower as harvest is mostly finished and grower selling remains underwhelming. It is expected that the exporter bids lowered in an attempt to shake out some improved farmer sales from those with length and protein suitable for Indonesia and the Middle East. There has been more ASW 9.0% protein wheat delivered to silos that will help ea se the northern feed grain deficit as it helps lower the wheat price in the north. ASW discounts to APW remain modest and it is reported that 30-40% of the wheat through the central parts of New South Wales (NSW) is ASW 9.0%.

Grain prices in VIC, SA and WA had a firmer tone later in the week as buyers become more anxious to get some improved coverage while farmers are harvesting. The national wheat harvest is about a third complete with barley even more advanced but farmer selling remains reserved where it’s not easy to cover volumes. Exporters may be struggling to connect to South East Asian wheat markets, but they have sold large volumes of wheat and barley into China, and they are anxious to get some coverage from farmers through the harvest window.

Barley bids by the trade firmed USD7-10/MT last week as buyers stepped up efforts to get some coverage. Farmer selling remains slow with growers happy to harvest the crop first before meeting contract commitments. Farmers are opting to store as much as they can with silo bags proving a popular option again in Victoria. There was also a broader sense in the market that exporters were more interested in covering against nearby sales with the firmer tone bids seen last week.

Australian Harvest Update:

The Queensland (QLD) grain harvest is nearing completion with receivals slowing in the southern bulk handling sites in the state. GrainCorp staff and equipment are beginning to move south to help with harvest activity in NSW and VIC. It is estimated that the QLD harvest is two thirds complete.

Harvest activity is well underway in NSW with good quality wheat receivals across the regions. Early canola is also starting to come into the most southern NSW sites. GrainCorp has reported 575 thousand metric tonnes (KMT) delivered last week lifting total harvest deliveries to just over 1 million metric tonne (MMT). The NSW harvest is about one quarter completed. Protein wheat premiums remain strong in NSW where the APH 13.0% bids are up to USD60/MT above APW 10.5%.

Harvest activity is ramping up in VIC, with sites in the northern regions now underway . Activity in the central regions of VIC is beginning to build, with some barley and canola receivals. There was 110KMT delivered into the VIC sites in the past week taking the harvest delivers past 120KMT.

In WA, CBH reported a big week of grain deliveries through to Monday following favourable harvest weather. Total deliveries reached 3.3MMT following last week’s receivals of 1.6MMT. Harvest is moving along quickly. This year’s harvest is reported as the earliest to receive 2MMT into the CBH system.

It’s a similar situation in SA where Viterra’s harvest deliveries are moving quickly. It is reported that farmers delivered more than 760KMT in the past week, lifting the total harvest total to 1.489MMT. Central region deliveries ramped up last week with 335KMT received. Viterra General Manager of Operations, Gavin Cavanagh says we broke a receivals record in October. “We’ve just had our biggest October ever with growers delivering over 925,000 tonnes to Viterra sites during the month. Wheat quality has been very good with a lot of H2. More than 70% of the wheat delivered has been H2 11.0%.”

Ocean Freight & Shipment St em Update:

It’s been another solid week for shipping stem additions with 838KMT of wheat, barley and canola. This included 477KMT of wheat, making it the biggest week for the 23/24 season so far. It also included 274KMT of barley following last week’s 514KMT. Canola additions were modest at 87KMT. WA accounted for most of the additions with 228KMT of wheat, 216KMT of barley and all of the canola. What was interesting was the 129KMT of wheat added to the stem for NSW. This included a couple of handy size vessels from Newcastle NAT as well as 60KMT for Port Kembla for a December shipment.

The last week has seen the Pacific freight market going sideways without much impetus either way. The underlying tone remains solid with a general perception the market may still have some life left prior to seasonal holidays next month. Capes were busy last week and now there may also be some flow-over of sentiment from the Atlantic where tighter tonnage availability is edging rates up on pmx/smx (rather than cargo driven). Asia is harder to call because of the regional long-weekend but a lack of fixtures and market talk suggests everyone is watching everyone else for the next move. The Persian Gulf / India area is weak and nearby ships are being fixed at cheap numbers. One interesting point to note is that forward cargoes are being fixed extremely cheaply on handy and supramax around $5-6kpd Singapore on 38kdwt types.

Australian Weather

Rain has been received last week in NSW in the north softening grain price bids. The rain will see more sorghum planted as well as help recently planted crops.

8 day forecast to 21st November 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 14th November 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar is weaker to start the week after a strong showing last week valued against the USD. The AUD fell 0.12% on Friday and extended its substantial losses during the week, which has witnessed the AUD/USD pair traveling from a weekly high above 0.6520 toward a low of 0.6327. Last week the AUD failed to gain strength despite an interest rate increase from the Reserve Bank of Australia (RBA) on Tuesday. The RBA raised its Official Cash Rate (OCR) by 25 basis points (bps) to 4.35%. RBA Governor Michele Bullock kept hopes of further rate-tightening alive, citing that the progress in inflation declining to 2% has slowed and risks of persistent consume r inflation have escalated.

Australian Crop Update – Week 44, 2023

Tue, 07 Nov 2023 10:19:45 GMT

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 Nov/Dec'23

Australian Grains Market Update

Australian cash prices finished the week lower.

Wheat was USD7 per metric tonne (MT) lower at (-3%) reflecting a strengthening AUD on the back of weaker US data. Barley prices were off USD3/MT as buyers continued to lower bids on harvest selling. The stronger AUD is impacting all values, but barley seems to have underlying demand from China which is keeping a bid under the market.

Export barley values are also being based off the US$250 FOB values that work back into China. Famer selling seems to have picked up in the past couple of weeks ahead of the southern harvest, but the strong dollar means the traders are lowering their buying expectations to remain competitive in the export market.

Wheat prices are holding on as China continues to buy a minimum 500-700 thousand metric tonne (KMT) of wheat per month from Australia. The question is when does the music stop?

Australian Harvest Update:

In the east of the country, harvest activity in Central Queensland (QLD) is nearly complete with receivals now focussed on the south of the state. New South Wales (NSW) is now well into harvest.

Harvest deliveries are also advancing quickly in South Australia (SA). Most of the activity has been wheat and the rest barley, canola and pulses. Wheat proteins were high with more than half of the wheat deliveries reportedly making H2 11.0% so far in SA.

In the west, CBH received more than 1 million metric tonne (MMT) of grain deliveries in the past week, lifting the total harvest receivals to 1.7MMT. Harvest is advancing across all of Western Australia’s (WA) port zones now. Canola and barley have been the major grain deliveries so far. The canola harvest is well-advanced. Wheat proteins are reportedly well-up from last year’s low-protein season.

Australian Pulses Update:

Australia exported 675,516 metric tonnes (MT) of chickpeas and a record 1,745,433MT of lentils in the year to September, according to the latest data from the Australian Bureau of Statistics. Pakistan received 372,858MT totalling 55 percent (pc) of the annual shipments, indicating its transition from a containerised to a bulk market. Bangladesh received 128,833MT as the second-biggest market for 2022-23 chickpea shipments, followed by the United Arab Emirates on 63,230MT. India was the largest market for lentils with 47% of 2022-23 shipments, followed by Bangladesh on 261,259MT, and the United Arab Emirates on 178,199MT.

Ocean Freight Market Update

The shipping market continues to lack any confidence and as a result, the rates have continued to ease further across all sizes. Interestingly however, owners are yet to discount as severely for longer duration trips or legs/period as compared to quick Pacific rounds trips, which suggests that owners still have faith in the market recovering for the "usual" pre-Christmas fixing rush. In the Atlantic, rates have also eased over the past week. On a positive note, for the owners, bunkers have remained fairly stable over the past few weeks which is helping the voyage rates to ease gently rather than drop quickly. The market’s point of view hasn’t changed dramatically and is still generally lacking cargo to help reverse the current trend with only another 4/5 weeks left before the shipping market starts to shut for the Christmas holidays.

Barley remains the largest grain moving for exporters according to the shipping stem. A further 514KMT of barley was added to the stem in the past week. SA accounted for 287KMT, WA with 175KMT and Victoria (VIC) with 52KMT. There was 300KMT of wheat and 55KMT of canola put on the stem in the past week with most of this in WA. Recent wheat sales to China should start appearing on the stem as these were reportedly for a December shipment onwards.

In other notable news - Australia exported 1.49MMT of wheat in September lifting the Oct22 to Sep23 marketing year exports to 31.7MMT of wheat exports – a record.

Australian Weather

There was some patchy rain across southern QLD and north eastern NSW last week ranging from 10-20mm. This will help with the pasture supplies across the region which are scarce, but more rain is needed. Some farmers have seeded sorghum on storm rains over the past couple of weeks but they will be awaiting more rain in the coming weeks to boost the dry subsoils.

8 day forecast to 13th November 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 6th November 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar is stronger to start the week against the USD after it rallied to a nine-week high capitalising on USD weakness following a weaker than expected Nonfarm Payrolls reading and risk-on market sentiment. Cooling US data is helping to confirm that the Federal Reserve is done with rate hikes, and investors are now turning forward to start anticipating a future rate cut cycle from the US central bank. The upbeat Australian economic data and risk-on environment have boosted the Australian Dollar (AUD). Looking ahead this week on Tuesday, the Reserve Bank of Australia (RBA) will decide if they are to raise the cash rate by a further 25 basis points.

Australian Crop Update – Week 43, 2023

Wed, 01 Nov 2023 10:15:44 GMT

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 Nov/Dec'23

Australian Grains Market Update

The Australian wheat and barley market came under further pressure last week as harvest pace increased with exporters unwilling to chase supplies at current values. Wheat bids were 2-3% lower on the east coast and about 1% lower in Western Australia (WA). APH13% premiums eased in Queensland (QLD) and Northern New South Wales (NSW) with traders reporting a little more protein wheat as the harvest moves south. Farmer selling interest picked up in Victoria (VIC) with farmers wanting to clear storages ahead of harvest. WA barley bids crept up USD3 per metric tonne (MT) higher on the back of strong sales into China.

In terms of yield, the current harvest is a mixed bag with some areas over delivering and others underwhelming in production terms. Northern NSW and Southern QLD have not seen as much high protein wheat as was expected whereas WA and South Australia (SA) are seeing higher protein than they have seen for a couple of years with lots of APW and AH2 reported.

Australian Pulses Update

The Pulses harvest has also commenced with the northern growing regions seeing most of the activity in chickpeas. In some isolated areas in the south, harvest for lentils, faba beans and lupins has also started. However, we are still approximately three to four weeks away from seeing significant volumes. At this stage, the estimate for the Australian faba bean production is approximately 1.6 million metric tonne (MMT) which is down from last year. This is mostly due to the dry finish. In addition, lentils are also expected to be lower at around 1.2MMT.

Grower price expectation is considered to be above export parity. However, the market has reported some northern faba beans trade into Saudi Arabia in containers. The northern beans usually trade at a USD20-30/MT discount to southern beans due to the variety performance and size differences. More information and activity will come to market over the coming weeks as the crop profile during harvest is further understood for the 2023/24 season.

Ocean Freight Market Update

With the amount of red ink visible across the freight Indices at the moment, you would think the market should be in free fall, but it isn't. There are some notable market players saying they think this is a temporary dip and the underlying tone remains firmer than today's expectation, but for the time being, the bears have control. From our perspective, it feels like the cargo side is very quiet and that combined with more vessels arriving from the Atlantic is keeping the market under pressure.

There was 284 thousand metric tonne (KMT) of wheat added to the stem in the past week, 185KMT of canola and 180KMT of barley. WA dominated the additions accounting for 2/3rd of the weekly wheat additions and all of the barley and canola. There was 70KMT of wheat added into VIC which is expected to be old crop wheat coming to market as farmers clear on farm storages ahead of harvest. NSW and QLD remain void of new additions which is expected to be a familiar theme for the 2023/24 season, although there was 27KMT of wheat added in Central QLD as well as a sorghum vessel.

Australian Weather

There have been few harvest delays over the last week due to rainfall and the same is expected for the next 7 to 10 days. Showers are forecast for coastal cities on the east coast with only 10-15mm expected for the next few weeks. The greater focus will be on what happens after harvest with the need for good summer rains to provide sub-soil moisture for the 2024/25 winter crop.

8 day forecast to 7th November 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 31st October 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian Dollar offered little to excite investors through trade last week tracking within what has become a familiar range as market attention drifted to what promises to be a week loaded with headline data events. Having edged toward US$0.6350 leading into last week's close, the AUD has given up 20 points to open the week as markets respond to an escalation in the conflict between Israel and Hamas at the weekend. The risk off mood is unlikely to send the AUD spiralling back below US$0.63 but should be enough to cap gain ahead of key headline events this week. The current AUD support levels are at US$0.6270/80. If it trades through this, it will have further downside to low US$0.6200’s quickly.

Australian Crop Update – Week 42, 2023

Wed, 25 Oct 2023 10:11:52 GMT

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 Nov/Dec'23

Australian Grains Market Update

Australian high protein wheat premiums were firmer last week but the east coast feed grain bids were soft as buyers adjusted their bids lower with harvest well underway. APH13.0% premiums in the north remain strong at USD$30-35 per metric tonne (MT) above APW10.5% with the smaller than expected volumes being harvested so far. Barley remains the softest leg in the south which seems to be a function of old crop selling and the lack of willingness for exporters to chase the new crop at levels that won’t work into China. Northern markets ended the week slightly lower as buyers pulled the bids on harvest pressure but there is a scarcity of trade sellers.

Western Australia (WA) and South Australia (SA) wheat bids were 2-3% higher for the week. H2 11.0%, APW10.5% were up USD$6/MT, while ASW was USD$9/MT higher. Adelaide H2 11.0% and APW10.5% was also USD$6-8/MT higher. Buyers are more willing to step up in WA and SA as harvest is underway and exporters have sales positions they need to cover. The shipping slots are well sold for the first half of 2024 with traders having reportedly already committed 2-3 million metric tonne (MMT) of new crop wheat into China as well as additional sales into other markets.

China has managed to snap up as much old and new-crop Australian wheat as it could over the past couple of months and was active again last week. However, with prices increasing on the back of the El Niño and building drought conditions across much of the country, competitiveness has decreased, particularly in the east. One would imagine their focus will shift to cheaper originations as well as sellers becoming reluctant to go shorter to the grower.

China’s de mand for Australian wheat also had to compete for late-season elevation capacity renewed demand for Australian barley after the anti-dumping tariffs and countervailing duties imposed in May 2020 were axed back in August. China resumed barley purchases almost immediately and it could be said that China has truly come to the rescue in terms of providing strong early season demand in an otherwise subdued international market that is buying on a hand to mouth basis.

Australian Harvest Update:

Over 20% of Australia’s total winter-cropping area has now been harvested. Wheat harvesting in Central Queensland (QLD) is close to finished and is progressing in WA's Geraldton zone, where yields have been below average because of limited in-crop rain.

Favourable weather saw harvest pace accelerate last week in southern QLD and northern and outer central New South Wales (NSW), where yields have generally been average or below.

Rain earlier this month in SA, Victoria (VIC) and southern NSW has either consolidated yields or improved them, particularly in VIC and southern NSW and our supply and demand update below reflects that.

Australian Supply and Demand Update:

We have raised the Australia’s 23-24 wheat production to 24.9MMT, which is 1MMT higher than the last update. Barley has been lifted to 10.1MMT. Most of the increase is in VIC and southern NSW, but other regions have also been edged higher. After some patchy hot weather in September, temperatures moderated for most of VIC and southern NSW which allowed for a gradual crop maturation, making the most of the available moisture. VIC NDVI’s are below last year but remain historically relativly high. This should allow for well above average yields. The GIAV is reporting on its recent crop tour across VIC and southern NSW which we expected to see average to above average yields for wheat, barley and canola.

The finish for SA and WA hasn’t been as kind as seen in Vic and southern NSW. October temperatures have been warmer than seen across southeast Australia and they didn’t benefit as much from the rain event in the first week in October. This is evident in the NDVI’s for SA and WA which have fallen away sharply in recent weeks.

The larger wheat crop will allow for more exports. We have raised Australia’s 23-24 wheat exports to 18.4MMT. Wheat stocks through QLD and NSW will remain tight but more comfortable in VIC, SA and WA. Even so, we are reluctant to push the exports any higher given national stocks are down below 3.0MMT. Barley exports are >6MMT with the bulk of this expected to head to China. We have canola exports at 4.2MMT.

Domestic demand assumptions are unchanged. Feedlots in southern QLD and northern NSW are set to remain full. Barley continues to enjoy a significant proportion of the feed grain diets in all states.

Ocean Freight and Export Stem

Last week was a really dull week with rates falling off their recent highs. Given how little fresh business reached the market last week we had expected the market to fall away quickly, but it has managed to remain relatively stable. We are not yet in a definably "weak" market but if the quiet spell continues rates must inevitably come under pressure. Most of the Baltic indices are a tale of two oceans and are reflective of what we are seeing at the coal face. In simple terms, the Atlantic is firm, the Med & Indian going sideways and the Pacific is weaker. Australia itself has been uninspiring. There aren't many ships open on the coast now but likewise, there isn't a great deal of demand.

There was approximately 300KMT of wheat and 100KMT of barley added to the stem in the past week. Exporters aren’t seeing significant demand at this stage of harvest, however, the new crop demand has started to emerge in recent weeks. More demand will with both the CBH and Viterra stems are close to fully booked through to May. WA and SA accounted for all the weekly stem additions with nothing added on the east coast ports. Several Panamax vessels were added to the stem in both WA and SA which are expected to be against the recent barley sales into China.

Australian Weather

8 day forecast to 31st October 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 23rd October 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar was slightly weaker to close last week when valued against the USD. Risk-aversion amidst heightened tension in the Middle East weighs on the AUD/USD, which trades at 0.6318, down 0.17. In other news, the Australian share market plunged on Friday to finish the week 2.1 per cent lower as traders worry about the ongoing conflict.

Australian Crop Update – Week 41, 2023

Wed, 18 Oct 2023 22:54:53 GMT

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 Nov/Dec'23

Australian Grains Market Update

Australian domestic values were softer last week after the recent rains across Southeast Australia solidified production forecasts. Domestic markets were extremely quiet with buyers pulling bids following the recent rain. Buyers are running hand to mouth as they wait for farmer selling to advance as harvest approaches the southern cropping belts. However, with the prospect of El Nino in the background it feels like grower selling is muted and is behind where it normally is for this time of year. On the demand side, there was talk of up to 700 thousand metric tonne (KMT) wheat purchases from China but none of this could be confirmed.

In terms of harvest progress, northern areas are progressing well, mostly barley and canola, but recent rains across the southern half of the country and cooler temperatures have slowed harvest timings by one to two weeks. That said, it will still be a relatively early harvest with southern New South Wales (NSW) and Victoria (VIC) likely to start late October or early November.

Harvest is underway in Western Australia (WA), but it is very early days. Early yields have been variable, with some growers reporting crops have come in slightly better than expected. Farmers in WA’s southern cropping regions remain optimistic that they are on track for above-average yields.

In terms of exports, Australia exported 359,392 metric tonnes (MT) of canola in August, down 15 percent (pc) from the 424,153MT shipped in July, according to the latest data from the Australian Bureau of Statistics. Japan on 130,411MT followed by France on 124,324MT and the United Arab Emirates on 61,375MT were the three largest markets for August-shipped canola.

Ocean Freight and Export Stem

The stagnant atmosphere from the close of last week has pushed into this week and activity feels subdued. We are seeing a little more tonnage hit the market, although the level of cargo enquiry seems about the same. Monday to Wednesday last week had a very strong feel with cargo interests chasing tonnage and rates pushing quickly, but as of Wednesday afternoon, the activity died away and has not returned. It feels like levels have dropped back to what they were 10 days ago. The Atlantic looks steady - enough enquiry balanced with the tonnage supply - but rates on Panamax have been at slightly lower levels. Stepping back for a moment, it feels like the market is searching for a direction. Notable is the number of stems being quoted from Black Sea ports - more than we have seen for a considerable period of time. The Pacific was very quiet at the back-end of last week and even though coal stems are still being talked up, it feels like everyone is taking a breather.

There was a little more traction and balance to the shipping stem additions in the past week as more new crop wheat and canola vessels appeared. There was 444KMT of wheat added to the stem with 354KMT coming from WA. Most of the WA wheat additions were new crop. First half November loadings started being put on the stem last week along with 200KMT of canola. More than half of this was WA but there were also cargoes from V IC and NSW. Barley additions slowed to 85KMT in the past week down from an average of 240KMT over the previous three weeks.

WASDE report summary

USDA raised US wheat production by 2.1 million metric tonne (MMT) to 49 MMT on the back of the changes already reported in the Small Grains report about 10 days ago. US stocks were increased by 1.5MMT to 18.2MMT. Exports were unchanged at 19.1MMT while feeding was increased. World highlights included Russian production unchanged at 85 while exports were raised 1MMT to 50MMT. Australia was down 1.5MMT to 24.50MMT with exports cut by the same amount to 17.50MMT. Canada 31MMT, Argentina 16.5MMT, and Ukraine 22.50MMT were all unchanged and Kazakhstan production was down 2MMT mil to 13MMT. Lastly, Chinese imports were unchanged at 11MMT.

Corn saw yield and crop reductions in the US offset by higher production globally, due to increases in EU and Argentina. Here we did see demand go up marginally for once (even though US demand went down). The net result was a tighter stocks situation and tighter stocks to use. US corn yields were cut by 0.8 bpa to 173.0 bpa. This was below market expectations with some privates expecting there could have been a slight increase. The US carry in stocks were cut by 90 mill bu. This was partially offset by a 25 mill drop in 23/24 feeding and a 50 mill bu drop in exports. US corn ending stocks were cut by 2.11 bill bu from the 2.22 bill in Sept. US corn exports still look a stretch with th e sluggish demand for US supplies. Improved US corn exports are likely to hinge on a weather problem in South America. South American 23/24 crop assumptions were edged higher. Brazil’s corn crop is forecast at 129MMT which is down 8MMT on LY with Argentina up 1.0MMT at 55MMT which is 21MMT more than LY. Global 23/24 corn was unchanged at 187MMT, up 12.8MMT on 22/23.

World barley production was close to unchanged. Australian production was lowered by 0.3MMT to 9.7MMT. Kazakhstan was also cut by 0.3MMT to 2.7MMT. EU production was edged higher. World trade was raised by 0.8MMT to 27.2MMT which is still down 3.1MMT on LY. Russia’s barley exports were raised by 1.1MMT to 5.8MMT which is 1.3MMT more than LY. Australia’s barley exports were down 0.3MMT to 5.2MMT. Saudi imports unchanged at 4.1MMT and China imports unchanged at 7.5MMT.

Beans were bullish with less production (and US solid yield reductions), higher demand and lower stocks as well as significantly lower stocks to use ratios. US soybean yields were cut by 0.5 bpa from the September report to 49.6 bpa and below the average estimate of by 0.3 bpa. The US crush was raised slightly on the back of the biodiesel demand. At the product level, USDA increased the amount of soyoil used for biofuels 2%. US exports were lowered by 35 mill bu and ending stocks were unchanged at 220 mill bu. The average farmer price was unchanged at $4.90/bu. Globally, Chinese imports were unchanged at 100MMT. South America’s production forecasts were unchanged. Brazil’s 23/24 soybean crop is forecast at a record large 163MMT, up 7MMT from LY. Argentina’s 23/24 crop is forecast at 48MMT, 23MMT more than LY’s drought crop.

Canadian canola production was reduced by 0.4MMT to 17.8MMT. This resulted in a 0.4MMT reduction in exports to 7.5MMT which the crush was unchanged at 10.1MMT. Australia’s canola crop was unchanged at 5.1MMT with exports steady at 5.2MMT. EU production was raised by 0.3MMT to 20MMT with imports down 0.2MMT to 5.1MMT, down 1.6MMT or 23% from LY’s 6.8MMT. World trade was lowered by 0.45MMT to 17.0MMT, down 3.2MMT or 16% from LY. Ukraine’s crop was unchanged at 4.3MMT vs LY’s 3.5MMT. Ukraine’s exports were unchanged at 3.8MMT up from 3.4MMT LY. Global stocks edged higher.

Australian Weather

Cooler temps through October will help crops maximise yield potential instead of having the crop prematurely shut down by extreme heat. This should help the southern cropping zones in particular, which are still green and where most areas had a reasonably favourable growing season.

8 day forecast to 23rd October 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 16th October 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Aussie Dollar touched a weekly low of 0.6289 courtesy of a risk-off sentiment even after the release of negative data from the United States. Australia witnessed a rebound in inflation in August, largely driven by elevated oil prices. This resurgence raises the probability of another interest rate hike by the Reserve Bank of Australia (RBA). The ongoing geopolitical tensions in the Middle East would continue to favour flows toward safe-haven assets, to the detriment of risk-perceived currencies, like the Aussie Dollar. The AUD/USD pair is currently trading around 63 US cents.

Australian Crop Update – Week 40, 2023

Wed, 11 Oct 2023 12:20:56 GMT

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 Nov/Dec'23

Australian Grains Market Update

Rain across most of Victoria (VIC) and Southern New South Wales (NSW) in the past week has helped sure up yields in these areas and for the time being at least, put pressure on domestic grain prices. Rainfalls were steady and beneficial. NSW received light rain in the north (10-20mm) which was too late for winter crops with farmers already into harvest although it did cause some delays. Farmers in these areas are looking for more substantial rains to plant summer crops.

South Australia (SA) received some patchy rain. This included light showers across the Eyre Peninsula, the Lower North and Adelaide Plains as well as heavier rains of 15-25mm in the Upper North. Cooler temperatures and showers across SA still offer some modest yield assistance. Western Australia's (WA) Great Southern and the coastal areas of the Esperance zone also got some light showers although this was limited to 5-10mm.

On the cash side of things, some Asian wheat millers were looking for cover with the post rain sell off and China continues to be active across all grades which is supporting the market. Barley prices were also softer against ample suppliers of black sea barley into the Middle East and softening CFR China bids as local traders there assessed prices against domestic corn prices as the harvest came online. Canola markets remain under pressure from the weakness in vegetable oil markets and ample oilseed supplies in the EU. Europe appears to be swimming in oilseed supplies with the Ukraine sunflower seed harvest coming in much larger than expected.

Finally – We saw this ASX Basis chart last week and thought it would be interestin g to our readership. White is Chicago Dec 23 and Orange ASX Jan 24. What’s interesting is basis has not been this wide since the last drought and it again reinforces the importance of timing in procurement.

Australian Export Stati stics Update

Australian wheat exports dipped below 2.2 million metric tonne (MMT) in August down from 2.68MMT in July and 2.56MMT in June. WA wheat exports remain strong at 1.38MMT, but other states are declining, and this is being led by NSW and Queensland (QLD). The August exports have lifted Australia’s Oct22 to Aug23 exports to 30.3MMT with a month remaining in the 22/23 marketing year. Indonesia was the largest destination with 767 thousand metric tonne (KMT) in August. China was the next largest destination with 340KMT. This lifts China’s Oct/Aug shipments to 7.36MMT up from 5.85MMT for the same period last year. Vietnam was the next largest with 230KMT.

Australia exported 350KMT of barley in August down from 365KMT in July. The most notable feature was the 55.7KMT of malting barley shipped to China. It was the first shipment to China since November 2020. Mexico also took a further 33KMT of malting barley in August. Japan was the largest barley destination with 166.4KMT.

Australian Supply and Demand update

The rain created more certainty about crop size which had been sliding with the dry weather over the proceeding 45-60 days and consequently, we have included an Australian balance sheet update. We put the national wheat crop at 23.9MMT and barley at 9.5MMT

Ocean Freight and Stem Upda te

It's probably too early to be making definitive calls on the freight market post Golden Week, but the early signs suggest more of the same freight rate wise. Ostensibly there isn't much going on - we haven’t seen an avalanche of enquiry nor ships pushed into the market, but the underlying tone is positive. The smaller classes in Southeast Asia look very tight on tonnage and charterers are quietly trying to fix without stirring up the market. Early worries about fuel prices also figure strongly from cargo interests who shorted the market in anticipation of weaker rates post Golden Week only to see oil prices up heavily due to the fighting in and around Gaza. On the derivative (FFA) market there is a touch more positivity to come for October and November, with some relief likely in December.

Probably more important to the wider market is a firm Atlantic basin - especially long-haul cargoes to Asia and India from ECSA and USG. As long as these two areas keep drawing in tonnage the ocean freight market is likely to remain firm.

Last week’s shipping stem additions saw 494KMT of grain added to the stem in the past week. Barley made up the bulk of this with 303KMT. Most of this was in WA but SA and VIC saw additions also. There was also 181KMT of canola put on the stem in the past week with most of this in WA. Wheat was at the other end of the spectrum with just 10KMT added last week!

Pulses

Prices for chickpeas have hit a high not seen since early 2020 with harvest underway in Central Queensland (CQ). CQ will this year be the origin for most of Australia’s 2023-24 chickpeas, as dry conditions limit production in southern QLD and northern NSW. While ABARES on Sep 5 forecast Australia’s 2023-24 (Oct-Sep) chickpea crop at 533,000 metric tonne (MT), down from 544,000MT forecast in June, traders are now expecting a crop of less than 500,000MT or even smaller.

Faba beans are beginning to be harvested in the north but most will end up in the domestic feed market which will leave the southern faba beans to meet export demand when it comes. With Egypt still battling foreign exchange issues this demand is not necessarily assured, for bulk at least. ABARES’ forecast for new-crop faba beans at 447,229MT looks realistic at this stage.

Finally, lentils harvesting is underway in the south with the quality supposedly exceptional although there does seem to be a stand-off between grower and consumer for the time being after the early rally saw prices of over 1000 AUD a tonne delivered to port on the back of Indian import changes. The conventional wisdom is that with a reduced Canadian crop the grower has a better hand this year and ABARE’s estimate of 2023-24 lentil crop at 1.2MMT is in line with trade estimates.

Australian Weather

There was 15-40mm of rain across NSW with the heaviest of the rain in the central parts of the state. This will stop the yield decline in these areas and even boost yields towards the east of the state. There has been some permanent yield loss in the south with farmers saying wheat potential is down 25-33% since the start of Sept, although that’s from well above average yields. Rainfall totals in VIC were scat tered with heavy rains in the central and northern areas. SA received some patchy rain. WA also got some light showers although this was limited to 5-10mm.

8 day forecast to 17th October 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 3rd October 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar was slightly weaker to close off the week on Friday valued against the USD. The Aussie dollar on Friday traded higher around the 64 US cent level after catching a bid that sent the US Dollar (USD) lower across the FX market as risk appetite flipped to close out the trading week. The AUD/USD pair had faced an intense sell-off to near 63 US cents after the better-than-projected Nonfarm Payrolls (NFP) report. The market sentiment shifted into a bearish trajectory as the expectations of one more interest-rate hike from the Federal Reserve (Fed) have accelerat ed. The AUD/USD pair is currently trading at 0.6351.

Australian Crop Update – Week 39, 2023

Tue, 03 Oct 2023 12:13:38 GMT

202/2024 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.

Australian Grains Market Update

The Australian normalized difference vegetation index (NDVI) crop conditions continued to slide as drier weather intensifies. Central New South Wales (NSW), some parts of Victoria (VIC) as well as parts of the northern regions of Western Australia (WA) all posted 10-14% weekly declines in the NDVI measure. Anecdotal evidence on the ground shows that crops in these areas are poor and many crops are unlikely to be harvested.

With that said, we currently have a useful rain band moving across much of VIC and NSW which will deliver much-needed finishing rain. In terms of cash values WA bids to the farmer from the trade were broadly softer. APW10.5% was down 2.2% for the week which we expect was a reaction to the forecast rain in Southeast Australia and thin export demand for wheat at current values. Barley fell 6.7% back US$16 to US$254 WA. There are likely to be a few things contributing to this with barley and canola crops handling the dry finish better than wheat and proportional production losses will be smaller because of this. We expect the other factor is that China has little appetite for feed barley at upwards of $290 Cost and Freight (c&f) China. China has started harvesting its own corn crop which offers fresh feed grain supplies to the local market. China also reportedly bought 0.5-1.0 million metric tonne (MMT) of corn from Ukraine for an Oct/Dec shipment in the past couple of weeks at values expected to be considerably cheaper than Australian feed barley. Ukraine corn is the cheapest corn in the world but it’s unclear at what value China has bought it at. Brazilian corn is currently around $280 c&f China.

Australian Pulse Market

Ocean Freight Market Update

Regional holidays in Australia and Golden Week in Asia have produced a very quiet week so far. All indices (excepting Capes) are lower as the physical markets respond to China’s lack of activity. In general, daily hire rates for all sizes are off US$1-2k per day. It is likely the market will remain listless for the remainder of the week, and we'll only know the underlying strength/weakness of the market mid-next week.

There were 365 thousand metric tonnes (KMT) of wheat, 152KMT of barley and 20KMT of canola placed on the shipping stem in the past week. The wheat was primarily in WA with single cargoes added in South Australia (SA) and VIC. Nothing was added in Queensland (QLD) or NSW.

Australian Weather

Australia posted its driest September on record with the onset of El Niño expected to bring more warm weather ahead. The nation’s total rainfall was 70.8% below the average for September, according to Australia’s Bureau of Meteorology

The forecast rain will help crops arrest the decline in crop conditions in the southern cropping areas. Southern crop vegetation anomaly ratings are still 2-6% ahead of average.

8 day forecast to 10th October 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 3rd October 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

An eventful quarter concluded following the end of Friday's sessions for the AUD. One of the major storylines from the September quarter was the US dollar's utter dominance, catapulted from mid-July lows amidst a sustained run of superior macro data flow, emblematic of sustained outperformance for the world's largest economy. The final two trading days of the month and quarter have seen the US dollar give back some of its gains, in turn enabling th e Australian dollar to rebound from year-to-date lows in the 0.6330’s to peek through 65 US cents heading into Friday's US session.

Australian Crop Update – Week 38, 2023

Mon, 25 Sep 2023 23:49:05 GMT

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.

Australian Crop Update – Week 37, 2023

Mon, 18 Sep 2023 23:29:20 GMT

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

Australian wheat bids were firmer last week on the back of dry weather forecasts and shrinking crop expectations. New crop wheat was up US$6 per metric tonne (MT) during the week, and up over US$60/MT over the last month. Increases were seen across most port zones. South Australia (SA) saw the sharpest weekly gains, although this was largely catching up with other port zones. New crop wheat in Victoria (VIC) is US$300 FOB. Kwinana APW1 was up US$3/MT for the week to US$298 FOB. Queensland (QLD) and Northern New South Wales (NSW) are reflecting larger premiums for wheat which will draw additional supplies into the domestic market for feedlots.

Barley bids were modestly firmer last week across most zones with the crop concerns although gains were not as large as wheat.

Canola bids drifted lower with the selloff in Canadian and French futures.

The 23/24 harvest commenced in Central QLD last week. It is too early to offer any feedback on yields or quality. We expect average yields given the season and the quality should be good with plenty of high protein wheat hitting storages this year.

Australian Pulse Market

The Australian pulse market can be described as a weather market for farmers at this point in time who have high expectations of pricing with little demand. With the European season gathering the attention of international customers, Australia is uncompetitive at this stage across the board for chickpeas, lentils and faba beans. In some cases, farmers expect USD750/MT FOB for new season chickpeas which is well above export parity.

Harvest has commenced in the northern regions bringing in new season chickpeas. However, we are still some five to six weeks away from any real momentum further south for the faba bean and lentil crops. At this stage, crop conditions are favourable for the southern regions and with a drier finish will see lower yields but higher quality. It is expected that pricing will come back at harvest where export opportunities for Australia can be found.

Ocean Freight Market Update

Another week has passed and the market has continued to firm across all segments. The Atlantic is still leading the way where Supramax and Ultramax sizes are now fixing in the 23/24k for front haul business and Handymax sizes are now asking 18/20k level for same. The firmness of the Indian Ocean is now seeping into Southeast Asia where there have been reports of Supramax sizes fixing in the mid/high with rumours of a Ultramax’s fixing in excess of 20k for quick Indo/China coal run. Bunkers still remain firm with prices in Asia around $650/675pmt level in the major ports

It is still hard to pinpoint the reasons behind the recent improvement rates however the longer it goes on, the more faith Owners have in it continuing. All the forward paper is currently trading at a premium to spot levels for the rest of 2023 so charterers are starting to believe this push will be sustained in the medium term.

Australian Weather

Recent rainfall in southern WA will benefit crops there preventing further downside in the short term.

Weather models continue to report a warm, dry outlook for the coming weeks in most areas although southern VIC and southern SA may get some rain this week.

The models are dry for the second half of September with above average temperatures expected. The Bureau of Meteorology is showing a completely dry October with average daytime temperatures expected to be 2-3 C warmer than normal.

There were sharp declines in the vegetation index anomalies in the northern cropping areas in the first week of September.

Australia is bracing for a hotter southern hemisphere spring and summer this year after the possibility of an El Nino strengthened and the Bureau of Meterology said the weather event could likely develop between September and November.

8 day forecast to 26th September 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 18th September 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar is weaker to start the week when valued against the US Dollar trading above 64 US cents. The Australian Dollar reversed its course against the US Dollar after registering gains during the Asian session where China retail sales and industrial production grew faster than expected in August. Industrial production grew 4.5% y/y in August, while retail sales, increase 4.6%. The Chinese economy has struggled to rebound amid a property slowdown, declining exports and low consumer demand. The Australian Dollar strength has a direct correlation to the strength of the Chinese economy hence if China is slower then Australia will follow.

Australian Hay Update - Friday 15th September

Thu, 14 Sep 2023 23:56:35 GMT

The long range rain forecast for September to November reflects a 60% to greater than 80% chance of below median rainfall for most of Australia. Above median maximum temperatures are very likely for almost all of Australia and warmer than median minimum temperatures are likely to very likely for most of western and southern Australia.

We thank our customers for your continued support and loyalty and welcome you to be amongst the first to place pre-orders for 2023 hay. It is expected that 2023 yields will be lower than average in all growing regions however the quality is expected to be above average. We are excited by what we have seen so far and look forward to sharing pricing and feed test results with you as they are received.

To discuss your requirements or to place an order please contact your Balco Sales Manager.

South Australia Season Update

A slow start to the season and not much early rainfall in South Australia meant that seeding was delayed.

High rainfall post seeding supported the germination of crops. While there were some frosts over the winter months, we are experiencing the predicted warmer conditions with reduced rainfall. This slowed the progress of a lot of hay crops and has had an influence on yield potential. A widespread rain event in the middle of August put things back on track with slightly below average yields expected.

With a predicted dry and warmer spring this year, South Australia is on track for slightly below average hay yields of high quality. The cutting of hay crops will begin over the next week or so in some regions of South Australia that typically cut earlier. New season hay is expected to be delivered to Bowmans in the second half of September. The feedback from our growers is to expect high quality 2023 hay to start arriving soon.

Western Australia Season Update

The quality of crops are looking good, and are varying from 7 to 14 days from cutting.
Our farmers are all positive about the season ahead and forecast that Western Australia is set for another good season of hay. The forecast is for warm dry days until the end of the season, which will support the cutting and conditioning of hay.

The Hyden area is expecting to meet the long-term average yield of 4 tonne to the hectare. Crops in the Corrigin area vary in maturity due to different seeding times and sitting close to a predicted 5 to 6 tonne. Areas surrounding Brookton still have growing time and we expect a minimum of 6 tonne to the hectare.

Victoria Season Update

After an extremely challenging 2022 season, everything is looking positive across all our growing regions. Crops look extremely healthy with fine stems, minimal brown leaf or fungal issues and a nice deep green colour.

Northern Mallee/Southern Riverina

The region had a consistently dry period from late April until the end of May, enabling all crops to get sown without any issues. A wet June has set the region up to move forward with a full soil moisture profile. Consistent shower events up until now have everything looking fresh and healthy.

A small portion of growers will commence cutting their crops in the second week of September with the remainder looking to cut towards the end of the month. Weather permitting, we should see some quality hay flow through to production late September early October. Estimated average yields 6-7 t/ha.

Central / Local

Very similar growing conditions to the Mallee, all crops are progressing nicely and with the seasons starting to change and with the days warming up we are seeing growth in the oat crops of around 100mm over the past week. With a full soil moisture profile crops are looking very healthy, thankfully not excessively large crops, but look to be on their way to be better than average yields.

Most farmers are looking at cutting around the second week in October. Estimated average yield 6-7 t/ha.

Southwestern / Southern Wimmera / Mallee

A wet start to the growing season has made things more challenging in our southern growing region. Thankfully a dry July and early August enabling everything back on track.

As with our central area the extra warmth has enabled crops to finally start to show some good growth over the past few weeks, to put them in a good position moving forward.

With crops still in their final growth stage, growers are looking at cutting the first or second week in October. Estimated average yield 5-6 t/ha.

Research unlocks new potential of oaten hay in dairy production: Agrifutures

A study from the University of Melbourne has shown that high-quality oaten hay could improve animal production, especially in dairies and feedlots, and support the sustainable development of dairy production both in Australia and overseas.

The 2023/24 oaten hay season is off to its best start for a number of years and with improved long haul freight rates, it is expected that products destined for the Middle East will be in strong demand. The team at Basis Commodities is available to discuss fodder requirements and also to support our clients with technical information. Our close association with BALCO Australia will ensure the appropriate information is shared with nutritionists and the livestock output is at optimal levels.

Please follow the link and enjoy this video detailing the support from Basis Commodities and BALCO Australia.

Please contact Nader Hassan or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
M: 0408 308 908
E : steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

Australian Crop Update – Week 36, 2023

Mon, 11 Sep 2023 23:20:22 GMT

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

Wheat and barley bids in the cash market remained firm as traders tried to encourage some level of farmer selling. Canola was weaker as traders reflected the sell-off in Canadian and French futures. Lentils continued to find the bid side as well. The AUD was off ¾’s a cent and is now trading below 64 cents.

APW is quoted at around USD 300 FOB. International Grains Council (IGC) lifted its APW export quotation by USD 4 to USD 308 FOB with the ASW also up USD 4 to USD 294 FOB. Farmer selling on the new crop is close to non-existent with the ongoing dry weather in the north and shrinking crop expectations. Northern crops in Queensland (QLD) and Western Australia (WA) were under pressure last week with the daily temperatures in the high 20’s to low 30’s with no rain.

Australia exported 2.704 million metric tonnes (MMT) of wheat in July up from the 2.56MMT in June. QLD and New South Wales (NSW) wheat exports slowed considerably in July while shipments from other states remained strong. Indonesia was the largest destination with 637 thousand metric tonnes (KMT) followed by China with 628KMT. Australia has shipped 1.55MMT of wheat to Indonesia in May/June/July compared to 990KMt in the same period last year. Australia’s Oct/Jul wheat exports topped 7MMT in July with another two months remaining in the 22/23 marketing year. Barley exports continue to slow with just 382KMT shipped in July. A further 285KMT of sorghum was exported in July.

Australian Pulse Market

Australia exported 34,954 tonnes (T) of chickpeas and 127,316T of lentils in July, according to the latest export data from the Australian Bureau of Statistics. The chickpea figure is down 41 percent (pc) from June exports of 59,622T, while the lentil figure is down 18pc on the month. On chickpeas, Pakistan with 23,184T, the United Arab Emirates on 3579T, surprise entrant Canada on 2535T and Nepal on 1851T were the four biggest markets for July shipment.

India on 61,667T was the largest market for lentils, followed by the UAE on 26,769T, Bangladesh on 1708T and Sri Lanka on 16,754T. Australia is continuing to export its biggest than ever lentil crop of 1.4MMT, and ABARES last week lifted its forecast for new-crop lentils to 1.2MMT, up 25pc from the initial June estimate.

Ocean Freight Market Update

There was 880KMT of wheat added to the shipping stem in the past week but only 70KMT of barley. The wheat was spread across all states with 293KMT in WA, 210KMT in both South Australia (SA) and NSW, and 160KMT in Victoria (VIC).

The freight market remains relatively firm but is devoid of a big story or event to catch the headlines with almost all load areas seeing slight freight rate improvements. On a macro level market fundamentals have not changed and give little support to the market. High oil prices and queues at the Panama Canal are adding fuel to owners being more circumspect on what they book forward given the way the market is holding. So there is something of a stand-off on forward rates with all parties eyeing the early October Golden Week holidays in PRC as a potential circuit-breaker on current sentiment.

Australian Weather

Most of the southern cropping zones received some light rain last week which will help preserve yield in these parts. This included 5-15mm across southern WA. There was 5-20mm across much of SA’s cropping areas with the lightest falls in the most northerly parts. VIC received 5-12mm across the major areas. Southern parts of NSW also received some light rain. Cool weather and showers will help limit southern yield reductions in September, but more rain is critical to finish crops and lock in current yields.

Last week’s vegetation index levels only showed modest declines across the cropping regions which is in line with normal seasonal declines. Spokespersons from the Australian Bureau of Meteorology noted that areas of severe rainfall deficiency had expanded and soil moisture was below average across large parts of the country threatening crops. "Since May 2023, areas of severe rainfall deficiency have persisted in south-west, Western Australia, and expanded along eastern Australia," the spokesperson noted. "Serious deficiencies (totals in the lowest 10% of periods since 1900) have expanded inland across north-eastern New South Wales into Queensland."

8 day forecast to 19th September 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 11th September 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar is slightly weaker opening the week as it continues to fend off a stronger US dollar from sending it further lower as markets contemplate central bank posturing, debt market gyrations and the outlook for global growth. The AUD/USD pair traded back and forth on Friday near the crucial resistance of 64 US cents. Last week the Reserve Bank of Australia (RBA) extended its interest rates pause for a third consecutive month as it assesses whether the sharpest increase in borrowing costs in three decades has done enough to slay inflation. The RBA left its cash rate on hold at 4.1%, the highest since mid-2012, at its September board meeting on Tuesday. On Thursday all eyes will be on the release of the employment data from the Australian Bureau of Statistics which will measure the percentage of the total workforce that is unemployed and actively seeking employment during the previous month.

Australian Crop Update – Week 35, 2023

Tue, 05 Sep 2023 23:15:50 GMT

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

Australian activity in the domestic market was limited in the past week on the back of little to no farmer selling. Northern New South Wales (NSW) and Queensland (QLD) markets remain firm as crop expectations shrink and end users prepare for 12 months of tight supplies. QLD feedlots are holding record cattle on feed numbers and cattle prices are back to the 2018/19 drought lows. The bottom line is the cheap cattle prices offers feedlot margin when grain prices are high.

Crop conditions in the Southern QLD and Northern (NSW) continue to deteriorate with anecdotal evidence saying crop conditions are no better than 2019/20. Crops are a little better in the eastern areas in the north, but these are also slipping with the ongoing dry, warm weather. Normalized Difference Vegetation Index (NDVI) anomaly data was mixed with declines in the northern cropping zones and steady to better across southern cropping areas. However, traders are reporting that the line where crops are in decline is progressively moving south. By far the biggest declines in the NDVI ratings were in the north of Western Australia (WA) zones last week which plummeted with the ongoing dry weather. Production estimates have been cut in Northern NSW reasonably sharply but estimates haven’t been reduced as much in the north of the WA cropping zones. The extremely dry soil moisture levels are clearly playing a large roll in these sharp declines. These crops are running out of moisture and its being reflected in the sharp NDVI declines.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) will publish its September crop report next week where we expect them to drop the wheat crop below 26 million metric tonnes (MMT) and barley below 9.5MMT. There are some higher forecasts circulating but there is limited market confidence behind them.

It’s being generally reported that China has bought 1.2MMT to 2.0MMT of Australian barley in the past four weeks since they lifted the import restrictions with buyers there to do more. Trades have been reportedly done at US$270-275 c&f levels and brokers are reporting buyers are still there at US$275 plus values. This keeping the new crop farmer bid well-supported. Early barley shipped are already on the stem (reportedly) and this will be shipped from old crop supplies. Wheat export demand is slower where traders are saying Asian buyers are waiting for cheaper prices based on Black Sea values at US$250 FOB. Australian exporters will be reluctant to take on this risk given the farmer is cashed-up and production estimates in retreat.

Ocean Freight Market Update

More than a million tonnes of wheat, upwards of 650 thousand metric tonne (KMT) of barley and close to 400KMT of canola have been added to the shipping stem over the past few weeks. It feels like the freight market is on the cusp of another push with a slow build up of demand reaching a critical point. It has happened almost by stealth because for much of last week the markets looked flat and maybe under a modicum of pressure. The Singapore holiday didn’t help but this week has dawned with a definite feeling of tightness again on the nearby positions. Pockets are showing strong gains such as USG and PG/WCI whilst others like ECSA and Southeast Asia are managing to hold. It's hard to put a finger on any definitive single commodity or region that is driving events. There appears to be a more general "across the board" effect whereby charters leave fixing late and are caught when the market unexpectedly tightens. The only common thread we would note is that we are seeing an uptick in trader-based activities across most commodities.

Panamax sizes stayed relatively static last week with Atlantic focussed biz coming off while Asia held steady. Front haul numbers are heading back into the mid/low $20k's per day whereas last week it looked like they would break $25k at one point. Conversely Supramax/Ultramax vessels are experiencing strong demands especially from USG/ECUS positions. Good spec Ultramax Vessels are now a parity to Panamax for front haul. In the MEG it was a similar situation with an unexpected dearth of tonnage visible from Wednesday onwards last week and Charters scrambled to cover. Supramax and Ultramax numbers in the region are edging up towards mid-teens for trips to Asia. Large Handymax’s are fixing in the low teens and firming.

Australian Weather

The Australian Bureau of Meteorology (BOM) issued its latest seasonal outlook update where they maintained the El Nino alert and said a positive IOD is likely for the spring. This is unchanged on previous updates. They said SSTs (Sea Surface Temperature) in the tropical Pacific are exceeding El Niño thresholds and have continued to warm slightly over the last fortnight. SSTs are likely to remain above El Niño thresholds until at least early 2024.

The Vegetation index levels stabilised across eastern Australia’s the northern cropping in August thanks to the mild temperatures. Veg index levels across southern NSW, Victoria (VIC) and South Australia (SA) also steadied at levels that are comfortably above the 20-year average. Some areas are even a little better than this time last year while others are down on last year but remain historically favourable. Veg index levels improved in WA driven by the Lower Great Southern and the Esperance zone with the other parts modestly better. Soil moisture levels are very dry across the northern cropping areas of Western Australia and eastern Australia.

Forecasters still suggest that the national wheat production for the 2023/24 season is at 26.6MMT and barley at 10.2MMT based on the current condition. Wheat production numbers have already been adjusted based on the dry weather in the northern cropping zones and the reduced plantings in Northern NSW. It all comes down to the spring weather and the BOM is forecasting a drier and warmer than normal September. The market is cautious about building weather forecast into the yields as the weather hasn’t been as bad as earlier predictions and many areas in the southern cropping zones are only one decent rain away from above average to well above average yields. Nonetheless, yields will be a function of the weather in Sep/Oct. Northern crops will come in earlier than normal with a warm/dry September, which is forecast.

8 day forecast to 12th September 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 5th September 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar is slightly weaker on the open this week when valued against the Greenback. The Australian dollar failed to capitalise on the surprisingly upbeat Caixin Manufacturing PMI for August. The Caixin China General Manufacturing PMI came in at 51 in August, 1.8 points higher than the July reading. It was the third time in four months that Chinese manufacturing conditions expanded, indicating that the sector was improving.

The Australian dollar didn’t strengthen despite being a proxy for Chinese economic prospects trading below 65 US cents.

On the local data front for Australia, all eyes will be on the interest rate decision by the Reserve Bank of Australia (RBA), which will be announced on Tuesday. According to a Reuters poll, RBA Governor Philip Lowe will keep interest rates unchanged at 4.10% but will keep doors open for more hikes.

Australian Crop Update – Week 34, 2023

Tue, 22 Aug 2023 12:04:04 GMT

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

Australian domestic markets were firm last week, despite a weaker AU dollar and US wheat futures falling. The most notable gains in domestic cash markets were in canola where prices were up USD12 per metric tonne (MT) to USD16/MT across the port zones. There is still limited farmer selling, with farmers quite comfortable holding on to their crops for the time being. Yield prospects are also weighing on decisions, as are the ongoing uncertainties associated with the impact of likely drier conditions associated with the El Nino phenomena. Cool to cold temperatures and wet conditions featured in the south of Australia during the week, whilst the north has been dry, with higher than usual daytime temperatures.

Most growers in Queensland (QLD) and Northern NSW have already lowered their yield expectations, and are hoping for average yields at best, due to the dry season. Some crops have been pushed to early maturity in northern regions. September rain and temperature forecasts will remain important in shaping crop yields in Northern NSW, QLD, and Central and Northern WA.

There has been enough rain in Australia’s southern cropping regions to keep these areas on track for above-average yields. During the week, the International Grains Council said there were reports that China has secured some barley cargoes from Australia at around U$275 CFR China, for Sep-Oct shipment but there were some concerns amongst the trade here re phytosanitary requirements that were supposedly still being worked through at a government level.

The Grain Industry Association of Western Australia August crop report states that WA’s total grain yield potential has slipped more than 1 million metric tonnes (MMT) in the last few weeks as a result of continued dry conditions in much of the state’s grain growing regions. In the Central and Northern regions of WA, grain yield potential has fallen and will continue to fall further if rain doesn’t pick up in the next month. Recent light rain in the northern parts of WA has given those growers a short reprieve from what was shaping up as being a very poor year. Further south, the situation is more mixed with patches of very dry areas amongst those still hanging on, to extremely wet waterlogged areas closer to the coast. For many growers, the potential for a good year is still there, although regular or meaningful rain will be needed.

Ocean Freight Market Update

A big clear-out of available tonnage in Southeast Asia has taken the steam out of the Ocean Freight market over the past week. Anyone with shipping slots has now been covered so charterers have some space to sit back and assess whether the market has a genuine impetus or the recent increase will cease. Similarly, many owners appear to have also cleared out their available vessels in the near term so they are happy to wait before re-pricing for deferred positions. For now, we would say there is enough demand that the gains of the last 10-14 days will hold for the near term, but conversely, the market isn’t showing enough demand to push things much higher and with the news out of China increasingly bearish, we suspect the market may weaken in the short to medium term.

Australian Weather

Last week, WA, South Australia (SA), Victoria (VIC) and NSW all recorded rain including a small amount in northern NSW.

The Australian Bureau of Meteorology’s climate outlook released on Thursday confirmed that Australia is set to see below median rain and above median temperatures from September to November. The long-range forecast is influenced by several factors, including likely El Niño development, potential positive Indian Ocean Dipole development, and record warm oceans globally.

8 day forecast to 22nd August 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 14th August 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar stands on shaky ground as risk sentiment remains fragile, amid growing uncertainty surrounding the state of the Chinese Economy. Equities fell during trade on Friday, with the Hang Seng leading losses with key indices marking their lowest level this year. While Chinese policymakers announced a series of reforms and interest rate cuts designed to boost confidence across capital markets, the moves offered little support to risk assets.

With the Yuan failing to make inroads against the USD, the AUD remains under pressure struggling to make any headway on moves above US$0.64. Having dipped toward US$0.6380, the AUD looked set to test Thursday's low at US$0.6363, before finding support and trading sideways bouncing between US$0.6380 and $US0.6410 into the Friday close. Longer term some of the banks now expect the AUD to dip below 60 before the end of the year.

Australian Hay Update - Thursday 17th August

Thu, 17 Aug 2023 00:32:27 GMT

Australia is well into the hay growing season and in general, it looks like most farmers will achieve average to above-average yields of good quality hay come harvest time. As highlighted in our last Australian hay update on 26 June , less moisture, particularly at the end of the hay growing season produces a far better product to suit the dairy and livestock industries.

Below is a brief update on Australia's main three hay producing states.

South Australia

A slow start to the season with minimal early rainfall resulted in delayed seeding.

This year, growers were able to ensure good weed management at seeding. High rainfall post seeding allowed crops to germinate. This moisture met the subsoil moisture from last spring to set South Australia up for a promising season.

The long-range forecast is for a dry finishing season with a warm spring. With a predicted dry and warmer spring this year, South Australia is on track for average hay yields and a season that is going to make high quality hay.

Western Australia

The season started strong with good opening rains, and we have seen this pattern continue for most of the growing season so far.

Brookton and surrounding areas had average rainfall, while parts of the Wheatbelt and further east have received slightly less.

Western Australia is on target to achieve above-average yields this season.

Hopefully, we will not have any rain for the hay-making period to allow growers to produce good quality hay.

Victoria

Most of Victoria has had a slow start to the growing season followed by a large volume of rain.

Much of Central Victoria currently has a full moisture profile and areas north and northwest have had above average falls for the growing season so far.

Victoria has experienced minimal rain over the last month with frosts becoming frequent. Victoria is currently on track to achieve above average yields this season.

Please contact Nader Hassan or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
M: 0408 308 908
E : steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

Australian Crop Update – Week 33, 2023

Wed, 16 Aug 2023 11:58:27 GMT

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

There were some notable gains in the Australian domestic markets last week, particularly in wheat and barley. East coast Australian grain was higher by USD8-10 per Metric Tonne (MT) while the largest gains were from Western Australia (WA) up USD15/MT for wheat and USD17/MT for barley following the news of China’s decision to reverse the tariff on Australian barley last week. Indeed, China has started booking cargoes of Australian barley. Traders have supposedly booked a number of cargoes however the exact quantity is not known.

New crop prices for wheat remain strong in the north of New South Wales (NSW) where dry weather has resulted in a lower planted area, but prices continue to fall in Southern NSW, Victoria (VIC) and South Australia (SA) where crops are in good condition as we approach spring.

Australia exported 418,075MT of feed barley, 47,807MT of malting barley and 395,370MT of sorghum in June, according to the latest data from the Australian Bureau of Statistics. On feed, the June figure was down 22 percent (pc) from the May total of 534,560MT. Saudi Arabia on 184,000MT, Japan on 155,090MT and Thailand on 32,571MT were the three biggest markets.

On sorghum, volume has dropped 10pc from the May peak of 440,921MT. China on 275,462MT accounted for 70pc of June shipments, with 60,000MT to Kenya and 30,000MT to Sudan the second and third-biggest markets.

USDA Report Recap

The USDA saw some reductions in production with EU, Canada and China each losing 2-3 million metric tonnes (MMT) of production. However, USDA also reduced demand so that stocks to use went up slightly. It is worth noting that Ukraine production was up 3.5MMT however it is unknown know how accessible that grain will be.

There were similar patterns in barley, with crop losses in some of the key producing nations but demand down by close to the same number.

Ocean Freight Market Update

Last week saw the freight market bounce back to life. Sharp rises across all sectors are the consequence of a general increase in demand. We have noticed for almost two weeks that trader activity was increasing across the commodities from fertiliser to scrap metals, especially on the Handymax sizes.

Last week it became apparent that the Atlantic and Southeast Asian markets were suddenly short on tonnage, particularly in spot positions. It was almost like a slow tightening reached a critical tipping point and owners realised they had the ascendency again. As usual, this caused plenty of "waiting for the bottom" cargo interests to jump in as charterers got FOMO (Fear Of Missing Out) on the basement levels of the last three months.

Adding to the sense of urgency for cargo interests has been the rapid rise of bunker prices. Singapore has leaped from the $580's pmt 10 days ago to mid $650's pmt. No one foresaw the fuel prices rising so dramatically and the combined effect of the freight market sparking into life with the fuel rise is causing much uncertainty. We have well and truly broken out of the range-bound mentality although it remains to be seen for how long.

Australian Weather

The weekly rainfall totals show good falls in VIC as well as parts of WA and Southern NSW. The rain in Southern WA came on the back of good rainfall received last week, which was needed given the region received very much below average rainfall from May-July. A small part of SA also saw light showers of less than 10mm during the week. Queensland (QLD) and Northern NSW only saw coastal showers, with cropping areas missing out. Dry season conditions are expected to continue for the northern part of Australia over the next fortnight. There is increasing crop stress in Northern NSW, with concerns that a hot, dry spring could limit yields in both Northern NSW and QLD. For August to October, below median rainfall is likely to very likely (60% to greater than 80% chance) for much of Australia. The northern WA cropping areas are also suffering from lack of water, but this is being offset by the favourable conditions in the southern regions.

8 day forecast to 22nd August 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 14th August 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar continued its downward spiral on Friday, overwhelmed by a stronger US dollar and ongoing Chinese economic uncertainty. US PPI data unexpectedly edged higher, propelling US yields upward as markets prepare for the possibility of one more Fed rate hike. This was in stark contrast to comments from outgoing RBA Governor Philip Lowe. It is clear the RBA hopes it has done enough to control inflation. China data showing a steep decline in bank lending and concerns over potential defaults in the property sector saw the AUD give up 0.3% on the day and 1.1% for the week, sliding below US$0.65 to mark lows at US$0.6486.

Australian Crop Update – Week 32, 2023

Tue, 08 Aug 2023 11:54:56 GMT

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

Global markets were sharply down at the end of last week. However, there were only smaller declines in Australian cash prices as the grower becomes increasingly reluctant to sell given events in the Black Sea, talk of Indian imports, Chinese bans being lifted and so on. There was also limited farmer selling with ongoing production uncertainties associated with the impact of El Nino weather patterns.

China to Lift Ban on Australian Barley

The Australian Government was notified that China will lift its trade sanctions on Australian barley from Saturday. The announcement comes roughly three years after the 80.5% duties first cut off what was once as much as a A$1.5b annual trade and led Canberra to file a case at the WTO. This lift will allow Australian growers and producers to re-enter the Chinese market. Traders were expecting this announcement, but it still offered a kick in the farmer bids. China uses 3-4 million metric tonne (MMT) of malting barley annually and they would typically like to import this from Australia, as Australia has a $30 per metric tonne (MT) plus freight advantage over France where China has been importing more barley from over the past three years. Ukraine barley isn’t available because of the Black Sea grain deal expiring in July.

The immediate reaction to this news has been positive with feed barley values rising sharply. It remains to be seen whether this pricing relativity carries into harvest.

Ocean Freight Market Update

The freight market maintains its range-bound status with little to report from the past week’s events. Panamax bucked the trend to some degree but any improvement in levels is coming from a very low base. It's difficult to say specifically but activity from European Community Shipowners' Associations (ECSA) seems the primary push behind Panamax rates. Otherwise, it is very much unchanged for the Ultramax/Supramax sizes. We remain of the opinion that the Handymax market is perhaps under-priced at the moment, especially for nearby tonnage.

Also notable at the moment are Panama Canal delays which have crept up to 18 days (reduced rainfall having curtailed water levels in the lakes/lock system). Presently about 32 ships are transiting each day versus 36-38 in normal operation. Bunkers have also risen appreciably in recent days on the back of Saudi oil production cuts.

Australian Weather

There was good rain in parts of Western Australia (WA) last week, which saw 10-20mm across the northern zones. 10-40mm also fell across the southern zone of WA. Crops needed this rain, which buys more time for crops that are still dry. Falls were heaviest along the coast and lighter on the eastern fringe of the cropping zone. There was little rain for the main part of the central WA cropping zone which is the state’s largest production area. There was little meaningful rain for the other states, which increases crop stress in northern New South Wales (NSW) and Queensland (QLD), with temperatures typically set to climb in the second half of August in the north as we near spring. This would lock in low yields without rain.

8 day forecast to 15th August 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 8th August 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

Last week was a disastrous week for the Australian Dollar giving up nearly 1.2% and passing through US$0.66 amid increasing economic headwinds. Having marked a weekly low of US$0.6516 the AUD seemingly found some support through trade on Thursday, only to give up gains leading into Friday’s all-important US non-farm payroll print. Attentions this week turn to Wednesday’s Chinese CPI update as the first real headline item on the macroeconomic docket. The Chinese economic slowdown remains a significant headwind capping the AUD upside and another deflationary print will likely exacerbate Yuan weakness and weigh on the AUD.

Australian Supply and Demand Update - August 2023

Tue, 08 Aug 2023 11:51:36 GMT

On the back of our visit to Australian Grains Industry Conference (AGIC) the week before last and discussions with our analysts AgScientia, it’s time to pull back the production forecasts. El Niño has been flagged as a production risk for some parts of Australia, and although we are of the school that says we have not met all the parameters of a fully formed El Niño or indeed that an El Niño always leads to large losses in production, we do feel we are moving back towards mean production levels this year after two record years.

Production Estimates

The planting window is closed. It’s estimated that less than a quarter of the intended wheat plantings in northern New South Wales (NSW) from Mungindi, Collarenebri, Burren Junction, Walgett, Coonamble, and Nyngan has been planted. This is a big deal as these areas accounted for about half of the state’s wheat plantings in the 2020/21 Census and it will have a major impact on the NSW 2023/24 winter crop production. Some areas are better than others. Areas east of Moree are planted and crops are ok, but the larger cropping areas to the west which makes up a large portion of the region only has a small proportion of the crop in the ground.

Based on this, we have cut the northern NSW wheat plantings by a third. We were forecasting a combined planted area across the northern, north western and central west of the state to be 2.2 million (M) hectare (ha) and this is now back to 1.45M ha. Most of the reduction is in the northern and north western areas, with the central west being trimmed by 6%. We have also pared the northern yields back to below average from the previous average assumptions. We don’t believe we are being unduly hasty about the sharp reduction in the northern crop forecast. Agronomists are saying many farmers in the north have already given up on the 2023 winter crop. There is a north/south divide line in NSW and West Wyalong is the cut-off line. Crops to the south of West Wyalong and east of Forbes are very good. However it becomes patchy and problematic to the north. We have edged southern NSW slightly higher, although this has little impact of the sharp reduction in the northern planting assumptions.

The combined changes lower the NSW wheat crop back to 6.6 million metric tonne (MMT). Queensland (QLD) is left at 1.3MMT. Parts of QLD received rain from the recent change however QLD yields will ultimately be a function of the spring weather and finishing rains. We have lifted yields in southern NSW, Victoria (VIC) and South Australia (SA) slightly on the previous forecasts based on the favourable conditions. Western Australia (WA) has been pared back slightly to 9.5MMT given slightly poorer conditions in the north. Together, this puts the Australian 2023 wheat crop at 26.6MMT.

National barley production remains large at 10.1MMT. Favourable weather in the key production areas of southern NSW, VIC, SA and southern WA help to insulate production despite the dry weather worries in the northern cropping areas. We have cut NSW barley production to 1.55MMT with 0.75MMT in the north of the state. We have left QLD barley production at 0.4MMT.

Demand Predictions

Domestic demand assumptions are largely unchanged. Feedlot numbers in the north are expected to remain high courtesy of the cheaper cattle prices and the ever-increasing capacity. Feedlot operators have shown in recent years they will keep the pens near capacity most of the time. The question in the north is which feed grains and where will they be sourced from. We estimate the QLD feed grain usage for 2023/24 at 2.6MMT with 70% of this coming from the feedlots.

We have reduced the interstate wheat movements from NSW to QLD as traders focus on exporting more of the NSW crop from its nearest ports and Grain Corp maximises its rail efficiencies rather than focusing on volume as they have done for the previous three sessions. We have 575 thousand metric tonne (KMT) of NSW barley going into QLD as well as 100KMT from SA and 300KMT from WA. We are forecasting 2023/24 wheat exports at 0.4MMT.

NSW wheat exports predictions have tumbled to just 1.35MMT with the sharply reduced crop. VIC wheat exports climb to 3.3MMT with a carry over of 0.5MMT and SA up to 4.8MMT with a carry over of around 0.02MMT. WA exports hold at 11.0MMT with the large carry in while the carry over stocks shrink to 0.35MMT. National 2023/24 carry over wheat stocks fall by 1.4MMT to 2.45MMT.

The large barley production estimate of 10.1MMT allows for sizable exports from the southern cropping areas. We have boosted barley feeding at the expense of wheat with the big spreads which we expect continue. Feedlots, poultry and pigs continue to maximise barley feeding. Nonetheless, this still allows for exports of more than 6MMT which won’t be easy given the Black Sea pricing and how uncompetitive Aussie barley is into Saudi, which has been the major export destination in recent years. We expect that China will relent and lifts its anti-dumping measures on Aussie barley imports this month, but this doesn’t mean it will be easy. China is more comfortable on its feed grain imports now they have Brazilian corn as well as a sizable volume of downgraded domestic wheat which is expected to flow into domestic feed channels.

Weather

Looking forward. Spring weather will determine yield outcomes from here. WA saw some light showers of 5-10mm early this week. This front also offered slight showers for SA, VIC and southern NSW. WA is expected to see another weak front early next week. The extended 46-day model is forecasting average to slightly below average rain for WA, SA and VIC during August and below average for NSW and QLD. WA is expected to see generally mild weather through August while the model points to above average temperatures for northern NSW and QLD over the same period.

Supply and demand charts

Information and images to write this update was sourced from the below:

The University of Sydney: https://www.sydney.edu.au/news-opinion/news/2023/07/18/how-will-el-nino-impact-the-world-s-wheat-and-global-food-supply.html
A g Scientia: https://www.agscientia.com.au/
Bureau of Meteorology: http://www.bom.gov.au/

Australian Crop Update – Week 31, 2023

Tue, 01 Aug 2023 11:46:39 GMT

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

Local Australian markets were firmer last week given the news from Ukraine that Russia had started its bombardment of grain storage and port assets. The Australian farmer responded by firming their selling ideas across all port zones and pushing international bids further away from any new business. Some port zones are still showing old crop premiums for wheat where exporters are still chasing some tonnage, but most are reflecting discounts to the new crop bids. New crop APW is about $285-295 FOB equivalent. Barley is around $220-225 FOB with most in the Australian trade expecting the Chinese ban on Barley to be lifted at some point in August.

That said a significant amount of the gains were handed back in the later part of the week with market participants hesitant about pushing ag markets higher without the support of confirmed balance sheet losses or export demand to support the higher prices.

Australian Grains Industry Conference 2023

Last week the annual Australian Grains Industry Conference (AGIC) was held in Melbourne. The overall tone was subdued with continuing concerns about the imminent arrival of El Nino conditions in Australia, a lack of export competitiveness and increased volatility associated with the Black Sea conflict. There was some positive sentiment around hopes for increased grain exports to India and a resumption of barley business to China although these were tempered with phytosanitary/quarantine concerns.

Ocean Freight Market Update

Another week of struggle looms for shipowners. The market remains weaker in the north with fewer trade options, so owners are tending to look south for business where there has been an up-tick in demand. Panamax has traded sideways in the recent past. Yet again it's mostly coal stems and steels/generals backhaul business that are providing the impetus.

Very little cargo interest is evident, and the conclusion of the Black Sea Grain initiative has left a small build-up of tonnage in the eastern Mediterranean. Persian Gulf ships have firmed slightly in line with better numbers out of East Coast Africa but we're not sure it has broken the USD10kpd barrier just yet. Period numbers for modern tonnage remain relatively high but Owner with sub-index tonnage is being more pragmatic. Bunker prices rose about $20pmt last week which caught out a few voyage charterers.

We expect more of the same over the next few weeks - maybe a few minor variations here and there but nothing seismic. For now, we cannot discern any major drivers which will impact the ocean freight market prior to Sept/October.

Australian Weather

Over the last few weeks, dry weather has not helped farmer engagement to sell down their old crop positions. It has been a “dry” July for most cropping regions with most areas only seeing 30-40% of the normal monthly rainfall. The latest normalised difference vegetation index (NDVI) weekly anomalies showed crop conditions are declining in the northern areas of Western Australia and New South Wales and southern Queensland. It is not irreversible, but it will be in two to three weeks for the northern areas without rain, particularly if temperatures start to climb. Crop conditions through Southern New South Wales, Victoria, South Australia and Western Australia are very good. Farmers are saying crop conditions for this time are as good as last year and the data tells a similar story. We are slated to see some showers this week.

8 day forecast to 7th August 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 31st July 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar is slightly weaker to start the week when valued against the USD. Last week, Australian inflation slowed more than expected in the second quarter thanks to falls in the cost of domestic holidays and petrol, suggesting less pressure for another interest rate hike in August and sending the AUD sharply lower.

Australian Crop Update – Week 30, 2023

Tue, 25 Jul 2023 11:41:09 GMT

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 & Oil Seed Market

The Australian cash wheat markets firmed last week due to the rally in US futures, however the buyers still remain in wait-and-see mode. The cropping regions did not see a lot of rain which firmed values for barley and canola also. Gains were mostly seen in the Western Australian market. However, we feel that the gains will be short lived as Australian grain remains uncompetitive internationally as we get closer to harvest.

The annual Australian Grains Industry Conference (AGIC) will be held this week in Melbourne over the 26th and 27th of July 2023. The Basis Commodities team will be attending, therefore our out-of-office is on. The conference is an industry-run conference for grain market participants and service providers, hosted by leading grain industry associations Grain Trade Australia, Australian Oilseeds Federation, and Pulse Australia. It is a good opportunity to sense the prevailing mood from this origination in terms of tensions in the Black Sea.

On the back of this, we will also issue an update to our Australian balance sheets.

Domestic demand assumptions are largely unchanged. Feedlot numbers in the north are expected to remain high courtesy of the cheaper cattle prices and the ever-increasing capacity. Feedlot operators have shown in recent years they will keep the pens near capacity most of the time. The question in the north is which feed grains and where will they be sourced from. We estimate the Queensland (QLD) feed grain usage for 2023/24 at 2.6MMT with 70% of this coming from the feedlots.

National barley production remains large at 10.1MMT. Favourable weather in the key production areas of Southern New South Wales (NSW), Victoria (VIC), South Australia (SA) and southern Western Australia (WA) help to insulate production despite the dry weather worries in the northern cropping areas. This also allows sizable exports from the southern cropping areas. We have boosted barley feeding at the expense of wheat with the big spreads which we expect to continue. Feedlots, poultry, and pigs continue to maximise barley feeding. Nonetheless, this still allows for exports of more than 6MMT, which won’t be easy given the Black Sea pricing and how uncompetitive Aussie barley is into Saudi, which has been the major export destination in recent years.

It is expected that China will lift its anti-dumping measures on Aussie barley imports. China is more comfortable with its feed grain imports now as they have Brazilian corn as well as a sizable volume of downgraded domestic wheat which is expected to flow into domestic feed channels.

Ocean Freight Market Update

The freight market continues to be quiet. Handmax had a tough week. Plenty of tonnage supply saw rates under real pressure in the near term. Nice Japanese ships are only able to achieve around $7kpd. Supramax and Ultramax had small upticks in activity last week as the Indonesia / Pacific Round Voyage Coal provided some demand side impetuous. Ultramax sizes were being talked above $10kpd again for ships south of CJK (Chinese, Japanese, and Korean).

Unfortunately, we have seen this same chain of events time and again over the last two months where a subdued market gets occasional spurts from Indonesian coal demand, with the market subsequently easing off when the coal stems dry up. We can't see any substantial positivity until October when the Indian monsoon ends at this stage.

Australian Weather

Australian cropping regions will remain mostly dry over the next 10 days, with little rain to be seen in key growing areas. Dry areas in northern WA cropping zones and northern NSW are expanding. More enquiry for drought feeding is emerging daily firming new crop pricing and this is something we need to keep an eye on as tensions in the Black Sea grow. The dry weather pattern is a major concern for winter crops where yields will be a function of the rainfall and temperatures from August 15 through September and October.

Australia’s Bureau of Meteorology (The Bureau) said Central and eastern Pacific Sea surface temperatures (SSTs) are exceeding El Niño thresholds. Models indicate further warming is likely, with SSTs remaining above El Niño thresholds until at least the end of the year. Some other agencies are saying ocean temperatures in the mid Pacific have already reached El Nino thresholds. The Bureau said the Indian Ocean Dipole (IOD) is currently neutral. All models suggest a positive IOD is likely to develop in late winter or early spring. A positive IOD typically decreases winter–spring rainfall for much of Australia.

day forecast to 31st of July 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 23rd July 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar edged upward through trade on Monday, finding support amid weaker US PMI data. The US dollar retreated after the composite PMI index fell to 52, down from 53.2 last month and well below consensus expectations, amplifying calls for the Fed to call an end to its rate-tightening cycle. The AUD crept toward US$0.6750, amid rising expectations of widespread China stimulus. However, gains were pared back as reports pre-politburo meeting notes suggest fiscal stimulus will be targeted.

Balco Hosts an Event in Raywood Victoria

Wed, 19 Jul 2023 05:06:34 GMT

On Wednesday 28th of June Balco Australia welcomed 65 guests to an Open Day at our new factory Raywood, Victoria.

Guests included Victorian farmers, members of Bendigo Government and Council, and Balco employees from across the country.

Guest speakers included prominent local farmer Josh Lanyon, Melbourne University Senior Professor Deli Chen, Melbourne University Senior Lecturer Dr Paul Cheng, and Balco Australia CEO Rob Lawson. It was the perfect opportunity to create new relationships, discuss the upcoming season, and receive feedback on site upgrades undertaken and planned by Balco.

Dr. Paul Cheng, Senior Lecturer in Livestock Nutrition and Grazing Management from the University of Melbourne Faculty of Science presented on the Value of Fibre in Sustainable Dairy Cow Production. Focus points for the presentation included why fibre is important, what NDF (Neutral Detergent Fibre) is and how it effects intake and rumen health, and the impact of fiber on gut health.

Our CEO Rob Lawson introduced our Senior Leadership Team and explained to the growers the many benefits of working with Balco including a stable cash flow and timely payments, the technical support provided to growers (including access to a large consultant group expertise in soil science, nutrition, environmental science), and our stable and scientific grading system that benefits both the farmer and our customers.

Season Update

Australian Crop Update – Week 28, 2023

Thu, 13 Jul 2023 11:37:11 GMT

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 & Oil Seed Market

Australian domestic markets steadied last week, albeit to varying degrees, after the sharp declines from the previous week. Barley shipments have once again been shipped from Western Australia and imported into Queensland to meet the nearby feed demand. Southern wheat and barley edged higher after last week’s sharp decline.

May 2023 Grain Export Statistics

Australia exported a further 3.33MMT of wheat and durum in May. This lifts the Oct/May accumulative total to 22.9MMT which is up 5MMT on the same time last year. Western Australia exports are up 38% on last year, Queensland is also 38% and South Australia 46% higher. Victoria exports are up 19% and New South Wales 4% higher.

Western Australia exported a record 1.46MMT of wheat in May up from 1.1MMT in April. New South Wales wheat exports slowed to 439 thousand metric tonne (KMT) but larger exports from Queensland helped offset this. China took a further 794KMT in May lifting China’s Oct/May to 6.3MMT vs 4.2MMT at the same time last year. Vietnam was the next largest with 457KMT then Indonesia with 409KMT and then South Korea not far behind with 373KMT.

There was 600KMT of barley exported in May, slightly up on April at 593KMT. Western Australia shipped 380KMT of the May exports or 60%. Saudi was the largest destination with 126KMT. Vietnam was at 125KMT and then Japan at 105KMT. Australia’s Oct/May exports are 5.25MMT which is 9% down on last year. Sorghum exports were 456KMT with 446KMT of this going to China.

Canola exports were up 448KMT from 287KMT in April. This lifts the Oct/May to 4.1MMT which is modestly down on last year’s 4.3MMT. Victoria exported 208KMT of canola in May and 142KMT came from Western Australia.

Lentil exports were huge at 265KMT up from 152KMT in April. There appeared to be some switching from faba beans to lentils which suggests previous months were incorrectly coded. Australia has exported 1.1MMT of lentils in Oct/May which is close to double the previous years 632KMT.

Ocean Freight Market & Export Stem

The freight market remains in a sluggish state although Capes/Panamax seemed to enjoy a mini resurgence last week on the back of iron ore/coal demand. Rates in the Pacific are generally trending sideways however we did hear a 37dwt open Japan was reported fixed for Aussie round voyage at $8,750 which owners are now trying to hang their hat on. Supramax are achieving around $8.5-$9k basis South China for Aussie round voyage and Ultramax $1k premium for same. Bunkers remain relatively stable.

There was 405KMT of wheat added to the stem in the past week. This included 162KMT in WA and 148KMT and the remaining 95KMT in Vic. There was 30KMT of canola added to the stem in SA. Another 50KMT of unspecified grain was added to the stem in Newcastle NAT. There is now 100KMT on unspecified grain to be loaded from NAT in the second half of July.

Australian Weather

Seeding is now completed in both Western Australia and South Australia. Despite experiencing below-average rainfall in May, timely precipitation during June has significantly improved crop production prospects in both regions. The southern region's favourable climate conditions continue to support sizable crop production. The later-seeded crops are faring better this season due to the consistent falls over the past month.

The most significant issue in the past week was the disappointment from the forecast rain event for northern New South Wales. The recent rain event only delivered 5-15mm across the driest areas of the state where farmers needed upwards of 35mm to entice them to plant the remainder of the crop. El Nino has been flagged as a production risk for some parts of Australia and it's starting to bite. The planting window is nearly closed, and it will take a major rain event to get more crop in the ground. It’s estimated that less than a quarter of the intended wheat plantings in northern New South Wales have been planted. It’s a big deal as these areas accounted for about half the state’s wheat plantings in the 2020/21 Census and it will have a major impact on the NSW 2023/24 winter crop production.

8 day forecast to 5th of July 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 28th June 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar tracked lower through trade on Monday, scuppered by weaker-than-anticipated China data. Amid a backdrop of weaker risk appetite, the AUD tracked toward intraday lows at US$0.6630, before finding support in a weaker US dollar. The dollar could not maintain the risk-off momentum enjoyed following the China data as treasury yields moved lower, back toward the lows seen in the wake of last week's softer-than-anticipated payroll print. We expect ranges will be well contained leading into US CPI data with the AUD tracking between US$0.6580 and US$0.6730.

Australian Crop Update – Week 27, 2023

Tue, 04 Jul 2023 11:33:47 GMT

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 & Oil Seed Market

Australian domestic bids were sharply lower last week on the forecast rain as well as the washout in US futures. Farmer bids were down in all zones and all grains, apart from canola which held its own and was firmer in some areas due to changes in the Matif. Heavy rains then fell across the cropping areas of Queensland (QLD) as the major weather models have proven to be accurate in forecasting, although it remains to be seen whether this influences the grower’s mindset re sales. Northwest New South Wales still did not get enough, and these areas are desperate for rain to boost soil moisture for crops already seeded and finalise plantings.

NDVI anomalies declines across most of Western Australia, New South Wales and Queensland in the past week. South Australia improved while Victoria was mixed. In terms of departure from average over the past 20 odd years, Qld is about normal although the western fringes are lagging. NNSW (extends down to Condobolin) is behind normal, SNSW, Vic and SA are all ahead of normal. Anecdotally, most farmers in these parts are saying crops are as good as they have been at this time in the past three seasons, which is a high benchmark. WA is mixed. Geraldton and northern Kwinana are behind average. Crop conditions improve in the southern Kwinana and upper Great Southern but aren’t as good in the lower Great Southern and extends into the Esperance zone.

The week began with further declines in wheat markets following a surprisingly bearish USDA planting report which showed the farmer planted an additional two million acres of corn than the market was expecting. This is important as it amounts to an extra 8-9 million metric tonne (MMT) based on a 175 bpa yield. It largely nullifies the yield losses due to the dry weather over the past month.

Australian wheat and barley remain globally expensive. New crop APW wheat is around USD283 FOB on a replacement basis. This compared to Russian wheat at around $235-240 FOB. Barley is USD220 FOB equivalent. The barley also looks expensive against new Black Sea quotes which fell to USD180 FOB last week.

Ocean Freight Market & Export Stem

There was 332 thousand metric tonne (KMT) of wheat, 170KMT of barley and 75KMT of canola added to the export stem in the past week. Although the wheat additions are up on the previous two weeks, there has been a noticeable slowdown in the shipping pace. Most of the wheat additions were in Western Australia as well as some smaller volumes in South Australia and New South Wales. The 170KMT of barley added to the stem in the past week was the most in 10 weeks with some talk Vietnam may have taken some cargoes. It’s interesting to note that all the barley additions are in handy size vessels with Australian barley no longer competitive into Saudi it makes sense the demand would be in Asia. There was 75KMT of canola added to the stem in the past week.

The market appears to be range-bound with cargo volumes just enough to keep levels steady. This is traditionally a quiet period so in the nearby, there doesn’t appear to be much opportunity for change. Levels remain much as they were last week; large Handymax’s around $7-7.5kpd, Supramax’s $7.5-8.5kpd, Ultramax’s $8.5-10k and Panamax’s $8-10kpd (all basis Pacific Round Voyage). Period rates are slowly easing but it's still notionally higher compared to voyage charterer values.

Australian Weather

Heavy rains fell across north west Qld in the past 24 hours as the major weather models have been accurately forecasting for about a week. The system is forecast to push south east towards Brisbane in the next 48 hours although the heaviest rains will continue to be centred around northern and central Qld. A similar pattern continues through the week although the rainfall totals will increase along central and southern Queensland through the week. Lighter falls are slated for NSW with only showers expected to push south of the border.

8 day forecast to 5th of July 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 28th June 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar outperformed through trade on Friday buoyed by softer US data and a surge in positive risk sentiment. The AUD traded toward lows near US$0.6615 before softer than expected US consumer spending and a further downturn in inflation pressures helped bolster demand for equities and risk assets. The AUD bounced off lows near US$0.66 and climbed back above US$0.6650 to mark intraday highs just south of US$0.6670. This week the AUD is expected to be range bound between 0.6580 to 0.6730.

Australian Crop Update – Week 26, 2023

Wed, 28 Jun 2023 11:28:19 GMT

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 & Oil Seed Market

Australian domestic grain prices were stronger last week with the bids strengthening and there seems to be plenty happening behind the scenes and on the price inputs. Global inputs were volatile with the sharp gains in CBOT wheat on fund short covering with the drought in the corn belt. Investors are nervous about pushing this too hard to quickly as they know grain futures will tumble just as quickly if the forecasts offer improved rain. Investors pushed markets sharply higher early in the week before turning more defensive ahead of the weekend where weather patterns could change while markets are closed for a couple of days.

Dry weather in the north and tight old crop supplies are keeping the old crop bids supported. East coast shipping stem additions have slowed considerably in the past month or so, but the strong early export pace means the old crop wheat supplies are relatively tight. The supply and demand shows that Queensland and New South Walers will be tight and even Victoria will be a lot tighter than we thought just a few months back.

South Australia, Victoria and Southern New South Wales are off to a favourable start to the 2023/24 cropping season with farmers across these parts saying crops are better positioned at mid-June than they have been over the past three seasons. Western Australia is patchy with farmers looking for a soaking rain to consolidate crops over the winter and build soil moisture ahead of spring. New South Wales is desperate for soaking rains to build soil moisture on the crops that are in the ground. Weather models offer a good chance of rain next week for these areas although it’s still a week out and a lot can change.

Ocean Freight Market & Export Stem

Another quiet week in the freight markets. Lack of cargoes remains the ultimate issue - especially in the Atlantic where the USG is very quiet. Ultimately this is attributable to the prevailing economic malaise. Operators are putting their own tonnage into their business and holding fire on future cargoes because there is a widely held perception the market will not get much lower therefore there is only a loss to be booked in. Conversely, the market up-side is on the ships but they are still hard to fix on period because tonnage suppliers are still holding out for disproportionately high prices. High potential losses on any fixable first legs are discouraging operating activity. What we are left with is a largely prompt market for both ships and cargoes. Ultramax are fixable around $10kpd for Pacific and a touch discounted for Continent. Panamax are fixing similar levels though the b/h to Atlantic is much more discounted - sub $5kpd from PRC deliveries. Nice spec Handymax vessels remain $7.5-8.5kpd for Pacific round voyage and low teens for sp. Older 32kdwt types are discounted to $8-9kpd.

There was 377KMT of wheat, 84KMT of barley, 67KMT of canola and 75KMT of sorghum added to the shipping stem in the past week. The favourable seasonal start in Victoria is helping to flush out old crop farmer selling from the Victorian farmer. Western Australia accounted for 178KMT of the wheat additions in the past week, Victoria 124KMT and 75KMT South Australia. Wheat additions have certainly slowed in recent weeks as the season progresses, but also in the growing disparity between Australian and Black Sea supplies. This hasn’t been just because of the slowdown in the east coast exports as the old crop supplies tighten. Western Australia has added 680KMT of wheat to the stem in the past four weeks compared to 1.33MMT in the previous four weeks. New South Wales and Queensland wheat stem additions have slowed, although Victoria continues to advance.

Australian Weather

Central Australia is set for an unseasonable deluge this week and this rainfall pattern is set to result in some significant rain for northern New South Wales and Queensland. June is typically the driest month for central Australia. The rain would allow unplanted areas to be seeded and offer valuable moisture to crops ahead of spring.

8 day forecast to 5th of July 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 28th June 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar is slightly weaker to open the week when valued against the Greenback trading at US$0.6600. On Friday, the Aussie faced severe selling pressure and the AUD/USD fell to its lowest level since early June towards the 0.6660 area, as Australia’s S&P Global PMIs for June registered mixed data on Friday.

Australian Hay Update – Monday 26th June

Mon, 26 Jun 2023 16:00:00 GMT

The 2023/24 growing season for Australian Oaten Hay is well underway and 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.

Harvesting:

A drier season and reduced rainfall can facilitate the oaten hay harvesting process. When there is less rainfall, the hay can dry faster in the field, allowing for earlier cutting and baling while maintaining the crop quality. This is crucial as excessive moisture in the hay can lead to mould and spoilage, reducing its quality and market value. If hay is baled above an acceptable level (14% Export Standard / 18% Domestic Standard) then heat pockets may be prevalent leading to internal combustion and result in a hay stack or shed catching fire.

Quality:

Oaten hay is valued for its high nutritional content and suitability as livestock feed. When hay is harvested in drier conditions, it tends to have a lower moisture content, resulting in better preservation of its nutritional value. Hay baled with lower moisture levels is less prone to spoilage, maintaining its quality and nutritional composition for longer periods. When baling, a drier crop will pack more densely leading to higher bale weight, less shrinkage and a more efficient storage life.

Field Management:

Less rainfall reduces soil moisture, which can be advantageous for oaten hay crops. The drier conditions make it easier to manage field operations such as irrigation, fertilisation, and weed control. Farmers have more control over the amount of water supplied to the crop, preventing excessive moisture that could lead to root rot or other fungal diseases.

Reduced Disease Pressure:

Certain diseases and pathogens thrive in wet conditions. With lower rainfall, there is typically a decrease in the prevalence of diseases that affect oaten hay crops. Fungal diseases, such as rust or leaf spot, are less likely to develop and spread in drier conditions. This can result in healthier crops and higher yields.

It’s important to note that while less rainfall can have benefits for oaten hay crops, the absence of rainfall altogether or prolonged drought conditions can be detrimental. Adequate moisture is still necessary for plant growth and productivity, so a balance is required to ensure optimal crop development.

The 2023/24 oaten hay season is off to its best start for a number of years and with improved long haul freight rates, it is expected that products destined for the Middle East will be in strong demand. The team at Basis Commodities is available to discuss fodder requirements and also to support our clients with technical information. Our close association with BALCO Australia will ensure the appropriate information is shared to nutritionists and the livestock output is at the optimal levels.

Please follow the link and enjoy this video detailing the support from Basis Commodities and BALCO Australia.

Please contact Nader Hassan or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
M: 0408 308 908
E: steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

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The post Basis Commodities – Australian Hay Update – Monday 26th June appeared first on Basis Commodities .

The Global Surge in Pulses

Thu, 22 Jun 2023 00:03:00 GMT

In recent years, the consumption of pulses has experienced a remarkable surge on a global scale. Pulses, which include lentils, chickpeas, beans, and peas, have been recognised for their nutritional value, sustainability, and versatility. This trend signifies a significant shift in dietary habits and a growing awareness of the many benefits legumes offer. So, what has caused the shift, and what opportunities does it create for pulse producers and traders around the globe?

Dietary Benefits:

Pulses are often referred to as ‘nutritional powerhouses’ as they are rich in plant-based proteins, dietary fiber, vitamins, minerals, and complex carbohydrates, making them a valuable source of nutrition for people of all ages. Pulses are also low in fat and cholesterol-free, making them an excellent choice for those seeking to improve their heart health. Another less known benefit to the small but mighty pulse, is they release glucose into the bloodstream slowly, promoting stable blood sugar levels, reducing the risk of diabetes.

Environmental Benefits:

Across the globe, end users of all products from food to textiles, are becoming more environmentally aware with their purchases. They’re asking questions like ‘what impact has the production of this product had on the environment?’ ‘What is the carbon footprint of this purchase?’ ‘How much is this purchase reducing the risk of climate change?’. This is a significant factor in the rise of pulse consumption around the globe. Pulses have a considerably lower carbon footprint compared to other protein sources such as meat and dairy. They also have the ability to fix nitrogen from the air into the soil, reducing the need for synthetic fertilisers and enhancing soil fertility. This point alone has seen farmers across the globe add pulses into their crop rotations, to benefit soil fertility for other crops. Additionally, pulse production requires less water compared to many other crops, making them an ideal choice for regions facing water scarcity. As consumers become more conscious of their environmental impact, pulses offer an attractive, healthy and eco-friendly alternative.

Cultural Diversity and Culinary Appeal:

Pulses have been a staple food in many cultures for centuries, particularly in regions like South Asia, Africa, and Latin America. However, their popularity has broken through cultural boarders and expanded globally. One of the key factors contributing to this rise is the diverse culinary appeal of pulses. From hearty lentil soups to fragrant chickpea curries and savory bean salads, pulses can be prepared in a myriad of delicious ways, catering to a wide range of tastes for any pallet to enjoy.

Health and Wellness Trends:

As individuals increasingly prioritise their health and well-being, pulses have emerged as an essential component of balanced diets. The rise of vegetarianism, veganism, and flexitarianism has placed pulses in the spotlight as an excellent plant-based protein source. With the growing popularity of meat alternatives, pulses serve as a nutritious and sustainable option for individuals seeking to reduce their meat consumption.

Government Initiatives and Support:

Governments across the globe have recognised the importance of pulses in achieving sustainable development goals and improving public health. Many countries have implemented policies and programs to encourage pulse production, consumption, and research. The Middle East is a great example of this. Recognising the growing demand for pulses, countries in the Middle East have started focusing on domestic production. This shift towards local production not only ensures a steady supply but also creates economic opportunities. Governments are implementing policies and providing support to farmers to encourage pulse production. This, in turn, boosts rural economies and creates employment opportunities.

Countries like Egypt, Turkey, Iran, and Saudi Arabia have made significant strides in increasing pulse production. For instance, Egypt has become one of the largest exporters of lentils and white beans in the region, catering to both domestic and international markets.

What opportunities does this provide for pulse producers and traders?

End users are becoming more health and environmentally conscious when making purchase decisions and this trend is expected to continue. With increased demand comes increased opportunities for exporters to move pulses around the world. However, tapping into these export opportunities, particularly in areas like the Middle East, where culture and connections play a crucial role in business, can be challenging particularly when it is overlaid with economic and geo-political instability.

This is where Basis Commodities has been able to add real value to bulk export businesses and assist to capitalise on this growing demand of pulses. With a network of trusted connections, particularly throughout the Middle East, Basis Commodities has experience in assisting businesses enter these markets and hit the ground running. For more information on Basis Commodities and how we can assist you to reach your goals, be sure to contact us on the details below.

Chris Whitwell
Sydney, Australia
M: 0419 833 356
E: chris@basiscommodities.com

Steven Foote
Sydney, Australia
M: 0408 308 908
E: steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

The post The Global Surge in Pulses appeared first on Basis Commodities .

Australian Crop Update – Week 25, 2023

Tue, 20 Jun 2023 11:23:13 GMT

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 & Oil Seed Market

The cropping regions of Western Australia, South Australia and Victoria have seen great rainfall over the past two weeks but unfortunately for Northern New South Wales and Queensland, the rainfall vastly underdelivered versus expectations.

Consequently, the cash markets are a tale of north and south. The northern feed market edged higher last week on the strength in the domestic market and continued dryness. The southern markets were steady to softer where crop conditions are favourable and edged lower with more sellers emerging late in the week with forecasts offering more rain this week. South Australia and Western Australia wheat was slightly higher for the week on exporter short covering. There weren’t a lot of new grain shipments added to the stem in the past week as Australia continues to struggle for competitiveness and overseas demand remains lacklustre.

Australia exported 593,671 metric tonnes (MT) of barley and 400,170MT of sorghum in April, according to the latest data from the Australian Bureau of Statistics. The barley figure comprises 470,448MT of feed and 123,223MT of malting, with the feed total being down 26 percent from the 635,917MT shipped in March, and malting total down 12pc for the month.

Sorghum exports jumped 73pc for the month from the 231,216MT shipped in March to reflect the arrival of new-crop volume, with around three-quarters of it leaving Brisbane in bulk bound for China. The sorghum harvest is going at full pace in Central Queensland and is complete in New South Wales and southern Queensland.

Australian Pulse Update

Recent rain across south-eastern Australia has helped faba bean and lentil crops get off to a strong start in a mostly steady market, while patchy conditions in north-west New South Wales are limiting the new-crop chickpea area. ABARES last week issued its initial forecasts for Australia’s five major pulses, which are estimated to weigh in at 2.684 million metric tonnes (MMT) this year, down 32pc from 3.95MMT grown in 2022-23. The national forecaster is predicting a 1pc increase in chickpea production to 544,000MT, but has forecast big drops for Australia’s other major winter pulses, namely faba beans, field peas, lentils, and lupins. Climate modelling suggests El Niño conditions are likely to develop in spring, and this has contributed to southern Australian growers reducing area planted to pulses, which are likely to produce average yields at best if spring brings hot and dry conditions.

Ocean Freight Market & Export Stem

The ocean freight market continues to consolidate at lower levels this week with most eyes set on what is/is not happening in China. When Chinese cargo activity grows then the freight market moves up and vice versa. That said we are entering a traditionally quiet mid-year period. India is still in monsoon, the northern hemisphere is entering a holiday period and the NOPAC is quiet.

The strong export pace for Queensland and New South Wales will leave minimal carry-over grain supplies heading into the 2023/24 season in these eastern states. This means the 2023/24 northern grain supplies remain at the mercy of the weather and the market will maintain the large freight premiums in the north to draw supplies up from the south by road or potentially by ship around from South Australia or Western Australia.

Shipping stem additions continued to slow with just 314 thousand metric tonne (KMT) of wheat added in the past week. All but 20KMT of this was in Western Australia and South Australia. There was 50KMT of barley added to the stem in the past week which included 20KMT from South Australia and 30KMT from Western Australia. There was 30KMT of sorghum added to the stem in Queensland.

Australian Weather

More rain is forecast for South Australia and Victoria this week. Western Australia and Southern New South Wales are expected to see light showers but nothing significant. Northern New South Wales and Queensland will be mostly dry. Another trough is set to develop from northern Western Australia mid next week which will pull moisture down into South Australia late next week and this will also bring widespread rain across Victoria. The southern slopes of New South Wales are expected to see rain from this event as well. The situation is becoming more serious for Northern New South Wales where time is running out for winter crop planting. This is in contrast to the very good start for South Australia, Victoria and Southern New South Wales for the growing season.

8 day forecast to 26th of June 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 19th June 2023
Source: http://www.bom.gov.au/

AUD - Australian Dollar

The Australian dollar is slightly stronger to open the week when valued against the Greenback, opening trading at US$0.68. On Friday the Australian dollar reached its highest in four months, after surging 1.3%, all of which is not helping Australian grains export competitiveness. If AUD/USD manages to move higher, the next resistances to watch are at the daily high at 0.6890, followed by the psychological mark at 0.6900 and the 0.6920 area.

Australian Crop Update – Week 24, 2023

Wed, 14 Jun 2023 11:18:22 GMT

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 & Oil Seed Market

Australian domestic markets were little changed in the past week, except for canola which rallied with the gains in Europe. There was good rain across most cropping areas with only the North West of NSW coming up short. They only received 5-10mm which isn’t enough to progress planting. Further south most of the areas received at least 25-40mm for the week which will consolidate crops and allow roots to meet up with subsoil moisture. Victoria also received soaking rains in the past week. This included 25-50mm across the Mallee and Wimmera and 40-60mm through central Victoria. Falls were variable in South Australia. The Murray Mallee, Southeast and Adelaide Plains received 20-30mm plus, but it was lighter across the Yorke Peninsula, Mid North and Upper North as well as the central Eyre Peninsula. Most of these areas only received 8-15mm. Most of Western Australia received good falls through the week as well. Despite this rain the grower remains relatively disengaged as they continue to focus on planting and drier longer term forecasts.

ABARES 23/24 Crop forecast

Given the rain it was interesting to see ABARES (Australian Bureau of Agricultural and Resource Economics and Sciences) pull down its estimate for Australia’s 2023 wheat crop at 26.2MMT, slightly below the 10-year average, saying the drier than normal forecast will hamper yields. ABARES said a significant downside risk to the 2023/24 winter cropping season is the potential for an El Niño event and positive Indian Ocean DIapole event (IOD) to both eventuate later this year. We still feel it is too early in the development of the crop to write it down. The rain received last week was timely, most areas have good moisture profiles and crops will progress into winter in good condition in most areas. Importantly looking at the models, we have yet to get clarity on the amplitude of the event or timing so who’s to say we might not see a weak event only consolidating in October when the crops are closing in on harvest. To be candid, this scenario has as much weight as the gloomier forecasts but does not fill the global media’s need for the dramatic and this is the danger when you attach a crop forecast to a long-term weather forecast.

Australian Wheat Exports

Australian wheat exports continue at pace while barley and canola exports are slowing relative to last year’s pace. Australia exported 3MMT of wheat in April down from the record 3.7MMT shipped in March. This lifts Australia’s Oct/Apr cumulative to 19.45MMT which is nearly 4MMT more than the same time last year. Western Australia exports are up 1.8MMT on last year’s pace, South Australia is up 1.2MMT, Victoria is up 0.5MMT and Queensland is up 0.25MMT while New South Wales is close to unchanged.

China was the largest destination, taking a further 985KMT of wheat. Thailand was the next largest with 330KMT followed by Indonesia with 300KMT and then South Korea with 268KMT and then Vietnam with 260KMT. Middle East exports are higher than last year largely because of increased sales to Iraq.

Barley exports for April were 594KMT which is the second smallest month since November. Exports to Saudi Arabia fell to 42.5KMT which is the smallest in seven months and well down on the Nov/Mar average exports of 295KMT. Australian barley lost its favour with Black Sea and Eastern European barley much cheaper.

Sorghum exports were 408KMT with 345KMT going to China, 24.2KMT to Japan and 31KMT to Keny

a.Canola exports fell to 355KMT in April down from 660KMT in Mar and 592KMT in Fe

b.Lentil exports remain solid with the further 160KMT of shipments in April. India was the major destination taking 65% of the shipment

Ocean Freight Market & Export Stem

The Ocean freight market continued to remain quiet with limited activity and a sentiment remaining negative. Increasing discussion about how well China is really coping economically and some even raising the possibility that China may already be or going into recession.

Lack of cargo enquiry world-wide is the big issue - and especially to/from China. The freight market has been stopped in its tracks. It is usual to see a mid-year hiatus in the market as seasonality plays a role with the northern hemisphere holiday season approaching but the level of general economic malaise is concerning for the freight market. Freight rates have tumbled again over the week to levels which many hoped they would not see again for a long time. Sub-index supramaxes can be fixed between $5-6k per day and panamaxes are still trading sub-$10k per day for the pacific round. Period numbers are finally beginning to edge off as owners realise the scale of the negativity and reign in their ideas.

It was also a quieter week on the Australian shipping stem with only 475KMT of wheat added since last Friday, down from 900KMT in the previous week. However, most of the weekly wheat additions were on the east coast while Western Australia was quiet. This included 169KMT in New South Wales with the bulk of this out of Port Kembla. A further 160KMT of wheat was added in Victoria and 112KMT in South Australia. Only 10KMT of wheat was put on the Western Australia stem in the past wee

k.No barley was added to the stem in the past week with only 250KMT put on in the past four week

There was 104KMT of sorghum added to the stem. This included 25KMT in Brisbane with the other 79KMT in Gladstone and Mackay.

Australian Weather

8 day forecast to 20th of June 2023
Source: http://www.bom.gov.au/

Weekly Rainfall to 13th June 2023
Source: http://www.bom.gov.au/

USDA Report

The USDA report came out late last week with little fanfare or market impact. The numbers were bearish. Wheat added 10MMT of 2023/24 production (across a few different countries) and although demand was increased it doesn’t feel like that at the moment, so the balance sheet was forecast to rise. Corn was also bearish – adding 3.1MMT] of production and 2.2MMT of demand so stocks are up just over 1MMT.

Australian Crop Update – Week 23, 2023

Tue, 06 Jun 2023 05:41:00 GMT

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 & Oil Seed Market

Australian domestic bids were softer last week with rain on the forecast for much of southern Australia. Buyers are hopeful rain will flush out farmer selling but the offers were little changed as we entered the week. That said, the rain received has been helpful across several areas and it has highlighted the danger of running ahead of the weather with crop forecasting as ABARE’s did with their 26.2MMT forecast for the wheat crop. Whilst one has sympathy for their dilemma given the chorus of El Nino forecasts and the correlation with droughts / reduced crops, we still have a lingering La Nina in play and changes in systems of this scale are rarely quick. So we are more cautious in terms of crop predictions this far out from harvest.

On the demand side, the bottom line is that Australian wheat and barley are globally uncompetitive at current values and its old crop shorts, slow farmer selling and new crop weather concerns that are keeping Australian cash values supported versus Black Sea cash values, which have been in free fall from week to week. It remains to be seen whether Australian values will be further supported by Chinese wheat quality concerns. It is a question of watch this space, but the promise of further exports cannot be discounted.

Ocean Freight Market & Export Stem

In terms of ocean freight, it is again a narrative of ‘different week, same story’. There has been limited activity with Indonesian coal, and Chinese iron ore markets are still weak. Very little to get excited about.

Another 900KMT of wheat was added to the stem in the past week. SA was the largest contributor accounting for 385KMT of the weekly additions followed by WA with 240KMT, and Vic and NSW both chipping in with 100KMT plus. A further 115KMT of sorghum was added to the stem in the past week (55KMT Newcastle and 60KMT Brisbane) as well as 116KMT of canola and 60KMT of barley.

Australian Pulse Market

Last week, the PULSE 23 conference in Sydney welcomed guests from all over the world. The sentiment was that Australia would see smaller crops this season.

Australian Weather

Weather forecasts continue to point to general rain across many cropping regions for the coming week. Coastal areas of WA saw heavy rain over the weekend. Parts of western NSW saw 20-30mm which is consistent with forecasts from the major models for most of last week. The rain in WA is expected to cling to the coast and not offer additional moisture for the cropping areas, but showers are expected to persist throughout the week. The trough across SA and NSW is expected to deliver widespread rain for much of SA and VIC cropping areas and then develop into more general rain across NSW later in the week. The heaviest of the NSW rain is expected to be in the south with only lighter falls reaching the dry northwest of the state. Below is the ACCESS model through to next weekend.

Source: bom.gov.au

AUD – Australian Dollar

The Australian dollar finished stronger to end last week when valued against the Greenback and is currently trading above 66 US cents. The RBA is expected to hold rates at 3.85% in June but economists and money markets remain divided over its next move as lingering price pressures and recovering home prices suggest a hike may be needed while weaker activity and rising unemployment argue for a pause.

The post Basis Commodities – Australian Crop Update – Week 23, 2023 appeared first on Basis Commodities .

Australian Crop Update – Week 22, 2023

Tue, 30 May 2023 05:39:00 GMT

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 & Oil Seed Market

Australian domestic values continue to strengthen amid expectations of a dry season and sluggish farmer selling. All port zones were firmer as traders lifted bids for supplies in up-country storage sites and domestic consumers reduced short positions. Sorghum bids are steady to softer with the downturn in Chinese demand and Australian supplies now expensive against other feed grain alternatives, such as Brazilian corn. The longer-term dry weather outlook is impacting medium term decision making and it’s not just about the east coast. Western Australian (WA) bids were 5% higher across both wheat and barley for the week. With that said, this week rain has appeared in the 10-day forecast for much of the country and some rain has fallen in southern WA which re-enforces the point that any discussion on the size of the Australian crop at this stage is more a weather forecast than fact.

Early forecasts for Australia’s 2023/24 wheat crop are coming in at around 28-29 Million Metric Tonne (MMT) based on a similar planted area of 12.5 – 13.0 million hectares and a return to average yields around 2.2 tonne per hectare. Forecasters favour having a below average yield bias for the coming season based on the seasonal weather outlook, but we prefer to leave this outside the balance sheet until the yield is no longer seen as achievable, which is some way off yet.

Ocean Freight Market & Export Stem

The freight market remained range-bound over the past week where very little of note is happening. Commodity traders across all the products seem to be lacklustre which is maybe indicative of the general economic malaise affecting the world at the moment. There are potential signs in Southeast Asia of another micro cycle emerging however the relative up/downsides (standard deviation) are much less than we have seen over the last two to three years. Handymax vessels in Southeast Asia feel a bit tighter, but in truth, it’s a bit notional and too early to call at this stage. The market is again seeing larger ships earning lesser rates. Panamax levels are in the mid $8k’s pd for pacific round voyage and sub $5k for Atlantic b/h. Ultramax tonnage is fixing between $9-10k for pacific round voyage and Japan spec Handymax’s between $9-11kpd. Supramax and handymax tonnage is not discounting much at all for b/h to Cont/Med at the moment – pretty much a full round voyage rate applies.

There was 737KMT of wheat, barley and canola added to the stem with more than 500KMT or 70% of it to be shipped from WA. There was 478KMT of wheat shipments put on the stem in the past week including 373KMT from Western Australia. There was also 107KMT of barley added to the stem in Western Australia in the past week as well as 58KMT from Victoria.

Australian Weather

With weather turning dry throughout May, reports have surfaced that the topsoil is starting to dry out in a few areas which is not only breaking the linkage with the better subsoil moisture further below, but also is impacting germination strike of later sown crops. However, the 8-day forecast is for rain across most southern areas.

AUD – Australian Dollar

The Australian dollar was slightly weaker on Monday morning when valued against the USD trading at its year-low of 0.6517. The AUD/USD pair continued its downward trend on Friday. On the data front last week, Australian Retail Sales failed to meet expectations, remaining unchanged from March. This lackluster performance reflects the challenges faced by consumers due to the impact of rising interest rates and persistent inflation.

The post Basis Commodities – Australian Crop Update – Week 22, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Hay Update – Monday 29th May

Mon, 29 May 2023 05:08:00 GMT

In this month’s report, we will explain the steps for bringing oaten hay to export from Australia, so our readers have a good understanding of the processes involved. Sowing for the 2023/24 Australian oaten hay season in Australia is complete. Based on weather forecasts it appears to be a drier growing season ahead which will be very good for oaten hay production. The coming months will tell the story, but for now, please enjoy this month’s report on growing, harvesting, baling, and exporting oaten hay from Australia to the international dairy industry.

Step 1: Land Preparation and Sowing

The first step in growing oaten hay is to prepare the land. The land must be ploughed, levelled, and treated with Urea (lime) and fertilisers to optimise PH and soil growing conditions. Once the land is prepared, the seed is sown using specialised machinery and then rolled to ensure uniformity of seed penetration and land surface. This creates benefits for both growing and when it is time to harvest. The best time for sowing oaten hay in Australia is from mid-March to early May.

Step 2: Irrigation and Weed Control

95% of the growing area in Australia is reliant on rainfall with the other 5% under irrigation. After the seed is sown, paddocks with irrigation capability are watered regularly to ensure the crop has enough moisture, while timely rainfall will be needed for dry area cropping. Herbicide applications may also be necessary to prevent weeds from competing with oaten hay for water, nutrients, and sunlight. This is usually achieved through the use of chemical herbicides and other weed control methods. One of the strong benefits of oaten hay production however is the natural weed control the crop offers as harvest for the hay itself is done prior to seed maturity which will also ensure that certain weed varieties are also cut before they can seed. This process denies the growth cycle of competing weeds, reduces farmer input costs and produces a more natural crop without the use of chemical.

Step 3: Cutting and Drying

Once the crop is ready for harvest, a specialised mower is used where the cut height is typically set to 2-3 inches (5-7cm) from ground level so the hay can rest on top of the stubble without touching the soil. The cutting is done when the hay has reached a specific stage of maturity, which is determined by the moisture content. Hay fibre lengths cut in the field are typically anywhere from 20 to 30cm. Once cut, the hay rests on the stubble and is left to dry in the field anywhere from 7-12 days, until it has reached the required moisture content of between 12% to 18%. Export hay is typically shipped with a Max moisture of 14%. At certain stages of drying, the hay is flicked and turned using a Tedder, a specialised machine that teases the hay to ensure drying is uniformed.

Step 4: Raking and Baling

Once the hay is at an appropriate moisture content, it is raked into rows using a windrower and then baled into large rectangular bales using a baler. Bailing preserves the quality of the hay and makes it easier to transport and store. Hay compression in high density balers can create significant compaction where weights can be anywhere from 500-700kgs. The denser the bale the more efficient transport and storage will be.

Step 5: Storing and Exporting

Bales are then collected and stored in a shed until they are ready to be processed for export. Prior to exporting, the hay is tested for quality, including the moisture content, nutrient content, and the presence of weeds or pests. If the hay meets the required export standards and destination country requirements, it is loaded onto trucks and transported to an export processing facility they are reprocessed in a hay press to uniformed packages in accordance with a customer’s requirement. Fibre lengths are reduced to 10-15cm so the product can be easily integrated to a Total Mixed Ration (TMR) or suitable for a mouthful size for livestock to eat directly from the export bale.

There are many processes involved in bringing high quality Australian Oaten Hay to the international dairy industry. Through the growing, harvesting, baling and hay press phases, the Department of Agriculture monitor the strict protocols and compliance processes to ensure the integrity of the Australian Oaten Hay industry is maintained and that our export customers receive the best possible product to support their dairy herds input requirements.

Please contact Nader Hassan or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
M: 0408 308 908
E: steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

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The post Basis Commodities – Australian Hay Update – Monday 29th May appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 21, 2023

Tue, 16 May 2023 05:37:00 GMT

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 & Oil Seed Market

Australian cash markets remain variable between the various port zones. East coast bids are edging higher as the offers retreat with continued dry weather. Markets are edgy and domestic buyers are nervous about the dry weather outlook. Sharp declines in cattle prices in recent months is encouraging feedlots to keep pens full which is ensuring good demand for northern feed grains. Sorghum prices under pressure as Chinese demand disappears at current prices which are expensive against South American corn.

Planting is around 70% complete and most areas are looking for rain to maximise germination and top up soil moisture levels.

Dry weather concerns also extend to South and Western Australia. Most areas are >75% planted with most of the crop expected to be seeded by early June. But it’s the dry weather which is now dominating farmer selling decisions. Local markets are edging higher at the same time global values are in decline. This means export margins are also in decline if they haven’t already disappeared.

The Grain Industry Association of Western Australia (GIWA) has reported that the states planted area is expected to decline by about 8% as farmers lower plantings with the drier outlook. Most of the decrease is in canola which they are saying will fall by 18%. They said this is more a reflection of the timing of the rain compared to last year. Forecasters have generally pulled back numbers for canola plantings nationally by 5-8%. GIWA said the state wheat area will be back slightly on last year with the dry weather in the Geraldton and northern Kwinana zone. Barley will be also back slightly with wheat benefiting more from the lower canola plantings than barley.

Ocean Freight Market & Export Stem

It was much of the same last week with very little happening of note in ocean freight. The freight market is threatening to become range bound. It feels like a malaise of apathy is pervading the freight world which is above and beyond what we would normally expect for the mid-year months. Over the last two years we have seen multiple significant influences on the market simultaneously playing out to a greater/lesser degree resulting in extreme unpredictability. Now we are in the opposite situation – there is very little happening with a roughly balanced supply and demand scenario. Rates everywhere else went sideways again or notionally eased.

Nearly 1MMT of wheat was added to the stem in the past week. Western Australia accounted for 474KMT of the wheat additions with 296KMT in South Australia and 163KMT in New South Wales. A further 30KMT of wheat was also added in Queensland.

Australian Weather

Nearby weather forecasts offer no significant rain in the next couple of weeks. Extended weather models have been forecasting El Nino for some time and the drier than normal weather is already evident. At the same time, crop forecasters are projecting production based on average yield assumptions. Forecasters are cautious about lowering yields on weather predictions, so the balance sheets don’t become a weather forecast with planting still going on in some areas. However, forecasters still need to have a bias on the likely yield outcomes based on increased chances of below average in crop rainfall and the impact this will have on yields. Caution needs to be taken in the approach, as we have seen on many occasions, where areas have grown average to above average crops with below average rain because of the timeliness of the rain that did fall. It’s very early to be market down crops in mid-May when planting isn’t even finished.

AUD – Australian Dollar

The AUD tracked sideways through trade in a quiet start to the week. An absence of headline news flow and ongoing uncertainty surrounding US debt ceiling negotiations allowed investors to sideline major bets. Having found support on moves approaching US$0.66, the AUD struggled on moves above US$0.6650 and is now firmly entrenched within broader support and resistance handles.

After the uncertainty of the March banking crisis, the AUD has tracked between US$0.6580 and US$0.68. Unable to shake off near-term yield disadvantages and extend toward US$0.70, yet supported by longer-run expectations of a correction in rates and inflation pressures, the AUD is unlikely to see any significant shift in fortunes until a break in the current narrative emerges.

The post Basis Commodities – Australian Crop Update – Week 21, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 20, 2023

Tue, 16 May 2023 05:33:00 GMT

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 & Oil Seed Market

Last week, Australian domestic markets were relatively quiet. Grain bids were mostly steady to a tad softer. If buyers need the grain in the near term, they are having to pay up, but for the most part, buyers are comfortable enough with the nearby coverage to sit back and wait a little longer.

A few themes are emerging. Barley bids continue to firm with the feedback that the Australian Government is continuing talks with Beijing on lifting the export ban. The wheat market isn’t showing the same strength as barley which suggests farmers are still selling enough to keep prices at the same levels. Australia exported 777,823 tonnes (MT) of barley in March, according to the latest data from the Australian Bureau of Statistics. Feed barley shipments for the month totalled 636,233MT, down 30 percent from the 911,105MT exported in February. The three largest markets for March-shipped feed barley were Saudi Arabia on 285,171MT, Vietnam on 82,358MT and The Philippines on 60,036MT. March malting barley exports at 141,590MT more than tripled from the February figure of 41,278MT. The largest market were Vietnam on 32,615MT followed by Mexico on 31,733MT and Japan on 21,000MT.

Sorghum shipments surged to reflect new-crop availability, with the March total of 255,066MT being almost five times the 53,117MT exported in February. China on 232,996MT accounted for 91pc of March sorghum exports, with Japan on 14,360MT and Taiwan on 4454MT the second and third-biggest markets respectively for the month.

Canola bids were back $30-40/MT in most port zones last week with few buyers chasing supplies. Exporters and crushers look to be comfortably covered and it’s just a case of how much canola is carried into the 2023/24 season where early assessment suggest global supplies are set to remain comfortable. Australia exported 600,853MT of canola in March, up 1 percent from the 592,027MT shipped in February, according to the latest data from the Australian Bureau of Statistics. The United Arab Emirates on 169,938MT was the biggest market for March-shipped canola, followed by Germany on 148,004MT and France on 96,672MT. At 3.4 million tonnes (MMT) shipped in the first half of the 2022-23 marketing year, a new canola export record has been and is up 28pc on the record 2.66MMT shipped in the corresponding 2021-22 period.

Farmers are occupied with planting and remain reluctant sellers as global markets continue to sag. At the same time, some are starting to question if the weaker global grain markets are here to stay and thereby need to make further sales. This seems to be the case in Victoria where the farmer selling has picked up a little.

Farmers have already stopped planting as they wait for more rain in some parts of Queensland, New South Wales and the northern zones in Western Australia. Planting is progressing quickly in Victoria, South Australia and most of Western Australia with the fine weather, but some of these areas are also looking for follow up rain to ensure even germinations in the crops that have already been planted.

Pulses Market Update

The most recent winter crop production figures have been released by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). According to the forecast, Australia is expected to achieve a new record in winter crop production (which includes all winter grains, oilseeds and pulses), with an estimated 67.26MMT in 2022/23. This represents a 6.40% increase from the previous year’s total winter crop production, which amounted to 63.22MMT.

Looking at pulses specifically, Australia is projected to reach a record lentil production of 1,412 thousand tonnes (KMT) for the year 2022/23, a notable increase from the 999KMT produced in 2021/22. The primary regions in Australia for lentil crops are Victoria and South Australia, with the latter contributing 64% and the former contributing 34% to the overall lentil production in 2022/23.

Source: Agpulse Analytica

Ocean Freight Market & Export Stem

Last week’s push in Southeast Asia seems to be losing momentum once again. The market did view the week as if Owners were talking up a small increase in the amount of coal stems from Indonesia. That seems to have ebbed away again and now the feeling is that there is always a ship there to do a piece of business – albeit it might be an older sub index vessel. Japanese built ships remain a premium and if anything, there is a two-tier market emerging – anything Ultramax-Handymax built in Japan in the last six years is earning a premium, especially on period. This is forcing some Charterers to compromise on their desire to only fix good quality tonnage because the discrepancy between voyage numbers and period operator numbers is simply too high to make sense of. Pacific round voyage on Supramax remains around $10kpd – though again there is a split. Southeast Asia is probably a bit more and the feast delivery gets a little less. Likewise for large Handymax, feast is the weaker zone in the Pacific. The Atlantic remains subdued (excepting for USG) and back haul numbers continue to rise which is a bad signal for the freight market. Handymax vessels are now attracting a premium to go back haul. So, a pacific round voyage is paying region $10.5 but b/h to Cont/Med is edging closer to the $12k lvl.

A further 700KMT of wheat and 126KMT of canola was added to the shipping stem in the past week. Western Australia accounted for 370KMT of the wheat additions and 170KMT from Victoria. There was also another 100KMT put on the New South Wales stem and 25KMT in Queensland. We will have to raise our export forecasts for both Queensland and New South Wales as the combined Oct-March exports plus the stem exceed what we are forecasting.

There appears to be a delineation between eastern markets, compared to the southern and west. This divide line is clear in the state’s Supply and Demand charts when looking at the shipping pace against our forecast exports. Queensland and New South Wales are already at 100% of the Australian Bureau of Statistics Oct/March exports forecast. Add in the shipping stem additions that are already reported for April-June with another three months remaining in the 22/23 beyond this, the exports will exceed the forecasts easily. Other states (Victoria, South Australia, and Western Australia) still have some way to go to reach our export forecasts based on the current exports plus the reported stem additions.

Australian Weather

Weather forecasts remain dry this week although there is a chance of some storms across Southern Queensland early next week. Extended weather outlooks continue to point to a drier than average June to August for Australia’s cropping areas. In its latest seasonal outlook statement, the Bureau Of Meteorology said for June to August, below median rainfall is likely (60 to 80% chance) for the majority of Australia, with south-western Western Australia, south-eastern South Australia, the majority of Victoria and southern New South Wales very likely (greater than 80% chance) to be below median.

Source: bom.gov.au

AUD – Australian Dollar

The Australian dollar is slightly weaker to start this week when valued against the Greenback. The Aussie dollar fell on Friday after Wall Street’s opening bell, as the US dollar strengthened and equity and commodity prices declined. The pair dropped to 0.6650, the lowest level in more than a week. Last week the Aussie dollar peaked at 0.6817, the highest level since February, before reversing its course losing more than a hundred pips. On Friday, it broke below the 0.6680 support area. The next relevant support zone is around 0.6635, below this attention will turn to 0.6600. To alleviate the bearish pressure, the Aussie needs to regain 0.6680 initially. The AUD/USD is currently trading at 0.6644 at the time of writing.

The post Basis Commodities – Australian Crop Update – Week 20, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 19, 2023

Tue, 09 May 2023 05:30:00 GMT

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 & Oil Seed Market

Australian cash markets avoided the volatility of the international markets last week with some zones still trying to move grain into the export channel. Observations of the weekly farmer bid changes show Qld and NSW bids were generally a tad firm while prices in SA and WA where export supplies are much more comfortable, were notably softer.

Sizable areas of Northern NSW and Southwest Queensland remain dry, and this is slowing old crop farmer sales in the northern cropping areas.

Western Australia (WA) and South Australia (SA) wheat, barley and canola bids fell to varying degrees. Declines were larger in SA which looks to reflect the exporter coverage against shipping commitments. The SA bids tumbled for canola and barley with exporters showing no interest in chasing supplies. The absence of barley bids indicates that exporters are not convinced that a potentially positive outcome from China’s review of the import tariffs on Australian imports will translate to higher barley prices. The SA bid for canola fell more sharply than other states which we expect is related to coverage against export commitments and little willingness for ownership beyond this. WA was also softer for wheat, barley and canola.

Victorian bids were a tad softer as well. We get the impression farmer selling has picked up a little with farmers increasingly concerned that global markets may keep trending lower.

Australia exported a record 3.73MMT of wheat in March. This comfortably surpasses the previous high of 3.25MMT shipped in Jan-23. Combined wheat, barley and canola exports for March were 5.1MMT which was also a record. There was 1.134MMT of wheat shipped to China in March, and Australia has now shipped 4.44MMT of wheat to China in the Oct/Mar which is 1.4MMT more than last year. Australia has shipped 16.5MMT in the Oct/Mar which is 3.5MMT more than the same time last year. Most of this increase is in Asia. South Korea is up by close to 800KMT, Thailand and Indonesia were both up around 0.5MMT and the Philippines is up by 0.25MMT. Africa is down 0.5MMT on last year. A further 209KMT of wheat was shipped to Iraq in March to take the Jan/Mar total to 419KMT.

Barley exports were solid at 778KMT. This was mostly shipped from WA and SA. Saudi took 285KMT. Total Oct/March shipments to Saudi are 1.47MMT which is down on last year’s 1.68MMT at the same time. Vietnam took 115KMT and the Philippines took 60KMT. Malting barley continues to be shipped to Mexico and South America. Total barley exports for Oct/Mar are 4.1MMT vs 4.36MMT at the same time last year. Sorghum exports for March were 276KMT. This included 242KMT from Qld and 25.7KMT from NSW. China took 245KMT.

Pulses Market Update

Australia exported 53,448MT of chickpeas and 168,650MT of lentils in March, according to the latest export data from the Australian Bureau of Statistics. The chickpea figure is down 32 percent from 78,213MT shipped in February, while the lentil figure is down 14pc from the 196,224MT on the month.

Ocean Freight Market & Export Stem

It was a very uninspiring week, and it remains to be seen whether the passing of regional holidays brings players back to the market with cargoes in their hands or not. At risk of stating the obvious, the former will see the market regain some semblance of stability and positivity, the later will see rates continue to ease off. Ominously backhaul numbers are again generally parity to a Pacific round voyage as Owners lose faith in the Atlantic market.

In the Pacific there is no clear driving force – the market is just ticking over. China remains subdued and the positivity we have previously seen in the FFA curve towards the end of Q2 and through Q3 is flattening out.

There was 447KMT of wheat, 107KMT of canola and 90KMT of barley added to the stem in the past week. Nearly half of the wheat additions were in SA and Vic with smaller volumes in WA, NSW and Qld.

Australian Weather

Last week, Basis Commodities published an article about Australian weather, looking at the difference between La Nina and El Nino and the climate drivers weather analysts watch to predict the long range forecast. You can read it by clicking here .

AUD – Australian Dollar

The Australian dollar is slightly stronger to start the week when valued against the Greenback. The AUD/USD pair climbed to a two-week high on Friday 5th May on the back of US Nonfarm Payrolls exceeding expectations. Last Tuesday the Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points (bp) to 3.85% after first-quarter Consumer Price Index (CPI) came in at 7% year-on-year to the end of March, well above the 2-3% mandated target band.

The post Basis Commodities – Australian Crop Update – Week 19, 2023 appeared first on Basis Commodities .

El Nino Vs La Nina – what do they mean?

Thu, 04 May 2023 09:41:00 GMT

Sowing has officially kicked off in Australia with many starting off the season with good subsoil moisture after what most have hailed as decent autumn break. According to the Bureau of Meteorology (The Bureau), the long wet of the past three years has ended and Australia has entered into a neutral El Niño-Southern Oscillation (ENSO) phase. However, there is talk of the country plunging into El Niño in a few months, which could bring the opposite problem to what we’ve experienced over the past few years. So, what do these weather phases actually mean, how do they occur and why do they have such an impact on Australia’s winter crops?

Let’s start with the present.

Australia has just come out of a triple La Niña. That is, three years in a row where strong equatorial trade winds changed the ocean surface currents and drew cooler water up from below. This caused the central and eastern tropical Pacific Ocean to cool, in turn bringing above average rainfall and cooler temperatures to the east coast of Australia. This rain was beneficial for some. However, overall it saw large crops with low quality and in some cases, a complete washout of crops that were in the firing line of the constant wet.

In early 2023, The Bureau officially announced that Australia had moved into a neutral ENSO phase, which is neither El Niño nor La Niña. When ENSO is neutral, the Pacific Ocean typically has little influence on Australian climate patterns. It’s expected this pattern will continue throughout autumn, but isn’t expected to stick around for much longer, with all but one climate model suggesting we’ll move into a El Nino phase by July, and all three models suggesting we’ll be in El Nino by August.

Australia on El Niño Watch.

When The Bureau announced the three year La Nina had ended, they also flagged the possibility of an El Nino forming later in the year and placed the country on El Nino Watch which means there is a 50% chance of El Nino forming during 2023.

El Nino occurs when sea surface temperatures in Pacific Ocean become warmer than average which causes tropical rainfall and cloud development. As a result, the heavy rainfall that usually occurs to the north of Australia moves to the central and eastern parts of the Pacific basin. This event typically brings warmer and dryer weather to the east coast of Australia, at a vital period in our winter crop development, spring.

There are other climatic indicators that are closely monitored to determine the shift between La Nina and El Nino including the Indian Ocean Dipole (IOD), Southern Annular Mode (SAM) and Madden-Julian Oscillation (MJO).

IOD

Many weather models are suggesting a positive IOD event may develop in the coming months. A positive IOD is often associated with El Nino and a negative IOD is typically associated with La Nina. The IOD is the difference in eastern and western Indian Ocean sea surface temperatures. Like ENSO, the change in temperature results in the rising and descending moisture and air. A positive IOD is known to reduce winter and spring rainfall over much of Australia.

MJO

The MJO is a climate driver used to monitor tropical weather around the globe. It is an eastward moving pulse of cloud and rainfall near the equator occurring every month to three months. It effects the timing, development and strength of the major global monsoon patterns, including Australian monsoons. It’s greatest effect on Australian rainfall occurs during the northern Australia wet season, which runs from October to April. Recent reports have shown that the MJO has strengthened and moved into the Western Pacific region. While in the Western Pacific, enhanced rainfall across parts of northern Australia and the Southwest Pacific is expected. This influence weakens as the MJO moves further east. For more information on the MJO, watch this short video. https://youtu.be/UsWHHE_jkGE

SAM

The contribution the SAM makes to Australia’s climate is a relatively new discovery. It refers to the north/south movement of westerly winds that dominate the middle to higher latitudes of the Southern Hemisphere. There are three phases to the SAM; neutral, positive and negative. During the summer and autumn months (December through to May) the SAM is showing an increasing tendency to remain in a positive phase which decreases the changes of rainfall from storm fronts across southern Australia.

So, what can we expect?

As mentioned, Australia is currently in ENSO Neutral. By monitoring the above mentioned climate drivers, The Bureau believes there is a 50% chance of an El Nino forming in 2023 with all three weather models indicating this will occur by August this year. The longer range forecasts also predict El Nino weather patterns to continue, however these are not known for their accuracy, so this information needs to be taken with a grain of salt and watched closely as we move through the winter months of 2023. Overall, Australia has had a relatively decent start to its cropping season, however, if El Nino predictions ring true, and the tap turns off over the winter months, we may see crop conditions start to deteriorate as we move through vital finish phase of the crop in September and October.

Source: information and images within this article has been sourced from the Australian Bureau of Meteorology BOM.GOV.AU.

The post <strong>El Nino Vs La Nina – what do they mean?</strong> appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 18, 2023

Thu, 04 May 2023 05:28:00 GMT

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 & Oil Seed Market

Australian cash markets came under further pressure last week with the sharp declines in U.S. wheat futures and forecast rain for North-West New South Wales which had missed earlier rain events.

With bids retreating quickly, farmer selling has been slow, but it seemed to pick up a little late last week according to trader reports. The reality is that new export sales now must be made at significantly lower levels than where the previous sales have been made to be competitive with Northern Hemisphere new crop prices. Traders have been giving away elevation margins for some time now, but even now Australian wheat looks expensive compared to other origins.

Grain Trade Australia provided an update on the China barley situation. They said the review would take three months with the possibility of a one-month extension. Any hopes that China may turn buyer are now giving way to the negative global feed grain outlook and Barley values are also being dragged lower.

Planting ahead of the new crop is progressing well in most areas with timely rains encouraging farmers in most areas. The general consensus is that there has been little drop off in the planted area and the start is as good as last year.

Ocean Freight Market & Export Stem

The back end of last week was pretty dire for owners as cargo interest dried up ahead of the global May-day holidays. Owners with near-spot tonnage had to take whatever they could to get covered and so some ugly numbers were reported. Red ink prevailed across the board from Panamax to Handysize. Is this representative of the wider market when China returns today is anyone’s guess. It feels like this is going to be a very flat week already.

More than 1.3MMT of grain and pulses were added to the shipping stem in the past week. This included 875KMT of wheat, the most in four weeks. Barley and sorghum additions were also strong at 193KMT and 150KMT respectively. East coast wheat additions improved in the past week with a combined 383KMT between Queensland, New South Wales and Victoria. There were serval sorghum boats added in the past week into Brisbane and Newcastle over multiple berths. No new canola ships were added.

In general however, wheat shipments continue at a record pace. The March wheat departures by the stem equate 3.1MMT before container shipments are added, and April and May are close to 2.8MMT. Western Australia continues with its impressive shipping pace with the stem indicating 1MMT plus a month Jan/May.

Pulses Market Update

In 2022, Australia exported 1,042KMT of lentils, marking a 25% increase from the previous year. The top destinations for Australian lentils were Bangladesh, India, Sri Lanka, UAE, Egypt, and Pakistan. Notably, Bangladesh was the leading importer, purchasing 391KMT of lentils. India was the next significant consumer, buying 275KMT, followed by Sri Lanka at 104KMT. The trend continues in 2023, as the country has had a strong start in the lentil export market. In the first two months of the year (January-February), Australia exported a total of 346KMT of lentils, a substantial 65% increase compared to the same period in the previous year. India remained the top consumer, importing 155KMT, followed by Bangladesh with 51KMT, and Turkey with 36KMT of total Australian lentils exported during this period. It is anticipated that the export of Australian lentils will reach close to 1 million tonnes in the year 2023.

Source: AgPulse Analytica https://agpulseanalytica.com/

Australian Weather

Australia is off to a very good start with 85-90% plus of national cropping areas having received enough rain to germinate winter crops by the end of April. Extended weather models continue to point to a drier and normal winter. The Bureau Of Meteorology updated its outlook during the week and pointed to drier than average for May to July across most of Australia. ENSO conditions are neutral with signs of that an El Nino could form during the winter. Similarly, the IOD is also neutral, but a positive IOD could develop in the coming months. Both are bad news for Australian rainfall for the winter and spring.

The post Basis Commodities – Australian Crop Update – Week 18, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 18, 2023

Mon, 24 Apr 2023 05:25:00 GMT

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 & Oil Seed Market

Australian domestic grain markets saw little change for the most part last week. Farmer selling has been steady into export destinations but for the most part, farmers are doing fieldwork ahead of the new growing season. In the drier region, farmers are starting to dry plant, and remain reluctant sellers. There is limited urgency however as domestic feedlots will eventually come to market to support price expectations away from export markets.

As previously reported, Barley is firmer following the announcement that China will review its position on Australian barley imports. This has stalled farmer selling. Traders edged prices higher when the China review was first announced but it will be some months before the review is complete. Traders will now be reluctant about pushing prices without confirmed demand and with the Islamic world celebrating the end of Ramadan the markets of the Middle East were very quiet.

There is little buyer urgency to be seen in a global market that is comfortable enough in the old crop and seemingly no major weather concerns for the 2023/24 season. This leaves the reasons for old crop price support to shorts, local weather and the Russian floor price. Thus, export sellers are starting to lower their price expectations.

Feed wheat was sold into the Philippines late in the week at around $293 c&f for a July/Aug shipment. The wheat is expected to be sourced from Australia. This will work back to a Western Australia FOB price of about $275 FOB compared to the IGC’s ASW weekly quote of $301 FOB. Prices still comfortably fit back into the farmer bids although exporters continue to give up margin to get the sales on.

Australia exported 3,050,336 tonnes (MT) of wheat in February, down 6 percent from the 3,251,260MT shipped in January, according to the latest data from the Australian Bureau of Statistics. The February 2023 figure is up 13pc from the 2,695,173MT shipped in February 2022.

In containerised exports, Vietnam, China then Thailand were the biggest markets for wheat shipped in February this year on 74,073MT, 59,288MT and 24,983MT respectively.

In bulk sales, China, Thailand then Vietnam were the biggest markets on 652,888MT, 301,776MT and 295,452MT respectively.

Ocean Freight Market & Export Stem

The past week has seen the freight market fluctuate. A widespread improvement in physical indices from Panamax to Handymax has not really resulted in any perceptible changes in fixture rates. There is a large component of the indices finding the correct level having lagged over the previous seven days and the start of the week shows spot levels are still largely below month-to-date figures. There doesn’t appear to be a widespread influx of cargoes to push the demand side of the equation. Operators are all pushing increased forward numbers as expectation builds ahead of a firm end to Q2 and more positivity in Q3.

It was another strong week for shipping stem. There was 720KMT of wheat added to the stem in the past week with 450KMT or 62% of that coming from Western Australia. New South Wales was the next largest of the wheat additions with 110KMT. There was also 80KMT of barley added in Western Australia as well as 93KMT of canola. All up, Western Australia accounted for 58% of the total grain, canola and pulse additions for the week. There was also 55KMT of canola put on the stem into Newcastle in two handy size vessels.

Pulses Market Update

South Australia added more pulses to the stem than grains over the past week as export sales continue. This included 74KMT of lentils and 36KMT of faba beans while there was only 70KMT of wheat put on the stem. Growers still hold significant tonnage on farm for pulses, especially in the southern markets. With the timely rain and subsequent breaks for planting seen over the past two weeks, farmers have seen downward pressure on prices and are happy to release their current season stock to clear the pathway for the new season.

Pulse production in Australia has grown significantly in recent years, driven by increased demand for plant-based protein and a growing global population. In 2022/23, Australia produced approximately 2.2 million tonnes of pulses, up from 1.9 million tonnes in 2021/22. Chickpea production has been particularly strong, with production increasing to 1.4 million tonnes. Lentil production has also increased steadily in recent years, with production reaching approximately 400,000 tonnes.

Australian Weather

Most of Australian southern cropping zones have received a timely autumn break and are busily planting pulses and canola following last week’s general rain. Remnants of the Severe Tropical Cyclone Lisa worked its way across Australia’s interior, resulting in some handy rain for South Australia, Victoria in southern New South Wales last week. Most of south-eastern Australia has seen reasonable April rain in recent weeks and this has triggered a general start to winter crop planting.

Farmers were already planting pulses ahead of the weekend rain and are now into canola with wheat and barley to follow. Last week’s dry weather allowed southern farmers to make some considerable planting progress. More rain is needed across north western New South Wales and south western Queensland after a dry April. Topsoils have dried out and the dust is starting to blow across the western Darling Downs and north western New South Wales. Farmers are looking for rain to plant barley and canola in some areas. Farmers in north western New South Wales are already preparing to start dry planting winter crops in the absence of rain. Good subsoil moisture reserves left over from last year’s wet spring will make the decision to start dry planting a little easier. Weather forecasts for the next week are mostly dry.

AUD – Australian Dollar

The Australian dollar was slightly stronger at the close of last week when valued against the USD. The AUD had been under pressure through the week, bottoming during one European session at 0.6678, the lowest level since April 12. For the time being there is no clear direction, and the AUD could trade in a relatively broad range of 0.6620/0.6785.

The post Basis Commodities – Australian Crop Update – Week 18, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Hay Update – Thursday 20th April 2023

Fri, 21 Apr 2023 03:17:00 GMT

In this month’s report, we will examine the current state of the Australian oaten hay industry, including its production, export, and market trends.

The industry has been an important part of the country’s agricultural sector, with oaten hay production and exports contributing significantly to the national economy.

Production:

According to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), the production of oaten hay in Australia has been relatively stable over the past few years. In 2022-2023, the country produced approximately 11 million tonnes of oaten hay. The main states producing oaten hay in Australia are Western Australia, Victoria, South Australia, and New South Wales. In an average season, there will be approximately 900k to 1.1M metric tonnes of exportable surplus with the balance crop being consumed domestically.

Exports:

The Australian oaten hay industry is reliant on exports, with the top quality representing 10-12% of its production destined for overseas markets. Japan, Korea, China, and Taiwan are the main destinations for Australian oaten hay exports. According to ABARES, the value of oaten hay exports in 2022-2023 is around $349 million. The capacity to export Oaten Hay with the various Hay Companies and their production plants is approximately 1.3M metric tonnes exceeding the typical available production quantity. The difference in the production capability and the export capacity is quality, as the export market demands the highest quality for the international dairy sector. Australia has had several seasons where weather events have damaged the crop at critical period during harvest downgrading crop quality.

Market Trends:

The demand for oaten hay has been driven by a range of factors, including the growth of the dairy industry in Asia, particularly in China, and the increasing demand for premium hay products in Japan, Korea and the developing Middle Eastern Markets. Australian oaten hay is known for its high-quality, and the country’s strict quarantine and biosecurity standards have helped to ensure that it is a reliable and safe product for export.

The COVID-19 pandemic has had a limited impact on the Australian oaten hay industry, with the major markets continuing to show strong demand. However, there have been logistical challenges, particularly around shipping and transport, which have led to higher freight costs and delays. The trend for the second half of 2023 and beyond is that freight rates will soften and improved services will enhance opportunities especially to The Middle East and Africa from Australia.

Conclusion:

The Australian oaten hay industry is an important part of the country’s agricultural sector, with strong demand from overseas markets. While production has been relatively stable, the industry faces ongoing challenges around freight costs and transport logistics. However, the industry’s reputation for producing high-quality, safe, and reliable products means that it is well-positioned to continue to grow and expand in the future.

Importers are encouraged to speak to Basis Commodities about their requirements so a quality profile can be created to provide deliveries without disruption in conjunction with our key supplier BALCO Australia.

Please contact Nader Hassan or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
M: 0408 308 908
E: steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

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The post Basis Commodities – Australian Hay Update – Thursday 20th April 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 17, 2023

Mon, 17 Apr 2023 05:21:00 GMT

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 & Oil Seed Market

Domestic markets were steady to softer over the past week. Export covering for wheat was steady with the bids trying to pull it lower but there appears to be enough depth of demand to keep values supported. The sorghum market is again softer week on week on the back of lower buying interest from bulk/container customers, citing cheaper alternatives and a bearish sentiment globally for feed grains. The canola market has also quietened down in the past month with grower selling decreasing after the high prices seen two to three months ago. Barley prices have firmed slightly in the wake of the news that China may remove their tariffs in the future, although some of this was already priced in and most analysts feel this will have more impact on 2023/24 values. The barley prices will likely go into a holding pattern for the next three to four months until a result is finalised.

The Chinese Ministry of Commerce has announced a review of its existing anti-dumping and anti-subsidy duties on barley imports from Australia, a major move toward reducing the ongoing trade tensions between the two nations. The ministry gave details of the barley tariff review in a statement on Friday, confirming an earlier announcement from the Australian government on Tuesday. In return for the review, Australia has agreed to temporarily suspend its case against China at the World Trade Organization. In the Friday statement, the Chinese government said the review would begin on April 15 and would finish within one year. The ministry said the decision had been made in response to a request from the China Alcoholic Drinks Association to end the tariffs and made no mention of a deal with Australia. The Australian government said this week that the review would take between three and four months to complete, but there is no mention of that timeline in China’s statement.

Farmers are busy planting pulses and canola across Australia’s southern cropping zones, and this has extended into the central regions. Canola plantings started in earnest over the past week. The general feeling is that canola plantings will remain large, although probably back a little on last year as farmers in the more marginal canola areas ease off a little. Pulses are also being planted in the south. Most farmers will wait another week or so before starting to plant wheat. Australia’s southern cropping areas received more rain last week, but the central and northern areas are looking for rain to replenish the topsoil which is dry.

Ocean Freight Market & Export Stem

It appears the ocean freight environment is showing signs of firming. Smaller ships feel like they bottomed out at the end of last week and there was plenty of fresh enquiry to begin the week. Several very cheap fixtures for spot/ppt tonnage from Australia have emerged but this is not representative of where the market sits today. A few spot ships remain but beyond that the tonnage list looks thin for the next few weeks. China remains a sleeping giant, so coal is still the main driver for Supramax/Ultramax market in Asia. When the coal is quiet, freight eases off and vice-versa. Period rates have followed the same pattern as the previous four to five months and remained detached from spot rates.

Only 30KMT of barley was put on the stem over the past week (Port Giles, South Australia). There was 134KMT of canola added to the stem. This included two Panamax vessels in Western Australia and 24KMT into Riordan’s at Geelong. It was a busy week for pulses with 52KMT of lentils put onto the stem. Most of this was in South Australia but there was also 12KMT put on the stem into Geelong. There was 25KMT of faba beans added in Pt Adelaide and 55KMT of sorghum put on the stem into Brisbane.

Pulses Market Update

According to the latest export data from the Australian Bureau of Statistics, Australia exported 84,879 tonnes (MT) of chickpeas and 223,581MT of lentils in February. The chickpea figure is down 20 percent from the 106,183MT shipped in January, but the lentil figure is up 83pc from the 122,464MT shipped in the previous month to what is believed to be a new monthly record for Australia. Bangladesh was the biggest market by far for chickpea exports, taking 56,957MT, or 67pc, of the total, with Pakistan on 10,506MT and the UAE on 6,583MT the second and third-largest markets respectively. India was the major market for lentils, taking 122,504MT, or 55pc, of the February total. Bangladesh on 47,156MT was the second-biggest market for February-shipped lentils, followed by Sri Lanka on 15,745MT.

Australian Weather

South Australia received widespread rain on the weekend with 15-25mm across most of the state. Most of Victoria received 15-25mm with the rain extending into Southern New South Wales, however the rainfall was lighter and patchier towards the centre of the state.

AUD – Australian Dollar

AUD/USD continues to trade below most banks fair value estimate of 0.70 and has traded below this level for the last 12 months. The two-year interest rate differential with the US is also weighing on AUD/USD along with predictions commodity prices will decline by 15% to 20% this year.

The AUD is expected to recover later this year as market participants price an eventual recovery in the global economy.

The post Basis Commodities – Australian Crop Update – Week 17, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 16, 2023

Wed, 12 Apr 2023 04:54:00 GMT

2 022/2023 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 & Oil Seed Market

Australian markets were softer last week for wheat, barley and canola with further declines in global values. The size of the price declines varied by port zone on the nearby coverage. This is primarily against export positions with the domestic buyers mostly covered against nearby requirements. Barley bids were steady for the week, but the offers have disappeared on reports that China’s ban on Australian imports may be coming to an end. It’s clear that Beijing and Canberra have been discussing details about a possible end to the barley export ban and the decision earlier this week to halt WTO actions and allow the Chinese government to review the situation on Australian Barley imports was seen as a face-saving exercise in light of WTO likely to rule in Australia’s favour. Relations between China and Australia have thawed considerably over the past six months.

The Australian Bureau of Statistics confirmed another impressive export month for February. This included a further 3.0MMT of wheat exports. Barley exports were strong at 1.04MMT and the strong canola shipments continue with a further 600KMT for Feb. Pulse crop exports were also strong. Combined wheat, barley and canola exports were 4.6MMt, slightly up on the 4.4MMT in Jan and Dec. Western Australia’s combined wheat, barley and canola exports exceeded 2.0MMT and weren’t far below the December record.

Wheat exports from all states were strong with China being the largest destination with 646 KMT. This lifts their Oct/Feb tally to 3.25MMT. Vietnam was the next largest with 374KMT then Thailand with 326KMT, South Korea with 255KMT, Indo with 231KMT and then the Philippines with 194KMT. The breakdown of the wheat export destinations highlights that Australia’s wheat export sales have become more difficult after the recent sharp declines in US corn values given that a lot of the wheat exports have been heading into feed grain destinations in Southeast Asia.

Saudi was the largest barley destination with 277KMT, lifting the Oct/Feb total to 1.2MMT. Japan was next with 150KMT and then Thailand with 130KMT.

Looking forward, Australian wheat plantings are set for a strong start as better-than-expected rains in central and southern areas have further improved soil moisture in the wheat growing areas with more on the way as this 14 day forecast shows.

Source: Marcus Weather Mapping www.marcusweather.com

On the other hand the Australian Bureau of Meteorology says from July, all but one of the models indicate El Niño thresholds will be met or exceeded, with all models noting it will be established by August.The ENSO is currently neutral with most international climate models suggesting neutral ENSO conditions are most likely to persist through autumn. It should be said ENSO outlooks extending beyond autumn should be viewed with some caution as they typically have lower forecast accuracy than forecasts made during other times of the year. When ENSO is neutral, the Pacific Ocean typically exerts little influence on Australian climate patterns. El Niño typically suppresses rainfall in eastern Australia during the winter and spring months. The Indian Ocean Diapole (IOD) is neutral. Most models suggest that a positive IOD event may develop in the coming months. A positive IOD can supress winter and spring rainfall over much of Australia, potentially exacerbating the drying effect of El Niño. Long-range forecasts of IOD made in autumn have lower accuracy than those made at other times of the year.

Ocean Freight Market & Export Stem

With holidays world-wide last week, the freight market headed lower as cargo activity dried up. Many players were away from the market, so liquidity tightened and rates fell away for the nearby positions. Owners across all sizes with tonnage open ppt-10days forward all took a bath as they realised enquiry was likely to dry up over the holiday period. Coal into China was notably quiet and there wasn’t much else to take its place. Supramax – Ultramax took the brunt of the fall with rates in Southeast Asia dropping away quickly to low teens and Charterers bidding sub $10kpd by the end of the week. It would not be a surprise to see rates already under $10k for Supramax types in the Pacific as we emerge from Easter. Handysize and Panamax held steady but sub-index types are under pressure – not a good sign. Several of the operators were expecting this dip to be short-lived, with activity picking up again after 1-2 weeks and FFA levels would indicate some support for that hypothesis but really the only thing predictable about the current market is its unpredictability. Owners are still holding firm on period numbers so a large discrepancy exists again between trips and legs for operators to try and bridge.

It was a quieter week for the Australian shipping stem following the sizable wheat additions in the previous week. A further 450KMT of wheat and 115KMT of barley was added to the stem in the week leading up to the Easter long weekend with no further canola.

Pulses Market Update

Availability of pulses remains higher than last year. As per the custom data available, lentil exports out of the four top exporters (AU, CA, TR, US) were 460KMT, compared to 158KMT last year. While India, the top importer, remained absent from Canadian shipments, Australia sent 122,504MT of lentils. For field peas, Canada exported 285KMT vs only 66KMT last year. Chickpea availability has also improved from the same time last year.

Ukraine to Plant Less Peas? As per the Ministry of Agriculture data, Ukrainian farmers have completed pea planting on 73,100 ha, compared to 82,500 ha at the same time last year. Pea acreage is falling behind and the ideal window is closing soon. The weather is conducive for the growth with sporadic rains and ample soil moisture.

Source: Agpulse Analytica https://agpulseanalytica.com/

Australian Weather

More rain fell across Australia’s cropping areas last week with Western Australia benefiting the most. Victorian cropping areas also saw decent falls throughout the week as did New South Wales. Queensland saw some patchy rain, but we expect this was isolated as some stations saw little to no rain. There were some heavy storms across the inner and eastern parts of Southern Queensland. In general, Australian farmers are happy with the start to the 2023 cropping season following the rains over the past few weeks. However, all eyes are on the medium-term weather outlooks and the prospects of an El Nino developing in the coming months as mentioned earlier.

Image 1: 8 day forecast to 18th April 2023 Source: http://www.bom.gov.au/

Image 2: Weekly Rainfall to 10th April 2023 Source: http://www.bom.gov.au/

AUD – Australian Dollar

The Australian dollar slipped back below US$0.6650 over the Easter break, weighed down by a slew of US data sets. US treasury yields rose on Friday, buoyed by another strong US non-farm payroll print. Payrolls climbed more than 230,000 in March, in line with market expectations lifting yields and dragging the USD higher. Having tested a break above US$0.67, the AUD slumped back below this handle, compounding losses through trade on Monday to mark weekend lows below US$0.6620. With another Fed rate hike all but priced in, we expect the AUD to remain under pressure through the near term. While supported on moves below US$0.66, upside moves will likely meet resistance above US$0.6750 and approach US$0.68.

USDA Report

The USDA’s April WASDE report offered few surprises which was US corn and wheat closing lower while soybeans strengthened. USDA kept its US 2022/23 corn and soybean ending stocks unchanged and modestly increased US wheat ending stocks. Analysts generally expected the USDA to trim corn and soybean stocks slightly after the March quarterly stocks report showed smaller than expected supplies. USDA left the US 2022/23 corn ending stocks at 1,342 mill bu and soybean ending stocks at 210 mill bu. US wheat ending stocks were increased by 30 mill bu to 598 mill bu, still down 100 mill bu (2.7MMT) on last year. Globally, USDA made further sizable cuts to Argentina’s summer crops. Although this came as no surprise. The most notable was a change in the global export mix. USDA lowered its forecast of 2022/23 world wheat exports by 1.2MMT to 212.7MMT. However Russian wheat exports were raised by 1.5MMT to 45.0MMT, Ukraine exports were increased by 1MMT to 14.5MMT and EU exports were cut by 2MMT to 35MMT. The safe corridor is working effectively for now and global buyers want cheaper Black Sea wheat supplies however a vocal minority in Eastern Europe is tired of the cheap flow entering from Ukraine angering their respective farm communities. Australia’s wheat exports were unchanged at 28.5MMT, up 1MMT on last year. World barley trade was trimmed by 0.3MMT to 30MMT, down 2.4MMT from 2021/22. Saudi Arabia’s imports were reduced by 0.4MMT to 4.3MMT.

The post Basis Commodities – Australian Crop Update – Week 16, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 15, 2023

Wed, 12 Apr 2023 03:26:00 GMT

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 & Oil Seed Market

Ocean Freight Market & Export Stem

Pulses Market Update

Australian Weather

AUD – Australian Dollar

USDA Report

The post Basis Commodities – Australian Crop Update – Week 15, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 14, 2023

Mon, 03 Apr 2023 03:23:00 GMT

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 & Oil Seed Market

The Australian domestic markets ended the week mixed with cash buyers returning following the sharp selloff in CBOT wheat which saw wheat bids up AUD$10-15/MT. The trade bids continue to bounce around on the back of how hard the exporters are chasing ex-farm supplies against direct to port grain loadings. Canola was AUD$50-60/MT higher in all zones, with the continued recovery in Euronext and Canadian futures. The other takeaway from the week is the misalignment in the current weather and the extended outlooks. A sizable proportion of Australia’s cropping areas received good rains in the past week, although falls were patchy in some areas as opposed to drier longer term forecasts. For the time being there are no concerns as we go into the planting season.

Elsewhere Grain Trade Australia (GTA) provided an update on China’s ban on Australian barley imports. The WTO Dispute initiated by Australia in response to AD/CVD Measures implemented by China on Australian barley exports was expected to report in March 2023. Advice is the Panel’s Report can be expected soon. Under China’s standard processes interested parties to AD/CVD measures can apply for review on the anniversary of the respective measures, based on a change in circumstances. China’s Ministry of Trade/Commerce (MofCOM) have recently advised Canberra that an interested Chinese industry stakeholder has requested an interim review of the AD/CVD measures on barley from Australia. Under its regulations, it is understood that MofCOM have up to 60 days to consider such applications and whether it may initiate a review of the measures. Until such time, Australian Barley is still banned from export to China, but it does continue to suggest there is growing momentum behind some kind of change in Beijing’s stance when industry participants feel comfortable enough to ask for a reconsideration of the Chinese Government’s stance.

Australian and Chinese officials will meet next week to discuss how to normalise trade, a source told Reuters, as diplomatic ties thaw. Under the WTO dispute process, the findings on whether trade rules have been broken and any remedy will be distributed to all WTO members within three weeks of the final report, and its recommendation adopted within 60 days unless there is an appeal. Assistant Trade Minister Tim Ayres said on Friday that Australia was “confident that the applications that we’ve made would be successful in the normal course of events” but was also discussing the WTO case with China. Trade Minister Don Farrell held a video meeting with his Chinese counterpart Wang Wentao in February, which was followed by a video meeting of trade officials. Trade officials will meet in person next week, a source told Reuters. “Minister Wang and I agreed to enhanced dialogue at all levels, including between government officials, to pave the way for the resumption of trade,” Trade Minister Don Farrell said in a statement to Reuters on Friday, in response to questions “Our government officials are meeting to continue to lay the ground work for the resumption of trade.”

Ocean Freight Market & Export Stem

Pressure remained on spot freight prices amid further signs of economic uncertainty and a lack of full blooded buying – a pattern exacerbated by renewed uncertainty over the Black Sea corridor and fresh warnings from Russia.

Lacklustre coal cargo enquiry in Southeast Asia has pulled the rug out from under owners last week within the region. Without an influx of fresh business early this week we could well see a more rapid reversal across all sizes in the Pacific as we go through the Easter period. Coal has been the big market driver since March and without it the market is crumbling. Supramax tonnage has eased from US$14/14.5k pd early in the week by about US$3kpd for pacific round voyage and large handys are off a little less – abt US$2kpd over the week to US$11-12kpd sub. Period numbers remain firm and have not moved much since rates appeared to top-out late last week. Longer term optimism remains from owners side (1yr plus time charter ideas are all around US $14k) but we now feel the market is following a similar profile to the period immediately post Chinese New Year. Medium to long term optimism is presently not being matched by achievable spot rates and a large gap is emerging which stifles operator activity. It feels like more volatility is on the way. Just a slither of positivity is enough for owners to push rates quickly higher, but likewise the market hits full retreat quickly when charterers sniff weakness…..a situation suggestive of a fine balance between supply and demand.

Finally, Black Sea and Azov routes into the Sea of Marmara also showed signs of further fatigue, with falls of up to US$5/MT along some routes. That came as Russian authorities continued to give off conflicting views, linking the end of the 60-day grain corridor extension to the pace of Russian exports, and then threatening to cut off wheat and sunflower exports amid high prices.

On the shipment stem side of things It was a strong week for wheat additions onto the shipping stem in Australia and this was dominated by the west. There was 913KMT of wheat added to the stem in week 13 of 2023. This was the third largest weekly wheat additions since January. Western Australia accounted for 538KMT of the wheat additions which is its largest week so far for the 2022/23 MY. Western Australia has added about 1.3MMT of wheat to the stem in the past four weeks and about the same in the four weeks prior.

Australian Weather

The Australian Bureau of Meteorology’s latest seasonal outlook statement for April to June said below median rainfall is likely to very likely (60% to greater than 80% chance) for the majority of Australia. Days are likely to very likely (60% to greater than 80% chance) to be warmer than median for most of Australia. While the Pacific Ocean is currently ENSO-neutral, but Bureau has issued an El Niño WATCH as we reported last week. This means there is around a 50% chance of an El Niño in 2023.

As reported most areas received welcome rain this week.

AUD – Australian Dollar

This week all eyes will be on Tuesday’s Reserve Bank of Australia (RBA) interest rate decision. Australia’s central bank is expected to go for a final 25 basis point interest rate hike to 3.85% on Tuesday, although forecasts from economists suggest the decision on whether to hike or hold rates is on a knife edge. While inflation in Australia rose to a more than three-decade high of 7.8% last quarter, well above the central bank’s target of 2%-3%, the bank signalled again this month a possible end to its current tightening cycle, as it did in December.

USDA Summary

The latest USDA report was also released last week. For corn, The USDA pegged quarterly stocks at 7.401 billion bushels, the smallest in nine years. Prospective Plantings data had 91.996 million acres for corn up 4% from 2022 and 1 million acres more than the average market guess, although there was some caution that wet weather in the south and heavy snow in the Dakotas could complicate planting. The USDA said the U.S. corn crop was 2% seeded by Sunday, matching the average analyst estimate and the five-year average. Planting was most advanced in Texas, while seeding has yet to begin in core Midwest corn states such as Iowa and Illinois.

The expansion in wheat plantings were larger than expected. Acreage data from the Prospective Plantings report show 49.855m acres of wheat for 2023/24. The winter wheat number was raised by 400k to 37.5 million. KS was raised 600k from the January number. Other Spring wheat intentions were 10.57 million acres, compared to the 10.9m trade average guess. Durum area is intended to be 1.78m acres, up from 1.63m planted during the old crop season.

USDA released its first weekly crop progress report of the 2023 growing season and rated 28% of U.S. winter wheat in good to excellent condition, the lowest for this time of year in records dating to 1989, as drought persists in key portions of the Plains wheat belt. Approximately 48% of U.S. winter wheat was produced in an area experiencing drought as of March 28, the USDA said in a separate report last week, a reduction from 51% a week earlier and down from 69% as the year began. However, drought remains concentrated in southwest Kansas and the Texas and Oklahoma panhandles, all key winter wheat production areas.

The USDA did not release figures on planting progress for spring wheat on Monday but said it expected to publish those starting with its next weekly report on April 10.

The post Basis Commodities – Australian Crop Update – Week 14, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 13, 2023

Mon, 27 Mar 2023 03:22:00 GMT

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

The Australian Domestic market finished sharply lower at the end of last week as buyers pulled wheat, barley and canola bids lower in response to the sharp declines in global markets. In response, the farmer selling still appears to have slowed and for smaller volumes. The Farmer is already well sold, with most of the grain held in the major bulk handlers storage already committed to sales, However, the farmer is still sitting on sizable on farm supplies that are still to be marketed. As an example, Victorian farmers grew an extra 1.85MMT of wheat, barley and canola in 2022/23, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) March crop report. Bulk Handler GrainCorp’s annual reported grain deliveries into Victorian storages were less than 100KMT more than 2021/22. Other bulk handlers will have increased their share of farmer grain deliveries, but farmers are still holding a lot of grain on farm. The same goes for New South Wales, but the smaller crop means there is not the same abundance of surplus supplies needing to find their way into export pipelines.

Australian barley values continued to fall in sympathy with the global decline in wheat and in competition to European new crops that are in good shape coming out of dormancy.

Australian Pulse Market

Prices for Australian faba beans, lentils, mungbeans and chickpeas have risen in the past month, thanks to healthy demand. March has also seen increased exports into South Asia and this has built confidence in forward business. In its quarterly Australian Crop Report, ABARES has lifted its production estimates for faba beans by 26%, field peas 11%, lentils 34% and lupins by 45% from the previous figure released in December. The chickpea estimate has been revised down 9%.

Interestingly on a year-on-year basis, pulses exports from the three major exporters took a big jump at the start of this year. In January 2023, combined lentils export out of Australia, Canada and the United States were up 64% on the previous year, while the chickpea figure was up 37% year on year.

Ocean Freight and Export

It was a quieter week for the shipping stem additions in Australia. It’s too early to be making a judgment, but maybe the washout in global markets and the discontent with export pricing and competitiveness are already being felt in the stem additions. In addition, we have just entered into the month of Ramadan which typically has a calming effect on buying interest. There was about 300KMT of wheat added to the stem which is the smallest in eight weeks and less than half of the four-week average. The additions were spread across all states. A further 180KMT of barley was put on the stem with most of this in WA. No canola was added to the stem.

The freight markets were also quiet last week with a lack of cargo interest undermining owners’ attempts to push the Asian market forward. Tellingly, all the Southeast Asia focussed routes on the Baltic indices were marked down over the week which probably indicates where the dearth of cargoes hit most. Indonesian coal shipments are clearly the key player still. If we see a fresh influx of cargoes ahead of the Indian monsoon then we’ll see another jump, but otherwise, and we feel the more likely scenario, the market will continue easing away. We can’t see much else to keep demand up. The Atlantic is trending side-ways and marginally upward – highly likely on sentiment from the Pacific.

Australian Weather

Widespread rain across New South Wales over the past week is also easing dry weather concerns. Most areas received beneficial rain throughout the week, despite the patchy nature of the storms and showers. It was a similar situation in the south in Victoria and South Australia. The unsettled weather is continuing in the coming week but is forecast to clear by the weekend.

Finally, the Australian Bureau of Meteorology is calling for drier than normal weather through the autumn.

AUD – Australian Dollar

The Australian dollar closed weaker last week when valued against the USD and closed at 0.6645. The Australian dollar attracted fresh sellers on Friday extending the previous session’s slide. Risk sentiment remains fragile over lingering and spillover concerns to European banks. Next support levels for the AUD/USD are defined now at 0.6620, 0.6560 levels with resistance at 0.6680 and 0.6760.

The post Basis Commodities – Australian Crop Update – Week 13, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Hay Update – Friday 24th March 2023

Fri, 24 Mar 2023 04:45:00 GMT

Australian growers planting intentions are usually made by the national holiday of Anzac Day which falls on the 25th of April each year. This date is seen as important as the cropping area will already have seen summer rainfall providing subsoil moisture and the long term weather forecast will already be understood to support crop growth. The Australian Bureau of Meteorology has suggested that La Nina has finished which would lead to drier conditions over the next three to six months during the winter cropping period. Less rain is typically positive for high quality hay. While the yields will be lower, the quality will be higher.

During the two main years of covid, container freight rates in some cases were five times the standard cost, making it prohibitive for the export of Australian Oaten Hay into the Middle East and African markets. The beginning of 2023 has been marked by deliveries of newbuilds of mega-container ships to liner operators. Evergreen has 49 vessels of 463,442 TEU under construction whereas MSC, the market leader, has an orderbook of 133 ships with a total 1.8m TEU. Other ocean liners such as COSCO and CMA CGM have orderbooks of 884,772 TEU and 816, 476 TEU respectively. This situation is providing a positive outlook for competitive ocean freight transport for Australian agricultural products into the Middle East and African markets and we expect that by new crop (October 2023 onwards) that rates will be competitive once again.

It is believed by some nutritionists that Oaten Hay is a substitute for Alfalfa (Lucerne Hay) as a fodder replacement. This is not always the case as Oaten Hay and Alfalfa are able to complement each other within a total mixed ration. With the appropriate ratios of the two fodder types, they are able to work together to provide a greater impact on the diet of milking cows as well as dry cows to improve milk fat production. Basis Commodities has worked with dairy nutritionists and the technical team of our key supplier BALCO Australia to incorporate both fodders in the dairy TMR and demonstrate positive results.

While the 2022/23 season Oaten Hay production did not provide significant quality surplus, there are still shipments heading to the Middle East for regular customers. Working in conjunction with our partners, Basis Commodities is able to provide samples of current season quality hay that can be used as an indicator for the upcoming season. We are confident that with improved freight rates and a dryer growing season, there will be a greater exportable surplus of quality Oaten Hay for the 2023/24 season.

Importers are encouraged to speak to Basis Commodities about their requirements so a quality profile can be created to provide deliveries without disruption, in conjunction with our key supplier BALCO Australia.

Please contact Nader Hassan or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
M: 0408 308 908
E: steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

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The post Basis Commodities – Australian Hay Update – Friday 24th March 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 12, 2023

Mon, 20 Mar 2023 10:40:00 GMT

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

The Australian cash markets were mixed over the past week. Canola was sharply lower in all states with the washout in European and Canadian futures. Bids to the grower were down AUD40-60 and are now over AUD100 lower than a few weeks ago. One gets the impression that farmers have been slow on the canola sales program, which is surprising, and have been caught flat-footed with the recent sharp selloff following the record large 8.2MMT Australian Crop.

The wheat market was generally firmer last week. Traders are still driven by short covering against export commitments and slow farmer selling. It is expected the shorts will persist through April and into May given the size of the export program. However, the inverse to the northern hemisphere’s new crop is sure to have an effect, unless we get support from the weather and the re-emergence of the fabled El Nino. The need to reengage with the global market varies state by state, but with a 39MMT wheat crop and 9.8MMT of this exported through January, we expect that this will happen at some point. The question is when?

It should be said that El Nino related drought risks are offering some background support but recent rain across Queensland (QLD) and New South Wales (NSW) is already eroding some of this. Elsewhere, the moisture profiles are relatively healthy, so it is difficult to get too anxious at this point. It is something to watch though.

Australia exported 417,215 tonnes (MT) of feed barley, 55,720MT of malting barley and 50,115MT of sorghum in January, according to the latest export data from the Australian Bureau of Statistics (ABS). January’s feed barley exports represent a drop of 61 percent from the December total, with the largest customers being Saudi Arabia on 115,219MT, Jordan on 91,280MT and the Philippines on 56,332MT.

Australian Pulse Market

Australia exported 92,287MT of chickpeas and 149,266MT of lentils in January 2023. The chickpea figure is up 49 percent from the 62,078MT shipped in December to reflect increased new-crop availability after a delayed harvest in Queensland. Lentils shipments dropped 9 percent for the month from 163,196MT shipped in December. Ports in Victoria and South Australia have tended to concentrate on exporting canola and wheat due to the export elevation on offer and this has left little room for pulses. The major destinations for January-shipped chickpeas were Pakistan with 41,382MT and Bangladesh with 38,225MT. Lentils saw Turkey export 35,155MT followed by India on 32,315MT and Bangladesh on 28,225MT.

Ocean Freight and Export

News hit the wires that Russia was willing to extend the current safe export corridor agreement but for only 60 days, not the 120 days the Ukrainians wanted. Russia wants to see better access for its Ag exports but that would mean the US/EU would need to ease or end the current banking and insurance sanctions that are in place. It’s hard to see that happening in the current climate of mistrust. The main question now, is if the 60 days is agreed, what do the shipping companies do? Many vessels have been stuck for 40 to 60 days waiting to load in Ukraine and the current vessel count is near 100 trying to get in or out of the Black Sea. There are a lot of moving parts for the trade in relation to Black Sea Ocean freight.

In the Pacific, it was another week of uncertainty and de ja vu. The market has stalled again and is showing signs of weakening on the larger ships. It feels like there has been a pullback in Indonesian coal stems which has taken the steam out of the Southeast Asia scene – given it was the primary driver behind the recent market run-up. Put simply, If more stems do not emerge this week, then the market gives back its gains. Alternatively, more cargoes will see another jump. The jury is out for the time being. The real win for cargo interests has been the rapid fall in bunker prices. Singapore bunker prices are heading toward the low $500’s pmt vlsfo – almost $100pmt lower than a month ago.

Australian Weather

QLD and parts of NSW received rain over the past week. QLD received general rain of 40-80mm while NSW saw patchy rain which benefited about 20-25% of the cropping area in the north and the central west. The Australian Bureau of Meteorology (BOM) declared the La Niña phase has ended in the tropical Pacific Ocean. The El Niño–Southern Oscillation (ENSO) is now neutral (neither La Niña nor El Niño). International climate models suggest neutral ENSO conditions are likely to persist through the southern autumn. However, there are some signs that El Niño could form later in the year. Hence the Bureau has issued an El Niño WATCH. This means there is a 50% chance of an El Niño in 2023.

AUD – Australian Dollar

The Australian dollar was slightly stronger at the end of last week when valued against the USD. The AUD/USD currently trades just above the 0.6700 mark and is drawing support from bank bailouts that ease fears about widespread contagion which boosts investors’ confidence. This undermines the safe-haven US dollar and benefits the risk-sensitive AUD. Nothing like the market getting ahead of itself…

The post Basis Commodities – Australian Crop Update – Week 12, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 11, 2023

Tue, 14 Mar 2023 10:38:00 GMT

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

The Australian domestic wheat market was sharply lower at the close of last week as buyers reflected declines in CBOT and Matif while the 2.7% decline in the AUD/USD lessened the impact. Canola saw the largest percentage declines reflecting the massive weekly declines in Matif. Bids for canola in most zones in Australia finished the week 4-9% lower with further reductions set for this week as buyers reflect the 5 euro decline on Friday. Short covering continues to offer support in the trade bids for wheat and barley also. The sentiment is that prices will have to break soon on the pressure on declining global values. At the same time, there is a depth of demand to own grain on the dip to cover shorts.

Farmers are offloading livestock across eastern Australian on dry weather concerns. Livestock’s numbers have been high with the string of favourable seasons. However, they are starting to pare back numbers with the late start to forage planting ahead of winter and El Nino concerns. Meat and Livestock Australia’s feeder steer indicator on pricing is down 6% in the past four weeks and down 16% since late December. East coast farmers will also be responsive to dry weather with further grain sales.

ABARES released its March Crop Report early last week where they raised wheat production to 39.2MMT from 36.6MMT in December. Barley production in 2022/23 was estimated at 14.1MMT, the third-largest volume on record. Canola production in 2022/23 was estimated at a record 8.3MMT, 21% above the previous record of 6.8MMT in 2021/22. The numbers came as no surprise to the market which was primed for a 38.5MMT to 39MMT wheat crop.

ABARES also issued some preliminary forecasts for the 2023/24 season. ABARES flagged smaller winter crop plantings in 2023/24 with the likely drier conditions as flagged by the BOM’s extended weather outlooks. The area planted to wheat is estimated by ABARES to decrease from 13 million hectare in 2022/23 which yielded 39.2MMT to fall to 11.8-12.5 mill ha, for a crop of 28.2MMT. They flagged a larger percentage decline for barley than wheat. Timing of planting rains is critical for the size of the 2023/24 winter crop plantings. The 28MMT 2023/24 wheat crop is a reasonable starting point for the 2023/24 preliminary numbers. The planted area has been high on the past three seasons because of early, general rains.

Ocean Freight and Export

Another 1MMT of wheat was added to the shipping stem in the past week. This included 390KMT in Western Australia, 320KMt in New South Wales and ~160KMT in Victoria. East coast wheat exports now seem to be focused on milling grades after the early feed wheat shipments. There was also 225KMT of barley added to the stem including 165KMT from Western Australia and 60KMT from South Australia. Just over 210KMT of canola was added to the stem in the past week with about 150KMT in Western Australia and 60KMT from New South Wales. Overall, wheat and canola exports are moving very quickly while barley is slower.

Freight markets were flat last week, even with market shorts bidding up capacity for nearby slots. It feels as though there is a market consolidation and the nearby could see rates a little weaker. There is a massive difference between the index and paper at the moment with the physical index lagging almost USD2k stronger than the paper market for March’23. This implies the market will see a minor push. However, there seems to be more capacity available which contradicts that theory hence we see quotes move sideways for the nearby.

Australian Weather

Central Queensland saw good rainfall last week, which will benefit sorghum crops. Southern Queensland received a storm on Saturday which dropped 20-80mm across the growing region. This will benefit subsoil moisture for summer crops. New South Wales saw 30-50mm, but the southern growing regions and Western Australian saw no rain.

AUD – Australian Dollar

The Australian dollar was sharply weaker last week when valued against the Greenback closing the week at 0.6580. Last week the Australian Dollar fell as the Reserve Bank of Australia (RBA) and Federal Reserve had differing views on monetary policy and high beta risk assets met headwinds going into the weekend. The Reserve Bank of Australia raised interest rates for the 10th consecutive meeting, with rates now sitting 3.5 per cent above where they were when the rate rise cycle began. It’s worth noting that recently financial markets were pricing in a cash rate as high as 4.35 per cent.

The post Basis Commodities – Australian Crop Update – Week 11, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 10, 2023

Tue, 07 Mar 2023 10:34:00 GMT

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

Big crops get bigger, and this has certainly been the case with Australia’s 2022/23 winter crop. The crop production forecasts across the board are higher following the harvest receival data showing Australia’s 2022/23 national wheat crop at 38.55MMT, the barley crop at 13.75MMT and canola at 7.8MMT. It’s a record large winter crop harvest, comfortably exceeding last year’s harvest. This was achieved with the massive crops in WA and SA, as well as big crops in Vic and Qld. These offset the smaller harvest in NSW where the excessive wet resulted in a lot of crops not being harvested along with eroding yields.

The Australian markets moving forward will be a function of exports, shorts and the prospects of a drier season in 2023/24. Australian grain prices have ignored most of the selloff seen in the US and French markets over the past week or so. Traders and exporters have absorbed most of the price decline.

Australian exporters have enjoyed very healthy export margins over the past 12 months and are giving back some of this margin against the Mar/Apr/May’23 sales to pare back shorts. This is evident on the ASX/A$ chart below which has rallied more than $30/MT over the past couple of weeks. Farmers are cashed up following the third consecutive record winter grain harvest. We estimate that farmers are 5-7% behind last year on wheat sales. This may not seem a lot, but when you look at it against a 38.5MMT wheat crop it’s about 2.7MMT which equates to a month of exports. Farmers are also wary of the possibility of a drier season ahead and have been more cautious on the selling programs.

Australia is well into the 2022/23 export season. The overall export pace is higher than 2021/22 at the same time, but there are some variations. Part of this was due to the carryover stocks from 2021/22 which allowed a quick start for the 2022/23 export program. Australia’s combined wheat, barley and canola exports for the Oct/Nov/Dec’22 was 10.15MMT which is more than 2MMT higher than the same period a year earlier. Half of this increase was canola which was 1.8MMT in Oct/NovDec’22 up from 0.82MMT a year earlier. The Oct/Nov/Dec wheat exports were up 1.3MMT on a year earlier, but the barley shipments were about 250KMT less. The shipping stem offers a good idea of what the Jan/Feb/Mar’23 shipping pace will be. It is forecast that the total wheat, barley and canola shipments for the Jan/Feb/Mar’23 will be similar to last year’s 12.3MMT.

Pulse Market Review

The Australian Pulse market moved sideways last week as little new international interest was reported. The weather outlook suggests a decline in rainfall in the autumn months and it is expected that planting intentions will be determined within the next few weeks as farmers look to grow the most appropriate crop for the upcoming season. In Australia, Pulses are recognised for the role they can play in improving subsequent cereal yields, by breaking the cycle of cereal root diseases while maintaining soil fertility. Pulse crops are able to ‘fix’ nitrogen when growing and although most of this is stored in the grain and therefore removed when the crop is harvested, the plants have not taken this nitrogen from the soil and so the need for nitrogen fertilisers is reduced. This combination of higher soil nitrogen and reduced root diseases is cumulative and can result in a dramatic increase in subsequent cereal yields.

Ocean Freight

Positivity is still the name of the game, but it feels like the market is in a period of consolidation and digestion of the rapid advances of the last couple of weeks. Whether this is a plateau before rising again is a moot point – it doesn’t feel like there is a huge change on the supply and demand equation beyond a shortage of ships in Southeast Asia across all sizes. We still note that Chinese controlled tonnage is being pushed in the market which we feel indicates the underlying situation in China is not healthy. Furthermore, this suggests that when the current Indonesian coal export push peters out, as it is very likely to do when the effects of the Indian monsoon arrive in May, then we will see the freight market ease off. We maintain that China is the biggest influence on the freight market so when it looks subdued, then that will hold the key to where the market is ultimately going.

Over the last week, vessel rates continued on their upward trajectory until Thursday and then we saw it activity diminish, a situation which persists into early this week. Bunkers also reversed and headed upwards again which underlined the market positivity for the voyage cargoes. It remains difficult for operators because period numbers, already a solid premium to spot, have been pushed again and so have maintained their spread versus spot.

Australian Weather

The Australian Bureau of Meteorology’s (BOM) latest Climate Outlook details that most of Australia will see a drier and hotter than normal autumn. This is largely a condition of the weather patterns that have been in place for the summer months where Australia’s cropping areas have seen below average rainfall. Only the tropical north received above average rainfall through summer during its wet season. BOM said there is a 60-80% chance of most of Australia seeing below median rainfall with a similar chance of above median maximum temperatures.

This suggests that Australia’s 2023/24 wheat crop is likely to fall back to 25-26MMT with the drier season outlook. Most crop forecasters have the crop higher, however it is anticipated that the national wheat crop will fall below 30MMT with a return to a normal yield on the weather forecast for a drier and warmer season.

AUD – Australian Dollar

The Australian dollar was weaker overall last week valued against the Greenback. The AUD/USD jumped from weekly lows below 0.6700 and climbed 0.44% on Friday. Factors like a risk-on impulse and an offered US Dollar (USD) keep the Australian Dollar (AUD) positive. The AUD/USD is currently trading at 0.6737. Looking ahead and all eyes this week will be on the Reserve Bank of Australia (RBA) official cash rate announcement. The Reserve Bank is expected to lift the cash rate for the tenth consecutive time to a decade-high 3.6 per cent on Tuesday in a move that could be followed by at least two more this year if the bond market is right. This will move the AUD higher against the USD.

The post Basis Commodities – Australian Crop Update – Week 10, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 9, 2023

Tue, 28 Feb 2023 10:29:00 GMT

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.

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.

The post Basis Commodities – Australian Crop Update – Week 9, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Hay Update – Monday 26th February 2023

Mon, 27 Feb 2023 22:43:00 GMT

The Growing and Bailing season for the Australian hay industry has concluded for the 2022/23 season. It is around this time that production numbers and quality can be quantified, and the results of the season are reported. The total production for the 2022/23 season is estimated at 11.2MMT of fodder production with an exportable quantity of 950TMT. The bulk of the tonnage will head to traditional markets such as Japan (450TMT), Korea (250TMT), Taiwan (100TMT). China (140TMT) & Middle East (10TMT).

This growing season showed significant promise with Victoria and South Australia starting off very well with good rain and ideal growing conditions throughout the plant growth stages. Yields appeared to be heading towards average and quality was looking positive. During the latter part of October and early November, after the hay was cut, significant rainfall was received prior to bailing leaving that hay quality severely affected. Much of the Victorian and South Australian hay failed export quality with high NDF, low WSC and visually very poor. This unfortunately meant that Victorian and South Australian production was excluded from the export balance sheet for this season.

The growing season in Western Australia however started off positively with timely rain and good conditions throughout the plant growth stages. Yields were well above average and cutting/bailing conditions were positive providing export grade hay. While there were some areas that will be rain affected, only a portion of the production was damaged and the bulk of the export capacity for Australia for this season will come from the West. The challenge now is the limited supply that is available due to the high demand from traditional markets in Asia.

During February, BALCO Australia announced their expansion into Victoria with the purchase of a hay packing facility in Raywood. This acquisition will provide a further 80,000 tonnes of annual capacity for BALCO increasing their total annual export capabilities across their three sites to 300,000 tonnes. With BALCO Australia’s ever-growing presence in the Middle East, this acquisition will provide further support and price competitiveness into the region.

Importers are encouraged to speak with Basis Commodities about their requirements so a quality profile can be created to program deliveries without disruption with BALCO Australia.

Please contact Nader Hassan or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
M: 0408 308 908
E: steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

Sign up for our mailing list.

If you’d like to be added to our mailing list and receive these updates direct to your inbox each month, email info@basiscommodities.com with your name and email address.

The post Basis Commodities – Australian Hay Update – Monday 26th February 2023 appeared first on Basis Commodities .

Balco Australia Acquires Victorian Site

Tue, 21 Feb 2023 22:51:00 GMT

MEDIA RELEASE FROM BALCO AUSTRALIA – https://balco.au/

We are excited to announce our expansion into Victoria with the signing of a binding, conditional agreement with Wingara AG Ltd (“Wingara”), for the purchase of all assets and operations of a facility in Raywood, Victoria.

Rob Lawson, Balco Australia CEO, said the purchase is a key step forward for the Company in working towards achieving our five-year strategic plan and would allow Balco to supply its customers with hay from multiple geographic locations.

It is anticipated that the deal could add a further 80,000 tonnes of annual capacity out of the Raywood facility following proposed upgrades of the press and site.

The deal ensures the employment of local staff operating the Raywood facility, and the sales channel for growers in the region, continuing Balco’s long-held commitment to secure local employment opportunities and support regional communities.

“ With Victorian growers on board, we will have an even wider product range for our global customers. ” Said Rob.

Rob said 2022 was a year of extensive planning and restructure of Balco Australia to facilitate a significant phase of business growth over the next five years. “ The acquisition of the Raywood facility is a perfect fit in the roll out of our national expansion strategy. ”

While supply of 2022 season hay is limited, we have positioned ourselves for increased volume purchased from 2023 onwards. Our Procurement Team will be working hand in hand with Victorian growers to establish contracts securing tonnage of high quality, Victorian hay.

We look forward to discussing any questions you may have in depth with you, however, can assure you that the quality and service provided by Balco will continue to be of the highest quality and standard and the Victorian plant will be managed to the same standard of Bowmans and Brookton.

We are thrilled to be able to share this with you and look forward to discussing how you can benefit from our expanding network of geographically diverse hay.

Balco Australia

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Basis Commodities – Australian Crop Update – Week 8, 2023

Tue, 21 Feb 2023 22:41:00 GMT

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

Australian Weather

Ocean Freight

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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Basis Commodities – Australian Crop Update – Week 7, 2023

Wed, 15 Feb 2023 22:37:00 GMT

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

Australian domestic markets were firmer in most areas on domestic and exporter short covering. The choppy price patterns continue as buyers push values higher at the regional level on short covering before pulling bids back when square.

Wheat and barley both strengthened last week. Barley values were firmer with exporters hopeful the meeting between Australia and China’s trade ministers may lead to China ending its unofficial ban on Australian imports. Comments following the meeting were encouraging but also flagged no immediate changes and that progress may take time.

Australian Export Data (ABS) to end December

Australia exported 2.667MMT of wheat, 1.08MMT of barley and 0.884MMT of canola in December. The combined monthly wheat, barley and canola exports for December were 4.635MMT which is 550KMT more than last year’s monthly high set in March 2022.

Wheat:

China accounted for 859KMT of the December wheat exports. Indonesia was the next largest with 381KMT followed by South Korea with 299KMT, then the Philippines with 294KMT and Vietnam taking 177KMT. Australia has shipped 1.65MMT of wheat to China in the first quarter of the new marketing year.

Barley:

There was 535KMT of barley exported to Saudi in December. Japan was the next largest with 178KMT. Interestingly a panamax also went to Iran.

Sorghum:

Exports fell to 48KMT from 107KMT in November with China accounting for most of this.

Canola:

Most of the 884KMT canola exports in December went to Europe. Other notables were 117KMT to Pakistan and 65KMT to the UAE.

Shipping Stem & Ocean Freight

It’s been a busy week for shipping stem additions in Australia with 1.4MMT of wheat, barley, canola and lentils put added in the past week. This included nearly 1.1MMT of wheat, 284KMT of barley and 48KMT of canola. Most of the vessels added were for March shipment.

The freight market had a sense of “same again” last week but we feel there is definitely a slow burn on sentiment that hasn’t quite reached the critical point yet. Tonnage lists are slowly tightening – especially in the Pacific and charterers are quietly hedging their bets by fixing forward off market. It remains the case that owners want premiums to fix business more than two weeks forward but likewise they are quick to drop their rates when they have a ship to fix in the next 7-10 days. Optimism on the forwards but pragmatism on the nearby. The FFA market has been very up and down but the premiums for forward are consistent. Owners have kept their nerve for period tonnage and are holding out for numbers that reflect a strong premium over todays rates ($14kpd for 1yr tc on 38kdwt vs $9.5kpd on pac rv….). For those keen to take periods – and there are numerous operators looking for physical cover at the moment – indexated deals seem to be in vogue so they are sacrificing the potential forward profits in order not to take too big a hit up-front.

Pulses

Lentil exports were 166KMT in December. India took 87KMT, Bangladesh 36KMT and then the UAE with 24KMT. Chickpea exports for December were 70KMT with 37KMT of this shipped to Bangladesh and 20KMT to Pakistan. Faba bean exports in December were 24KMT.

Jumps in export figures for all pulses reflect new-crop availability and compressed early shipment demand created by a harvest that was slow to start and rain-delayed.

Currency

The Reserve Bank of Australia has increased rates for the first time in 2023, by an expected 25 basis points (0.25%) to 3.35%. This is the highest level of interest rates since 2012. The AUD is currently sitting just under .70 US cents.

Australian Weather

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Qatar, UAE, Oman and Egypt Tour

Tue, 14 Feb 2023 00:20:00 GMT

Over the past two weeks, our new General Manager of Basis Commodities Consulting DMCC Nader Hassan and Managing Director Chris Whitwell have been visiting grain and fodder customers in Qatar, UAE, Oman and Egypt. This trip was the first of several planned trips throughout 2023 for the Basis Commodities team and will play an important role in continuing to improve our understanding of the demand and quality requirements of our valued customers within the region.

“We had a very positive trip to start 2023 and it was a great time to discuss the Australian new crop profile with our clients as well as visit new dairy and fodder clients on behalf of our fodder partners Balco Australia ,” said Chris Whitwell.

During the trip to Qatar, both Chris and Nader visited Salalah Flour Mills. In the photo below, Managing Director Ahmed Dahab is seen in a discussion with Nader Hassan in front of their stone mill.

The Basis team also visited Alexandria Port, Egypt to review preparations for a stock management agreement that was put in place for one of our clients.

The team at Basis Commodities continues to extend the reach and support for our clients and we look forward to seeing you at next week’s Gulfood between the 20 ^th and 24 ^th of February 2024 at the Dubai World Trade Centre. Please feel free to contact Chris or Nader on the details below to arrange a meeting.

Chris Whitwell
M : +61419833356
E: Chris@basiscommodities.com.au

Nader Hassan
M: +971566915688
E: nader@basiscommodities.com

For more information on Gulfood, exhibitors and how you can attend, visit https://www.gulfood.com/ .

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Basis Commodities – Australian Crop Update – Week 6, 2023

Tue, 07 Feb 2023 22:33:00 GMT

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.

Domestic grain bids have been variable across Australia over the past week. Domestic markets on the east coast remain thin and tight, which is keeping values supported. Farmer selling remains slow, particularly for barley. While farmer sales have been slower than normal for this time of year, there are signs selling is improving with a firmer tone in domestic bids.

Grain exporters have been sniffing around for H2 wheat against recent sales into Iraq. Asian feed grain buyers are maximising volumes of feed wheat at current prices with another couple of cargos sold into South Korea last week at $340/MT cost and freight for a June/July shipment.

Southern and Central NSW received 15-25mm of rain over the past week which is keeping soil moisture levels wet ahead of new winter crop planting in 8-10 weeks.

Australia’s extended climate outlooks are returning the normal with the La Nina pattern set to fade, after more than six months of wetter than normal outlooks. This was confirmed in the BOM’s latest climate outlook statements. For February, most of the country has close to equal chances of above or below median rainfall. For February to April, most of the country has close to equal chances of above and below median rainfall. But it hasn’t shaken the La Nina pattern completely.

Shipping Stem and Ocean Freight

It was a solid week for the Australian shipping stem, although the total volume of grain added was down on the previous two weeks.

One of the most interesting observations was the volume of pulses added out of South Australia (SA) and Victoria (VIC) over the past two weeks, with 200KMT of lentils put on the stem. 108KMT of this was added in SA alone last week. We have also seen 70KMT of Faba beans over the same time period.

For wheat, there was 435KMT added to the stem over the past week, down from 880KMT in the previous week. There was also 175KMT of canola and 107KMT of barley.

ABS will be out with Australia’s December grain exports this week which is expected to show near record shipments out of Western Australia and SA as the shipping pace gains traction.

From an ocean freight perspective, last week saw the first real trading days post the Chinese New Year holidays. The market was talked notionally firmer, but it is very hard to tell whether this is reality or just positive sentiment from the last month pushing into a self-fulfilling prophecy. The Pacific is more positive than the Atlantic, although that might easily be attributed simply to regional players being behind their desks again. Bunker prices have also risen substantially over the past two weeks, which has taken a lot of the “dip” out of the market.

Australian Dollar

The AUD tumbled below 70 cents on Friday night after the US dollar surged higher on the much better than expected January jobs numbers.

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Basis Commodities – Australian Crop Update – Week 4, 2023

Wed, 25 Jan 2023 22:30:00 GMT

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.

The Winter crop harvest across Australia is almost complete with the Victorian harvest winding down in the Wimmera, Geelong and Western Districts. Traders are reporting that several private storages were redirecting grain deliveries to alternative sites after their own storages filled.

Southern Queensland growers are anxious for another rain for sorghum crops with paddocks drying out sooner than expected from last year’s deluge. Early planted sorghum is in good shape and on track for above average yields but later planted crops need rain in the coming weeks. Harvest is expected to start in the coming weeks.

Domestic markets were quiet but weaker last week as exporters pulled bids back in line with overseas weakness, but it does not appear to be getting any easier to secure grain from the farmer.

There is a real contrast between the domestic markets and the export-orientated track bids. The east coast domestic markets remain firm on short covering and slow farmer selling. Deferred offers are scarce. The exporter driven track bids have fallen $20-40/MT across Queensland, New South Wales and Victoria in the past four weeks or so, with smaller declines in South Australia and Western Australia. The biggest declines in the east coast have been in the milling wheat grades with the smallest in the feed categories. Canola bids fell by a further $30-40/MT last week across most zones with the declines in Canada and the Matif as well as news out of Germany about proposed regulation changes to biofuels legislation.

Exporters continue to sell Aussie feed wheat into Asia at $340-345/MT cost and freight levels which is about $10/MT above South American corn. It was interesting to see that Thai buyers bought a cargo of feed wheat for Mar/Apr at $340/MT cost and freight which is likely to be sourced from Australia. They also secured a second cargo at $325/MT cost and freight for a July shipment which coincides with the arrival of safrinha harvest in Brazil. We think this sums up the export market well. Global buyers see values getting cheaper in the second half of 2023. This is making it difficult for exporters to put on sales at the margins they became accustomed to through the 2022 season, putting pressure on export margins. All of this is further complicated by slow farmer selling who are holding off for higher prices, or for tax reasons.

Local prices will be driven by global relativities in the coming months. Slow farmer selling just means the exporter becomes more cautious about making further sales if they haven’t already got the coverage. Global buyers source supplies from someone else as we see East Africa switching back to Black Sea supply. Domestic buyers don’t have this luxury.

Barley prices have retained a bid side feel supported by continued speculation about an end to punitive Chinese import tariffs. Australian and Chinese trade ministers will meet for the first time since 2019 following a breakthrough on the sidelines of the Davos forum in Switzerland last week.

Shipping Stem and Ocean Freight

The past week represented the largest week of shipping stem additions in a couple of months. There was 1.3MMT of wheat, barley and canola added in the past week as well as some legumes in South Australia. Most of the additions were wheat (930KMT) with more than half of these in Western Australia. Barley additions were steady at 240KMT. The monthly breakdown of the shipping stem by departure dates shows that exports are now running at near capacity for January and February with strong wheat, barley, and canola shipments. Australia is seeing solid feed wheat demand into Southeast Asia at around $340/MT Cost and Freight levels, and this is limiting the downside of ASW (Australian Standard White) wheat in the west.

On ocean freight, there is not much new to say this week with the Year of the Rabbit upon us and activity at a bare minimum. For those of us still left in the office, the only point of discussion is the same as the last 2 months… what will happen after the holidays? There is an almost universal expectation that the freight market will bounce purely on sentiment alone, however that is where the agreement stops. Depending on where you are sitting in the market, there is a 50/50 split over whether the ocean freight will improve or collapse back down to current levels.

The bottom line is, no-one really knows what will happen, but it is notable that we are seeing plenty of period demand from operators. However, even here there is a caveat, in that operators are happy to fix index linked deals despite the currently low market environment…They are hedging their bets both ways.

Australian Dollar

From a year-end level near 0.68, the AUD/USD has spent some time above 0.70 already this year, aided by a weaker USD and big Chinese Yuan gains, the latter as markets moved to price in a quicker China growth rebound from the end of its zero covid strategy. Our bankers NAB (National Australia Bank) now see AUD/USD spending much of the first half of 2023 above 0.70, with their end-Q2 forecast at 0.74. The AUD is now seen moving into a 0.75-0.80 range in the second half of 2023! Others are a little less bullish and certainly it feels like we are only in the foothills of this global recession which in theory should see the USD re-emerge at some point.

The post Basis Commodities – Australian Crop Update – Week 4, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Hay Update – Monday 23rd January 2023

Mon, 23 Jan 2023 01:14:00 GMT

With the 2022/23 growing and baling production behind us, Australia now focuses on exporting what fodder was produced this season. Many regions within the country have suffered greatly due to flooding and the eastern hay crop has been removed from the balance sheet for exportable quality. Much of this year’s exportable crop will leave from Western Australia through Fremantle port with lower grades available through South Australia via Adelaide port.

Total production is estimated to be 11.2 million metric tonnes of fodder this season with only approximately 900,000 metric tonnes available to meet export grade. This is due to the untimely rain received in the eastern and southern states. Much of eastern Australia’s domestic demand this year will be serviced by last season’s hay as many growers decided to take advantage of high wheat and barley prices, therefore did not plant oats for hay production.

The demographics of feedlots as well as the human population is greater in the eastern states of Australia, while in South Australia and Western Australia, most of the oaten hay and other folder types are grown specifically for the export market as there is not a large domestic demand.

Ocean freight for the first quarter of 2023 has seen some relief with shipping lines either holding rates as they are or passing on small reductions. Unfortunately, this does not translate into closing the gap between the European and Australian competition for fodder into the Middle East.

With China resuming normal activity and moving towards herd immunity, away from a zero covid policy, it is expected that the world economy will recover and ocean freight pricing will follow with greater economies of scale and better rates.

The Australian Dollar has appreciated against the USD over the last six weeks and rests at .7000. This level is widely considered good for both importers and exporters within Australia.

Despite the challenging growing season, Australia is still in a good position to support the Middle Eastern market with quality oaten hay for the dairy and equine industries.

Basis Commodities work closely with Balco Australia to export Australian hay into the Middle East. For more information on Balco Australia and its operations, watch this short 1.41 minute video.

Importers are encouraged to speak with Basis Commodities about their requirements so a profile can be created to program deliveries without disruption with Balco Australia.

Please contact Nader Hassan or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
M: 0408 308 908
E: steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

Sign up for our mailing list.

If you’d like to be added to our mailing list and receive these updates direct to your inbox each month, email info@basiscommodities.com with your name and email address.

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Basis Commodities – Australian Crop Update – Week 3, 2023

Fri, 20 Jan 2023 02:53:00 GMT

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.

The Australian cash markets saw milling wheat grades moving lower while feed grains moved higher. Western Australia (WA) was the exception where the bids were little changed for the week. Stronger feed grain values are a combination of the New South Wales (NSW) crop situation and slow farmer selling. The decline in the NSW crop vs last year, combined with the quality profile of the harvest has significantly tightened the east coast feed grain balance sheet compared to last year. The other notable change is the quality profile of the crop with more barley making malting quality in NSW this year.

In WA, CBH said harvest deliveries topped last year’s record of 21.3MMT late last week. We have raised our WA wheat forecast by 0.8MMT to 13.8MMT.

In South Australia (SA), Viterra’s total grain receivals for the 2022/23 season are already a shade over 8MMT. This is more than a third more than last year’s final grain deliveries into the Viterra network, with several more weeks of harvest remaining in some areas. We have lifted the SA wheat crop forecast to 7.1MMT from 6.8MMT previously and edged Victoria higher on the back of the SA performance to 5.5MMT.

The net adjustments raise the Australian 2022/23 wheat crop by 1.2MMT (3%) to 37.7MMT.

We have included an update of the state wheat supply and demand below with the larger wheat crop. Note, our wheat exports are smaller than USDA at 25.9MMT because of the state configuration of the crop and limitations in export capacity at the state level.

In terms of crop profile we have updated our numbers as follows :-

Ocean Freight
We could easily copy and paste last week’s report again with sentiment dominated by a feeling nothing will happen until after the Chinese New Year.

The most interesting point over the last week has been bunkers rising about $50pmt across the board – now back over $600pmt for Singapore delivery.

The post Basis Commodities – Australian Crop Update – Week 3, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 2, 2023

Wed, 11 Jan 2023 01:19:00 GMT

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.

Happy New Year and welcome to 2023. We hope you all enjoyed the festive period and made time to relax with family and friends. We’re looking forward to a fantastic year ahead!

The past week offered our first real look at the domestic markets for a few weeks with most traders returning from the holiday period. Domestic markets were broadly lower with the declines in overseas markets.

Given this is our first report of 2023, it is best to assess market activity in terms of the changes witnessed over the past three weeks.

Barley bids have strengthened considerably while wheat is a little softer, which along with a stronger AUD, has seen a consolidation in barley values in US$ terms. Farmer replacement barley from Kwinana and Adelaide has climbed by $25/MT in the past month. The timing of the relative increases in barley values coincides with the increased optimism for a resumption of trade with China following the meeting with Penny Wong and her Chinese counterpart in Beijing. While nothing has been confirmed, exporters are pricing a change in policy, after the Chinese New Year. Although there is nothing official, the tone does seem to have changed. Chinese state-owned coal importers are making inquiries about pricing Australian coal, and meat is again being sold in Chinese shops. As a side note, it seems to us that the Chinese are the masters of commercial pragmatism – witness ongoing Australian wheat imports and South American Corn. Australian Feed Barley is the cheapest global feedgrain by a country mile so the motivation for a change would seem to be there!

Wheat prices have been mixed over the past month depending on the zone. Western Australia’s higher protein wheat bids have strengthened relative to ASW, which represents the bulk of the crop this year as it did last year. 68% is ASW or GP as per CBH latest receival report.

Harvest is wrapping up in most areas with only the latest production areas still going. The national harvest is 90-95% complete and we can start to analyse what it is telling us.

Note that there are some differences between the national crop estimates appearing with NAB Bank leading the charge at a whopping 42MMT. Our Analysts have raised their wheat number to 37.7MMT.

Yields have been very good in the northern half of Western Australia but not as good in the south where they suffered from dry weather early in the season. Wheat deliveries are only marginally higher than last year, and the harvest is ending. Production problems and abandonment in New South Wales (the second largest production state) have also limited the upside to the Australian crop. A smaller NSW crop is offset by the larger crops in Queensland, Victoria, and South Australia.

In terms of crop profile we have updated our numbers as follows :-

Shipping Stem and Ocean Freight

Shipping stem additions have been solid over the Xmas / New Year period. There has been 2.4MMT of wheat added to the stem in the past four weeks including the past week. Close to 0.5MMT of barley and 0.4MMT of canola has been put onto the stem in the same period. West and South Australia, as the main export states, have accounted for the bulk of the additions. East coast additions have been slowed by the delayed harvest but are improving, although internal logistics are still a challenge.

In terms of ocean freight, the expected weakness has continued into the new year. Right now, we are caught in the middle of that period at the end of the western hemisphere seasonal holidays but prior to the early Chinese New Year where, it would seem, there is little incentive to get on with anything. That said, there remains a widely held perception that the market will follow expectations and firm again immediately after the Chinese New Year. Any operators stuck with ships open in the next two weeks are taking any rate they can get. The caveat is of course that these rates are at the bottom of the barrel and only available for quick vanilla business. Owners are holding out (relatively) on longer haul fixtures or anything perceived as difficult with forward paper now a premium for all periods.

It should also be noted that global container freight rates are also back down toward the pre-pandemic lows as the Container Freight Index below shows.

Australian Currency

The AUD$ was higher into 2023 with a weaker USD$ but also optimism of a thawing in trade relations between Australia and China pushing it about 69 cents to the USD.

The post Basis Commodities – Australian Crop Update – Week 2, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 51, 2023

Wed, 21 Dec 2022 03:02:00 GMT

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.

Another week of mostly fine weather made for another big harvest week last week. As of the 12th of December, the main bulk handlers had received over 24MMT of grain. There have not been any major changes in the harvest patterns over the past week. We continue to see big yields (record or near record high) for Western and South Australia.

In New South Wales, farmers are wrapping up in the North and Central West with reports of lower than expected yields. Numerous farmers have said that crops looked 3-4 t/ha, but most have come in in the low 2’s or even lower. There has been a lot of vegetation, but yields did not match the vegetative mass as the excessive spring moisture took its toll through the pollination and filling. Quality has been variable. The protein has been reasonable but there are lower test weight, falling number and screenings issues which will provide opportunities to those buyers who are prepared to be flexible with specifications.

GIWA (Grain Industry of Western Australia) released its December crop estimates this week which pegged the total 2022/23 winter grain gravest at 24.7MMT up from the 24.0MMT last year. They said grain yields in many cases were record high and this justifies the larger crop forecasts, wheat proteins were lower due to the dilution effect of the high yields and other quality parameters were good with low screenings and high-test weights. As expected, wheat proteins were also lower than normal last year.

In the cash markets wheat bids were firmer with the recovery in futures and a weaker Aussie dollar.

Ocean Freight

It feels like Asia has signed off for the year with many market players already travelling for an elongated break. At risk of sounding like a broken record, Asia has gone sideways again over the last seven days. There is enough business to prevent the market collapsing but not sufficient to stop it easing. China remains quiet on spot business. There has been a steady flow of Australian grain cargoes into Indonesia and Philippines for Q1 but in a busier and more interesting market these would not warrant a mention!

Merry Christmas and Happy New Year

As we wrap up for 2022, we’d like to wish you, your families and loved ones a very Merry Christmas and Happy New Year. For those who celebrate at this time of year, we hope you all enjoy the festive period and have time to relax with family and friends. We look forward to working with you in the new year and beyond.

The post Basis Commodities – Australian Crop Update – Week 51, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Hay Update – Friday 16th December 2022

Fri, 16 Dec 2022 04:05:00 GMT

The Australian hay season has been summarised to date as two sides of a coin. East coast and Southern states hay received significant untimely weather over the course of the growing season which has pushed yields higher but downgraded quality reducing the export options. On the other side of the coin, in Western Australia, the season has been exemplary, producing high-quality hay suitable for the export market.

In a typical season, Australia will produce approximately 12 million metric tonnes of oaten hay and of this, 1.2 million metric tonnes are suitable for export. Over the past two years, with the impacts of Covid, equipment availability and ocean freight rates have made it prohibitive to export Australian hay into the Middle Eastern market. We are seeing relief, however with ocean freight lines softening freight rates by quarter 1 / quarter 2 of 2023. Freight rates are expected to reduce by 10 to 15% for the European/Persian Gulf trade lanes.

The states for hay production in Australia are primarily New South Wales, Victoria, South Australia and Western Australia with the majority of exports leaving from Melbourne, Adelaide, and Fremantle Ports. New South Wales and Victorian production play a larger part in the domestic markets with the population density and the majority of livestock managed in the eastern states. South Australia and Western Australia however have a lower domestic demand but across the two states, they produce approximately 75% of the exportable crop hence they are critical for Australia’s exports to international markets.

In an average season, Australia will export 450 thousand metric tonnes of oaten hay to Japan, 300 thousand metric tonnes to Korea, and 100 thousand metric tonnes to Taiwan, and despite the licensing restrictions, there are still approximately 100 thousand metric tonnes heading into China. With the challenging seasons on the east coast and south of Australia, demand for the high-quality Western Australian oaten hay will be strong and prices will remain firm for the new season.

The Middle Eastern dairy industry has substituted between European origin oaten hay with different grass types from Sudan coupled with US alfalfa. With quality concerns of the Australian season thus far, there will still be an exportable surplus to go into the Middle East from Q2 of 2023 onwards.

Basis Commodities work closely with Balco Australia to export Australian hay into the Middle East. For more information on Balco Australia and its operations, watch this short 1.41 minute video.

Importers are encouraged to speak with Basis Commodities about their requirements so a profile can be created to program deliveries without disruption with Balco Australia.

Please contact Nader Hassan or Steven Foote, who are available to support any fodder needs for the season.

Steven Foote
Sydney, Australia
M: 0408 308 908
E: steven@basiscommodities.com

Nader Hassan
Dubai, UAE
M: +971566915688
E: nader@basiscommodities.com

Sign up for our mailing list.

If you’d like to be added to our mailing list and receive these updates direct to your inbox each month, email info@basiscommodities.com with your name and email address.

The post Basis Commodities – Australian Hay Update – Friday 16th December 2022 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 50, 2023

Wed, 14 Dec 2022 02:58:00 GMT

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.

Australia’s winter grain harvest is now progressing quickly after the slow start. All the major storage companies are reporting strong weekly grain deliveries and the fine weather over the past week will ensure this trend continues. Queensland harvest is nearly complete. New South Wales is about 30% complete with wet subsoils slowing harvest progress. Victoria is just getting under way, while South and Western Australia are progressing quickly and are both over half done.

Yields remain good, but wheat proteins are lower than normal. In New South Wales, wheat quality is variable but there has been more protein than expected. This has allowed domestic millers to access protein wheat and so for time being, protein spreads are under pressure. We feel this is an opportunity international consumers should look closely at.

Farmer selling has slowed with the decline in local prices as domestic supply and quality concerns ease. There are no accurate measures on farmer selling, it is subjective by its nature, but it is fair to say growers were already behind the normal selling pace leading into harvest and falling values is slowing sales through the harvest window. Our take is that farmers will exit harvest with less of the crop sold in percentage terms than in other years.

Track markets in most states were softer. The track market largely reflects where the exporter buying interest is. We get the impression that exporters are struggling to make further sales at the export margins they have been accustomed to in recent times. The combination of falling global wheat prices, slow farmer selling and importers who are keeping their demand spot and are seeing cheaper Russian wheat and lower ocean freight is likely to continue to pressure margins. This can be seen in the narrowing spread between Australian and Russian wheat quotes (see chart below). On the exporter side there is a reluctance to offer and therefore we are working hard with our customers to provide aggressive bids to start the conversation with sellers.

Crop Profile Update

Given the above, our analysts have made some small changes to the expected crop profile by increasing the AH2 and APW volumes expected in Queensland and Northern NSW. This would leave a quality exportable surplus from this region.

Pulses

As with grains and canola, the yields for lentils and beans have been very good so far. Lentils, like canola have been a grower favourite this year and we are told the quality has held up reasonably well in South Australia. The situation on Fava Beans is a little more unclear. The yields are good and there will be plenty around post-harvest, but quality continues to have growers and sellers worried given the rain and potential for disease, so the market remains at a standstill. There is a bean bulk cargo on the stem for January and this is likely to be seen as a litmus test for other exporters who, given the late harvest, have been moving the export slots back into March and beyond.

December WASDE Summary

US ag markets were mixed after the USDA’s December WASDE failed to offer any big surprises.

Wheat:

USDA kept its US wheat assumptions largely unchanged. They juggled the grade exports but kept the overall US wheat exports unchanged at 21.1MMT with 2202/23 ending stocks unchanged at 15.5MMT.

The global wheat situation was a function of lower supplies and shrinking consumption. Overall global production was cut by 2.1MMT to 780.6MMT. Argentine production was cut by 3.0MMT to 12.5MMT as they accounted for the impact of the drought on crop size. Canada was lowered by 1.2MMT to 33.8MMT following the StatsCan Nov report. This was partly offset by a 2.1MMT increase in the Australian crop to 36.6MMT in line with ABARES. Other major producers were unchanged. Global wheat consumption was cut by 1.6MMT to 789.5MMT, mainly on lower feed use in the EU and Ukraine. World trade was raised by 2.2MMT to 210.9MMT with higher exports from Australia, Ukraine, EU and Russia more than offsetting the smaller exports from Argentina. Australian wheat exports were raised by 1.5MMT to 27.5MMT (we don’t think this will be achieved given the smaller NSW crop which will restrict east coast exports while the big WA crop is limited by export capacity). USDA is expected larger feed wheat exports from Australia into Southeast Asia and South Korea. Ukraine’s exports were raised by 1.5MMT to 12.5MMT on the back of the healthy export pace. Argentine exports were cut by 2.5MMT to 7.5MMT which is the smallest since 2014/15. Russian wheat exports were raised by 1.0MMT to 43MMT, EU was lifted by 1.0MMT to 36MMT. Canada was unchanged at 26MMT.

Corn:

USDA cut US corn exports by 75 mill bu to 2.075 bill bu which is 16% down from last year with the lagging shipping pace. Ethanol and domestic feeding were unchanged. US ending stocks were raised by 75 mill bu to 1.257 bill bu. Further reductions in the US exports will need to happen if the export sales don’t improve. USDA lowered the US farmer corn price by 10 cts to $6.70. bu. USDA also cut the US sorghum exports by 20 mill bu on the decline in imports from China. The smaller exports were absorbed by larger feeding and FSI.

Global corn was interesting. World corn production was cut by 6.5MMT to 1162MMT on the back of a 4.5MMT reduction in Ukraine output to 27.0MMT with the reduction in area and yield. The EU crop was trimmed by a further 0.5MMT to 54.2MMT. South American production forecasts were unchanged with Brazil at 126MMT and Argentina at 55MMT. Global corn exports were cut by 1.1MMT to 181.6MMT. However, Ukraine’s exports were lifted by 2.0MMT to 17.5MMT on the back of the strong shipping pace, despite the smaller crop. Global corn imports were cut by 1.2MMT on the back of smaller imports into Southeast Asia and South Korea which is importing more feed wheat from Australia. World corn ending stocks were cut by 2.4MMT to 298.4MMT which is down 8.7MMT on last year (mainly in the US and China).

Barley:

World barley production was lifted by 0.5MMT to 149.5MMT. This was mainly due to the 0.7MMT increase in Australia to 13.4MMT in line with the ABARES increase. Argentine production was lowered by 0.3MMT to 4.2MMT. World barley exports were trimmed by 0.1MMT to 29.6MMT which is down 3.1MMT (9%) on last year. There were limited changes, although the EU imports were up 0.2MMT to 1.3MMT as they import more Black Sea feed barley because of the smaller corn crop. Thailand imports were cut by 0.1MMT to 0.4MMT. Australian barley exports were raised by 0.3MMT to 7.5MMT while Argi exports were cut by the same amount. China and Saudi imports were unchanged at 9.0MMT and 4.7MMT, respectively.

Soybean:

US soybean forecasts were unchanged from November. Production, crush, exports and ending stocks were unchanged. Based on a review of EPA’s recent proposed rule for renewable fuel obligation targets, soybean oil used for biofuel for 2022/23 is reduced 200 million pounds to 11.6 billion. Soybean oil exports are also reduced on historically low export sales through November. With reduced use of soybean oil for biofuel and exports, food use and ending stocks are raised.

South American soybean production was unchanged with Brazil at 152MMT (+25MMT last year), Argentina at 49.5MMT (+5.6MMT last year) and Paraguay at 10MMT (+5.8MMT on last year). Exports were raised slightly as higher shipments for Argentina are partly offset by lower exports for Canada and Paraguay. Global crush was close to unchanged. Ending stocks were up 0.5MMT to 102.7MMT (+7.1MMT last year).

Canola/rapeseed:

USDA cut Canadian canola production by 0.5MMT to 19.0MMT following the StatsCan report. This wasn’t the full extent of the StatsCan reduction. Canada’s crush was trimmed by 0.2MMT to 10MMT. FWC was up 150KMT to 450KMT. Exports were down 50KMT at 7.90MMT while ending stocks were lowered by 0.4MMT to 1.65MMT. Australian production was unchanged at 7.3MMT and exports unchanged at 5.2MMT. EU and China imports were unchanged. World stocks were cut by 0.36MMT with the smaller Canadian crop but are still 2.5MMT more than last year at 6.8MMT.

Australian Exports

ABS released its October export data late last week. Australia exported 2.042MMT of wheat in October up from 1.78MMT in September. WA shipped 983KMT and then NSW 450KMT followed by Vic with 391KMT. Indonesia was the largest destination with 453KMT closely followed by China with 426KMT. South Korea took 303KMT and Philippines 222KMT.

Barley exports fell to just 247KMT. Japan was the largest destination with 129KMT. Sorghum exports were at 276KMT down from 400KMT in September. China remains the major destination taking 268KMT.

2022/23 Shipping stem

There was 1.1MMT of wheat, barley and canola added to the shipping stem last week down from 1.3MMT in the previous week (largest in 8 months). Weekly additions of more than 1MMT are large given the max monthly export capacity is about 4MMT. There was 684KMT of wheat added to the stem in the past week following the 824KMT in the previous week. There was a further 236KMT of canola added to the stem and 190KMT of barley.

Ocean Freight

Charterers exploited an indifferent market in the last week even though spot tonnage was not so easy to find. This week has continued to be quiet, and we suspect this is the “end of term” feel that typically afflicts the market at this time of year. Freight went sideways in Asia for the second week in a row. Tellingly, there remains a sizeable quota of Chinese controlled tonnage being marketed for business – indicating China demand is itself subdued. As we mentioned last week, the groundswell of opinion suggesting a recovery in freight rates during February is increasingly popular however we are not so sure – the recessionary clouds keep gathering and ocean freight rates are often the canary in the cage with respect to global economic activity.

AUD Commentary

The FX markets remain choppy ahead of the final major reporting week of the year. It seems to us that the AUD is currently range bound between .685 on the upside and .65 on the downside and will take further direction into the new year.

The post Basis Commodities – Australian Crop Update – Week 50, 2023 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 49

Tue, 06 Dec 2022 03:59:00 GMT

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.

We have had another good week of harvest progress this week. Queensland wheat harvest is now more than 80% complete, New South Wales is approaching 33% complete while Victoria is less than 20%. The reported grain quality remains highly variable ranging from milling grades as well as downgraded quality. In truth, we have been surprised at how well the wheat crops in the east have handled the rain in October and November and the volume of the crop that is making milling quality.

That said we are expecting the quality profile of the NSW crop to decline as harvest moves south into the regions that were more significantly impacted by the general 50-70mm in mid-Nov. This was the rain event that dumped 50-100mm across parts of the Central West which is still draining. We are hearing that SFW and GP is the major grade in the western Riverina for instance.

In Western Australia, CBH received 3.4MMT of grain in the week to Sunday 4th December up from 3.0MMT in the previous week. We estimate the Geraldton zone is about 66% complete, Kwinana 50%, Albany 33% and Esperance about 40%. Yields are very good and are supporting a similar crop profile to last year with ASW being the dominant wheat grade. No matter how much fertiliser farmers apply, record wheat yields mean low protein content.

As harvest has progressed and the global market weakened, both futures and cash values have been on the back foot. Local markets were a sea of red. Nothing was immune from the sharp declines, with wheat, barley, and canola particularly, on the east coast and in South Australia. ASX wheat fell $24 (5.5%) for the week to $399.50.

The other notable for Western Australia was the floor in feed barley bids disappeared. Kwinana feed barley bids were off 10% for the week which is the same as SA.

So where to from here? Our analysts put these charts together based on IGC export quotes for just Australian APW, ASW and Russian 12.5 pro wheat.

Australian wheat export quotes (ASW and APW) fell sharply with the declines in US futures helped by the first week of decent harvest progress. Russian wheat prices have been steady over the past few weeks with the quotes nominally holding between the $317-320 FOB range. The function of the market will be to maximise Russian wheat exports and then push more volume into Africa and Asia as more traditional homes are exhausted. Lower ocean freight only encourages this process and this in turn puts more pressure on the price premiums for non-Russian wheat, including Australian. The issue however remains access to logistics and at the risk of repeating ourselves, this is what we are trading. We have just finished a tour through Western and South Australia and the sense we get still is that logistics are tight through to March at least.

From a flat price perspective, what happens to global wheat prices going forward is largely going to be a function of what happens to Russian wheat prices. We see demand largely remaining spot. Russian values should remain well supported particularly if the winter has a negative effect on their ability to ship. Global values will then look at the prospects of the 23/24 northern hemisphere crops as they start to come out of dormancy in March.

ABARES Crop Report & Agscienta Balance Sheet Updates

ABARES has released its December crop report which projected a national winter crop production of 62MMT in 2022-23. Production is expected to reach new records in Western Australia and South Australia following favourable spring conditions in these states. Crop prospects in the eastern states remain high overall including forecasts of record production in Victoria, but widespread losses are estimated in regions affected by untimely record spring rainfall. Crop abandonment in the eastern states due to flooding and extreme rainfall over spring is estimated to total around 16% of planted area in New South Wales, 7% in Victoria and 5% in Queensland. These abandonments are factored into ABARES forecasts through lower state-wide average crop yields, which are calculated on area planted rather than area harvested. Wheat production was forecast at 36.6MMT up from last year’s 36.3MMT. Barley production was forecast at 13.4MMT, slightly lower than last year’s 13.9MMT. Canola production was projected at 7.3MMT up from 7.0MMT last year.

ABARES also expects that flooded and otherwise too‑soggy areas will see declines in wheat quality. So, as most expected, there is likely to be considerably more feed‑grade wheat available from this crop. Also, largely unexpectedly, the drop in milling‑grade wheat supply is likely to be modest.

Pulses

The northern Fava Bean crop is still being harvested with predominantly 2s and 3s seen so far. The Victorian crop has all but been consigned to feed and the SA crop is still a few weeks away from harvest with concern growing about its quality and ability to withstand another rain event.

Lentils seem to have held quality better, being earlier, but there are still some quality issues that need to be managed through carefully. There is little to no farmer selling and the exporters show little or no inclination to get in front of the grower and sell FOB. So for the time being the market watches and waits.

Ocean Freight

The ocean freight market continues to idle along with negative sentiment in the ascendancy for now. For the bulls there are slim pickings. The script runs something along the lines of an early Chinese New Year suppressing market activity until the end of January, then in February, the Chinese authorities will release COVID restrictions and simultaneously stimulate the domestic economy. Commodities will be fashionable again to coincide with greater imports and all will be well. Returning to the present, the most interesting issue is bunkers. They had slipped, but now seem to be heading up again due to the price limitation on Russian oil.

Currency

Uncertainty is in the air, and everyone is feeling the pressure of the days ahead.

At the beginning of the week, Australia released the retail sales data with an unexpected decline of -0.2% vs 0.5% expected. That is making more pressure on the AUD/USD which has weakened -by 0.84% during the week so far. The RBA increased the cash rate by 25bps and the AUD traded sideways. The USD GDP print is expected tomorrow.

The post Basis Commodities – Australian Crop Update – Week 49 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 48

Wed, 30 Nov 2022 15:53:00 GMT

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.

A week of dry weather across the country pulled the domestic cash markets sharply lower last week and that weakness has continued on the back of improved weather on the east coast as well as broader weakness in global markets. The question is how much of this will the owners of export elevators pass onto consumers given they are well sold through to the second quarter of 2023.

Queensland harvest is about 75% complete while NSW is still less than a fifth complete. Grain quality on the east coast was variable. Larger than expected supplies of AH2 have eased domestic miller concerns but expectations were low to start with. Growers will naturally focus on better paddocks first and quality is expected to decline through the NSW central west and southwest which has seen more rain than the north in recent weeks.

In Western Australia, the dry, warm weather also provided a huge harvest week. We understand that CBH received about 3MMT of grain deliveries in the past week which lifts the total harvest deliveries to 6.8MMT. Wheat protein levels have declined as the harvest picks up in the Kwinana zone. A significant proportion of wheat is reportedly ASW1 which is sub 9% protein and as a consequence, the ASW/APW spread has widened at the track level.

Looking forward – The Weather forecast across Australia is increasingly favourable for the next ten days or so. We expect that CBH could receive more than 3MMT of weekly grain deliveries with the warm, dry weather which would be about double the previous week. WA is still on track for a record 23MMT crop with several Geraldton sites already reporting record receivals.

Other states are also making good harvest progress. SA’s Eyre Peninsula will make big inroads into the harvest and activity is picking up in the Mallee. South Australia’s wheat quality has been good so far with a mix of H2, APW and ASW. Queensland and Northern New South Wales will also make solid progress.

The better wheat quality has significantly eased domestic quality concerns for milling wheat which should see the market’s focus return to export driven factors. Indeed, in terms of the cash markets, the protein spreads came under some pressure on the east coast and some FOB sellers of milling wheat have emerged, although the offers remain limited until the southern harvest cranks up and the logistics improve.

With respect to logistics, a slow start to harvest has seen some congestion build in WA, and Eastern Australia continues to face significant risk after the heavy rain and flooding. Freight corridors in some areas are in a state of disrepair, with an estimated 10,000 km of road impacted in NSW. Rail links are not much better with major lines connecting storage sites being impacted by flooding. In early November, a derailed freight train cut a key route from Adelaide to Melbourne for over a week until it could be repaired. This will compound the already slow start to harvest as growers struggle to get heavy machinery into paddocks without being bogged down.

In a precursor to what we may see on wheat when we get further into the New South Wales crop, the Australian Oilseed Federation (AOF) has established two segregations with a tolerance for mouldy seed for the canola Crop. The new segregation allows for 40 mouldy seeds per 1000 seeds compared to the normal 5 mouldy seeds per 1000. The new segregations have come about following consultation with domestic crushers, exporters, and bulk handlers to ascertain the extent of the quality impacts, and to assess options for dealing with weather-impacted canola.

Ocean Freight & Export Stem

There was 930KMT of wheat, barley and canola added to the stem in the past week. 70% of the weekly additions were in WA.

This week may prove interesting as some Indonesian coal cargoes appeared on the market. Immediately owners were trying to push the numbers a little however conflicting with this was news over the weekend of unrest in China and the possibility of falling commodity demand due to further lockdowns. As we write, it’s hard to call how this is going to play out. Owners are talking a good game but without much conviction. The market is volatile, and we are at a low point we have not seen for 2.5 years – in short, players are quite jittery either way

Looking forward, Oslo-based Xeneta. suggests that ocean cargo volumes could fall by up to 2.5% and ocean freight rates will drop “significantly” into 2023.

Currency

In FX markets, the clouded near-term outlook for China and the weaker yuan saw the AUD down 1.5%. The AUD is currently around 0.6652 after ending last week at around 0.6754. That puts the AUD back around levels before the move lower in the USD on Wednesday last week.

The post Basis Commodities – Australian Crop Update – Week 48 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 46 2022

Wed, 23 Nov 2022 16:00:00 GMT

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.

Mostly dry and warmer weather in the coming days is conducive to harvest activity this week. Queensland and Northern NSW will see warm weather before storms arrive on the weekend. Southern areas across eastern Australia are also set for warmer temperatures on Thursday and Friday as well as a generally dry forecast through to the start of December. The delayed start to harvest on the east coast is expected to see a more drawn out harvest in Victoria, and cool and unsettled weather continues to limit harvest progress this week in South Australia. Western Australia’s growing areas received some rains which slowed their rate of harvest progress.

Early wheat quality isn’t offering any major surprises. Proteins are below average with the high yields. High protein grades are scarce and there is plenty of downgraded wheat coming to the market in Queensland and Northern New South Wales. The proportion of the downgraded wheat is expected to climb when the NSW harvest eventually picks up, but there does seem to be a pleasing amount of milling wheat out there. There is some AH 11.5 protein coming off, but very little APH.

Logistics continue to be a challenge as many roads in the North West of NSW remain blocked due to floods. Last week GrainCorp’s total NSW grain deliveries finished at 0.39MMT which is about 2MMT less than the same time last year.

CBH received 1.4MMT of grain taking total deliveries to 3.9MMT, compared to a total of 4.7MMT this time last year. Growers are still reporting yields higher than expected in Western Australia and protein in the Northern part of the state is also higher than expected at this stage. Wheat proteins have been lower as harvest moves south. The Geraldton zone has received nearly 1.5MMT of grain deliveries which will be about a third of what is expected. Overall, WA harvest is nearing 20% complete.

Grain deliveries in SA picked up last week. Viterra reported around 340,000 tonnes of grain delivered into its storage network in the week ending November 13, taking the season total to around 370,000 tonnes. Just under three-quarters of the grain deliveries were on the Eyre Peninsula, where hot, dry weather is allowing farmers to make good progress.

Domestics cash markets were broadly pulled lower by harvest progress, strength in the dollar and weakness in global markets with the extension of the Ukraine safe corridor deal. This is very variable by region and most of the work is being done on the quality spreads with lower quality wheat moving lower and protein wheat – APW and AH2 and higher – maintaining value. Indeed, if you look at this graph below from our analysts you can see graphically how the protein spreads are widening at the track level in AUD – albeit in the Newcastle zone.

Canola bids were sharply lower across all zones with the sharp declines in overseas markets. Barley bids were down $10/MT but the trades through Clear Grain Exchange suggest the feed barley bids are even softer than the $340/MT quoted for Kwinana. On the futures side, ASX wheat futures were down $15/MT to $450/MT and are now off about $40/MT in the past couple of weeks.

On the demand side of the equation, there is growing speculation among the trade that China will lift bans on Australian barley and canola imports after a meeting between leaders on the sidelines of the G20 meeting. Indeed, Chinese buyers continue to be active in the wheat space and are reported to be buying milling wheat into Q2 of 2023 from Australia. Nothing has been confirmed, but it looks like traders are sensing change and Chinese demand may have already emerged.

In the Middle East and East Africa, demand remains muted. APW and ASW, as this graph shows, are still pricing healthy premiums over Russian 11.5 and 12.5 wheat into those markets which is making finding demand difficult.

Ocean Freight & Export Stem

Southeast Asian demand seems to have bottomed out – especially for Handysize vessels – but the Far East remains over-supplied and the amount of China cargo is limited. As we mentioned last week, until we see more cargoes into China from charterers, the signals for the Ocean freight market will remain negative. Bunkers continue to slowly slide away which assists with voyage numbers.

Export Stem additions continue to climb with the onset of the 2022/23 harvest, although it’s not without its problems. There was close to 1.2MMT of grain added to the stem in the past week up from about 1.0MMT in the previous week. Two-thirds of the weekly stem additions were WA/SA with exporters still very unsure about the ability to export from the east coast, particularly NSW which is the worst affected state by weather and floods.

Australian Dollar

In a quiet week for the markets given the US Thanksgiving holiday later this week, the Aussie was trading a bit under 66½¢ to the USD earlier this morning.

The post Basis Commodities – Australian Crop Update – Week 46 2022 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 45 2022

Tue, 15 Nov 2022 16:00:00 GMT

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.

orrential weekend rain across New South Wales and parts of Victoria and South Australia is expected to result in quality downgrades. NSW copped the worst of the rain with 40-70mm across most areas and upwards of 100mm in some parts including Forbes and Cowra. The positive for NSW was the rain didn’t go as far north as Moree and into southern Queensland. The Victorian Mallee / Wimmera also received heavy falls on Saturday amounting to 30-50mm. The SA Murray Mallee received heavy rain, but it was lighter on the Eyre Peninsula. Western Australia continues to escape the deluge.

We believe Queensland harvest is 40% complete, all of NSW around 10% and Vic/SA less than 2%.

Weather forecasts are drier for the next two weeks at least, although December still looks to be on course for above average rainfall and critically, supply chains are still disrupted by widespread flooding which is slowing harvest logistics.

However, enough harvest is now underway to allow the cash markets in Australia to begin to work again.

The track quality premiums are starting to work as well as harvest progresses, giving buyers and analysts a better understanding of how the early harvest quality is coming off. APH was up A$13/MT for the week, H2 down A$4/MT, APW up A$4/MT and GP/SFW down A$2/MT. Anecdotal reports from the north indicated there is some H2 coming off but not much APH and plenty of APW, ASW and GP/SFW.

Harvest is progressing well in Western Australia, and this is putting pressure on prices which were broadly softer. Most receivals are in the Geraldton and northern Kwinana zone and about 70% of this was canola and around 15% each of barley and wheat. Early indications are the wheat proteins are slightly up on last year where the crop was dominated by a lot of low protein ASW, but care needs to be taken reading anything into such a small sample size, particularly as Geraldton is normally a better performer in the protein stakes. Canola prices were lower in all states.

Balance Sheet Update

We have pulled back our forecast of NSW wheat production by 0.8MMT to 9.0MMT on the back of flooding in the northern cropping areas around Moree and to the west. We have assumed that about 100k ha of wheat in the region will not be harvested due to the flooding, and our analyst’s national wheat total is now 35.7MMT.

We have also lowered the barley harvested area by a similar percentage at the regional level by 400KMT to 2.0MMT compared to last year’s 2.9MMT. Our analyst’s national barley total is 13.8MMT.

AOF pegged the Australian canola crop at 6.75MMT. The most notable of the state forecasts was NSW at 1.25MMT down from last year’s 1.8MMT despite a forecast 12% increase in the planted area. This implies state-wide canola yields at 1.35 t/ha down from last year’s 2.25 t/ha a 40% decrease.

Projected Wheat Crop Profile

Export Capacity and Ocean Freight

Just under 1MMT of grain was added to the stem last week. This included 594KMT of wheat, 274KMT of barley and 110KMT of canola. About 300KMT of wheat was added in Western Australia and 130KMT in NSW. WA accounted for 185KMT of the barley additions for the week with the rest in SA. All the canola was WA.

It was an interesting week on the freight markets. The underlying tone was weaker but there was also a risk off feel to the market. Asia continues to be weak but Handies and Panamaxes have stabilised. Supramax has continued to be weak. Chinese imports of Nickel ore are over for the season and imports of coal from Indonesia are very weak. China periodically shuts its doors to imports for varying reasons (and through various mechanisms…customs quotas, credit restrictions included) and the market invariably reacts quickly and negatively.

USDA Report Summary

The USDA’s November WASDE report didn’t offer any major surprises but that didn’t stop wheat finishing solidly lower. Wheat was off ahead of the release of the USDA’s report, and it continued following its release. USDA edged the US corn and soybean yields higher. The modest production increases were offset by slightly larger US domestic disappearance. This keeps US soybean and corn 2022/23 balance sheets tight and calendar spreads are reflecting that. It also re-enforces the importance of South American weather in the coming months. USDA raised wheat production in Australia and cut Argentina. Both were expected.

As a general observation, wheat has been trading demand for some time now and we expect this pattern to continue until a new flag emerges. Wheat has been sold down on the big flat price spreads for US wheat above other origins and most buyers are chasing cheaper Black Sea wheat. Global ending stocks were little changed at 267.8MMT which is 8.5MMT down on 2021/22.

Australian Dollar

In FX markets the AUD finished Friday at 0.6703.

The post Basis Commodities – Australian Crop Update – Week 45 2022 appeared first on Basis Commodities .

IAOM Middle East Operative Millers Conference

Wed, 09 Nov 2022 10:55:00 GMT

Basis Commodities MD, Chris Whitwell has just returned from a trip to the Middle East to formally welcome our new GM in Dubai, Nader Hassan to the business and to speak at the annual IAOM Middle East Operative Millers Conference on the island of Zanzibar, Tanzania.

This is the 17th he’s attended.

With over 525 people registered for the conference, it was a great networking event with good discussions covering a number of different technical and market topics.

In particular, Chris was involved in a successful panel session covering the strategies employed by successful millers to manage wheat price volatility.

This was a fantastic opportunity to catch up with suppliers and customers all in one place.

While at the conference, Chris was also able to tour Stone Town, the UNESCO heritage listed centre of Zanzibar City.

An amazing place with hospitable people.

A huge thank you to Said Salim Bakhresa Group and the organising committee of the IAOM for their efforts to make our stay so memorable.

Below are some photos conference, if you’re interested in seeing more visit the IAOM website .

The post IAOM Middle East Operative Millers Conference appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 44 2022

Tue, 08 Nov 2022 16:00:00 GMT

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 cash markets continued to strengthen last week as east coast wet weather flushed out shorts. Storms early in the week kept everything wet, further complicating the already difficult situation with grain logistics and tight nearby supplies. There was another 30-50mm of rain across Queensland cropping areas, 20-50mm across New South Wales and 10-15mm across Victoria. Weather improved in the later part of the week, but the damage was done by the earlier storms and many areas are now experiencing flooding.

Western Australian cash values were also higher which looked to be driven by nearby export shorts. Quality spreads are widening which is reasonable given how the weather is affecting a lot of the higher protein areas. The Kwinana APW1 / ASW discount is also large with traders expecting another big ASW year.

In terms of harvest pace, Graincorp has received 330KMT of grain deliveries to date, the bulk of this in Queensland. Viterra has received a trickle of wheat in South Australia, and it will be another 1-2 weeks before harvest pace picks up there. CBH has received close to 1.3MMT of grain deliveries which would represent about 2% of the expected 24MMT plus of deliveries. Early harvesting in Western Australia has been mostly canola. Australia’s wheat harvesting is less than 1% complete.

Eastern Australia is forecast to see a drier and warmer week ahead before further rain is predicted on the eight-day forecast. Cooler temperatures and wide planting windows mean the bulk of the crop is still green, so hopefully if the rain keeps away we will still have some good news to share in the coming weeks from a quality perspective.

On the other hand, the Bureau of Meteorology expects the wetter than normal east coast pattern to continue through November and December, but Western Australia and South Australia are not expected to be as wet. The combination of La Nina, negative Indian Ocean Dipole (IOD) and warmer than normal ocean temperatures around Australia are driving the wetter than normal patterns across much of Australia, the Bureau said.

Australian Supply & Demand Balance Sheet Update

Our analysts closed out the 2021/22 marketing year with Australia exporting 27.5MMT of wheat, 8.3MMT of barley and 5.5MMT of canola. WA accounted for 17.2MMT of this, NSW 7.7MMT, Vic 7.6MMT, SA 6.5MMT and Qld with 2.2MMT. This has left Australia’s 2021/22 ending stocks at 4.5MMT of wheat, barley stocks at 2.1MMT and canola at 0.5MMT. WA and NSW account for the bulk of the carryover stocks. Another similar size winter crop in 2022/23 will see further stock builds in WA this year.

AgScientia made an adjustment to the 2022/23 forecast reducing NSW wheat and canola crops 9.8MMT and 1.65MMT respectively, with further reductions expected in the coming week. WA barley and canola production has been lifted to 5.8MMT and 3.7MMT respectively.

Wheat protein will be lower than normal and likely to contain a big proportion of feed wheat quality on the east coast. With a restricted summer crop due to poor planting conditions for sorghum and cottonseed, this proportion of feed wheat will be welcomed. It is estimated at least 4MMT of the Qld/NSW/Vic wheat crop will be feed wheat (SFW) but this could easily be surpassed with more unseasonal rain through November and December and a long tail to the harvest forecast.

The smaller NSW wheat crop and larger Vic/SA harvest will alter the configuration of Australia’s wheat export surplus in 2022/23. NSW wheat exports are forecast to fall to 4.3MMT, down 2.0MMT from 2021/22. Vic exports will be similar while SA exports are expected to rise slightly. The national export forecast is 25.7MMT (27.5MMT last year) for wheat, barley exports are estimated at 7.5MMT (8.3MMT last year) and canola exports at 5.0MMT.

Export Stem & Ocean Freight

Wet weather continues to stall east coast export activity while the focus remains on canola in Western Australia. There was 445KMT of wheat added to the stem over the past week, 209KMT of barley and 140KMT of canola.

The freight market remains in a state of flux. Spot numbers dropped quickly last week after owners realised early the market was extremely weak in Asia. Notably, there are relatively few coal requirements in the region – and more particularly for China. Periodically China turns off the tap on various commodities for whatever reason, and it feels like this is one of those times. Combine that with a general easing of congestion in the region, ongoing geo-political uncertainty and market confidence evaporates. Tonnage lists are long for Supramax and Handysize vessels and it’s difficult to see where the support is going to come from.

Australian Dollar

In FX markets, the AUD fell around 1% early on Monday, quickly reaching an intraday low of 0.6402, but has since recovered to be up 0.2% at 0.6480.

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Basis Commodities – Australian Crop Update – Week 42 2022

Mon, 24 Oct 2022 16:00:00 GMT

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 grain markets moved sharply higher in all zones last week on the back of the torrential east coast rains. Central Queensland, which had started harvest, received 150-200mm for the week. Southern Queensland and Northern New South Wales also recorded heavy rain. Totals were lighter further south although the rain was patchy. While there was some isolated heavy rain across parts of Victoria, totals across the Wimmera and Mallee were mostly limited to 5-10mm. It was a similar situation in South Australia. Western Australia was mostly dry and continues to enjoy good harvesting weather.

Accessing grain from storages is an emerging problem. A secondary problem is getting the grain to its destination. This is particularly evident in central Victoria with many roads closed due to floods. In our view, this is likely to become a major feature of this harvest and the subsequent export program and will need to be treated carefully by exporters and consumers alike.

Grain quality is an additional problem. Our analysts AgScienta have released an updated protein profile of the wheat crop slipping with the wet finish. It will be a big ASW year at best and at worst, we’ll see large volumes of downgraded wheat if the rain continues through the harvest window (November-January). Memories of 2010/11 will be still fresh on the traders who survived it.

It’s going to be a long, drawn-out harvest which further exposes the crop to quality downgrading as farmers struggle to get grain off with their own equipment, relying on neighbours for assistance once they’ve finished cutting their own crops.

The rain is a big problem for canola where farmers would typically be windrowing crops ahead of harvest. Windrowing is impossible with the current wet weather leaving paddocks too wet to hold machinery. Initially, we thought this may result in yield losses as they wait for crops to ripen and then direct-head harvest. This approach is difficult and draws out the ripening process leading to yield losses as they wait to optimise the already ripe pods against pods that aren’t ready. However, crop coatings can be applied to ripening canola which holds the pods together limiting yield losses associated with direct heading. Access to planes to apply this will be the next issues.

It should be noted that harvest is already running two to three weeks later than normal due to the cold and wet weather on the east coast. This means most crops are still green and benefiting from rain. Ripening of feed wheat crops will be dependent on the weather between now and harvest. We’re not quite into that window yet, but it’s looking ominous with more rain on the way next week. Similar patterns of southerly fronts combined with a trough that draws moisture from the north is expected to result in more extreme rainfall across the east coast in the latter half of next week.

The weather situation is better in South Australia and Western Australia where receivals have started to roll in.

On the cash side, traders were releasing stocks allocated against export positions that work into domestic markets with the spike in prices. Aussie feed barley is triggering export demand at current values. Canola strengthened with the spike in ICE which is likely to be driven by export selling to China.

WA and SA bids were also sharply higher in the past week. Exporters have become more sensitive to supplies for nearby shipments as the east coast outlook becomes more uncertain.

From our perspective, another massive crop year puts the customer’s focus squarely on grain quality and logistics. Grain stocks will continue to swell across wheat, barley, and canola. We will have stock build across all balance sheets, the question is where the demand comes from for a big ASW crop. We understand China has already been active in securing ASW which is likely to be used as a low-quality milling wheat/feed wheat. Southeast Asian feed wheat buyers have also been active to ensure access to harvest slot logistics. Consequently, we believe Southeast Asian wheat importers are reasonably well covered for the first quarter but demand from the Middle East and East Africa is slow due to the pricing dilemma provided by Russian wheat, at least 60 dollars below APW on a FOB Basis. Difficult economic conditions and a high US dollar simply exacerbate the situation.

Updated Balance Sheets and Projected Crop Profile

We have lifted national wheat production to 36.5MMT, barley to 13.5MMT and canola to 7.0MMT. There are some production losses in NSW and Victoria where crops are saturated, have been sitting in water for some time and will be abandoned. But overall, more crops are benefiting from the rain still. We are calling the NSW yields down 20-30% on last year. Victorian grain production will be hurt in parts, although the worst hit areas by the floods are not the state’s biggest production areas. Overall, the impacts will be relatively small, and these are offset by big yields in the Mallee and Wimmera. South Australia will be a record large crop and Western Australia is similar to last year and possibly better.

Below is our current projection of crop quality. As some of our customers would already know, access to high protein wheat for exports is going to be a challenge with domestic users moving quickly to secure the protein they need from a depleted crop.

Export Stem

There was 776KMT of grain added to the stem over the past week with canola the largest contributor. There was 342KMT of canola, 324KMT of wheat and 110KMT of Barley added to the stem with nearly half of this coming from Western Australia. It comes as no surprise the weekly east coast stem additions were limited as the ongoing unsettled weather stalls early harvest and doubts when the new crop supplies will be available for export.

Ocean Freight

The Ocean Freight market continues to search for direction. Levels in the Atlantic are firming. The issue is what is going on in the Pacific where there is little to provide direction. Indices would seem to support a weaker market and the sentiment is negative, and yet the market remains stable. Week to week rates are down with less enquiry causing numbers to ebb away. After last week’s push on bunkers, they have started tracking down again.

Oaten Hay

The Australian hay season is expected to produce around 12 million tonnes for the 2022/23 season. The rain in the eastern states is likely to limit the amount of export quality hay from that region. South and Western Australian states however have had favourable conditions and expect to represent the exportable surplus of approx 1.1MMT for the season.

The biggest challenge to exports of fodder products remains ocean freight. Container rates into the Middle East remain firm and while there has been some nearby indices support for softer prices into 2023, the limited export surplus caused by the wet weather in the eastern states is supporting prices.

Australian Dollar

The AUD is one of the most liquid currencies in the world and given the prevalent risk aversion in the air, the AUD is proving yet again to be the weapon of choice to express risk aversion and is consequently in a bearish trend. Inflation is expected to peak at the end of the year in Australia. The RBA is now trying to balance the impact of interest rates over GDP rather than just catching inflation. The market is expecting a further 25bps increase in November in Australia and opposing to other developed countries, a growth in their GDP. That makes the Aussie attractive versus other currencies.

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Basis Commodities – Australian Crop Update – Week 41 2022

Fri, 14 Oct 2022 16:00:00 GMT

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.

The Bureau of Meteorology released its latest long-range forecast for Australia, and eastern and Northern Australia seem set for a wet summer and autumn. Victoria received heavy falls early this week and more is on the forecast for Victoria, New South Wales, and Queensland over the coming days. Western Australia continues to escape the rain as harvesting picks up pace and South Australia continue to pick up yield.

Southern Queensland is unlikely to start harvesting for another 3-4 weeks (a month late) and most of NSW is saturated. This will impact pre harvest activities as well as harvest itself. Farmers are already behind in windrowing canola because it’s too wet. Recent rain only makes this worse. Harvest activities are going to be impacted as well as paddocks won’t take the weight of harvesting equipment, field bids and trucks. It’s going to be long harvest on the east coast with NSW being the epicentre of the problems for a second consecutive season.

Global grain markets are beginning to pay more attention to the excessively wet weather across eastern Australia with rain threatening to spoil the quality of another big east coast harvest and possibly lead to the spectre of significant crop abandonment.

Analysis of the NDVI’s for the various states in early October reveals the state by state story:

New crop bids were firmer this week as domestic consumers took quality cover as the ongoing rain threatens the quality of upcoming east coast wheat harvest. ASX wheat, which is for APW, has rallied by close to $50/MT over the past three weeks. Old crop barley bids were sharply higher on old crop squeezes which is normal for this time of the year, but they will probably last longer than normal given the lateness of harvest and the wet outlook. Old crop barley bids are up to $375/MT Melbourne. The grower remains a reluctant seller given the weather risks they’re facing as well as quality concerns, higher input costs and the volatility caused by wider geopolitical concerns.

Ocean Freight

The freight market in Asia seems to be well supported. Although, it is difficult to determine that we are on a longer-term upwards trend particularly when you see the cliff face in the FFA paper market for 2023, which drops in the region of 13k pd for Q1 2023 and the clear discrepancy between the physical and paper markets. Bunkers have firmed in the last week with the oil price rise. Backhauls from the Pacific to the Atlantic remain a dilemma/point of contention with different owners attaching very different values to it.

Australia Export Pace and Logistics

Australia exported 2.52MMT of wheat in August, modestly below the 2.6MMT in July and the 2.71MMT in June. This lifts the Oct/Aug exports to 25.7MMT. Western Australia has already shipped 9.4MMT of wheat so far for the 2021/22 marketing year, and New South Wales 6.0 MMT. Indonesia was the largest destination for August with 444KMT followed by Philippines with 420KMT, then Vietnam with 322KMT followed by China with 308KMT. Australia has shipped 5.8MMT to China in the Oct/Aug period.

Barley exports for August were 602KMT up from 591KMT in July. WA accounted for 426KMT of the August exports. Saudi took 323KMT with Japan the next largest at 61.4KMT.

Sorghum exports for August were 253KMT with 242KMT of this heading to China. There was 184KMT of sorghum shipped from Brisbane in August.
Canola exports in August fell to 152.5KMT down from 336KMT in July and 540KMT in June. Nearly all came from Victoria.

Ships scheduled to load in NSW slipped back by around a week. More heavy rain is forecast across East Coast in the next week which will add to the delays. It is shaping up to be another tough season for grain logistics with big crops keeping pipelines running at or near capacity and this will need to be borne in mind by consumers when planning their purchases. As far as we can tell, China is well progressed with its new crop purchasing – mainly low protein ASW – along with Southeast Asian consumers and as a consequence there is very limited stem available before February/March.

Australian Dollar

Risk aversion has dominated the currency markets this week with the AUD losing ground to a stronger USD. This mood looks set to continue with the AUD likely to test lower at some point in the fourth quarter, although the Reserve Bank is making noises about a balanced approach to interest rates – it’s not just about inflation, it seems the GDP growth gets a look in at times.

USDA Report Summary

Wheat:

USDA cut the U.S. crop as flagged in their Sept 1 stocks report. USDA lowered U.S. wheat exports by 1.4MMT to 21.1MMT. Argentina’s crop was lowered by 1.5MMT to 17.5MMT with exports down 1MMT to 12MMT. Australia’s crop is unchanged at 33MMT. Russia is also unchanged at 91MMT while the global trade is modestly lower. EU crop was raised 2.7MMT to 134.8MMT and exports were increased by 1.5MMT to 35MMT.

Corn:

The USDA forecast U.S. corn production at 13.895 billion bushels, based on an average yield of 171.9 bushels per acre. Analysts, on average, expected a 13.885-million-bushel crop with an average yield of 171.8 bushels per acre. USDA lowered U.S. exports. USDA lowered China’s 2021/22 imports by 1MMT to 22MMT and left 2022/23 unchanged at 18MMT. USDA raised Ukraine 2021/22 and 2022/23 each by 2.5MMT. EU 2021/22 wheat imports were raised by 2MMT to 20MMT and 2022/23 imports up by 1MMT to 20MMT. EU corn production trimmed.

Barley:

Raised EU crop by 1MMT to 51.1MMT. EU exports unchanged. Ukraine crop unchanged but exports up by 0.6MMT to 2.4MMT. USDA cut Australia’s 2021/22 exports by 0.8MMT to 8.2MMT. 2022/23 Australia’s crop unchanged at 12.2MMT and exports unchanged at 6.7MMT. Australia’s 2022/23 ending stocks raised by 0.8MMT on the back of smaller 2021/22 exports. Global imports largely unchanged with Saudi imports unchanged at 4.7MMT and China at 9.5MMT. USDA raised Saudi’s 2021/22 imports by 0.3MMT to 4.5MMT.

Canola:

Rapeseed production for the EU has increased 1.0MMT to 19.2MMT on higher production for France, Germany, and Poland. Partly offsetting this is a 0.5MMT reduction to 19.5MMT for Canada’s canola crop on a lower yield. China’s canola imports are lowered 0.5MMT to 2.3MMT reflecting lower Canadian supplies.

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Basis Commodities – Australian Crop Update – Week 40 2022

Tue, 04 Oct 2022 16:00:00 GMT

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.

As we tick into the 22/23 crop year, the above table is our view of “replacement FOB numbers” for the main wheat grades, barley, and canola across the main port zones. It is important to bear in mind that these prices are composed of the track bid/offer spread for the grade/zone plus our view of accumulation and fobbing costs. This is NOT an offer or indication to sell at these levels, but we believe it is useful for our clients to gauge a rough idea of protein spreads between wheat grades. It also helps inform buyers with respect to elevation margins on each commodity and therefore the likelihood, or not, of FOB sellers putting wheat, barley or canola on the stem which is an increasingly important feature of the Australian cash markets in a big crop year.

As with the crop year just gone, we need to bear in mind that with another big wheat, barley, canola, oats, fava beans, chickpeas and lentils crop on the way, the commodity being sold at the FOB point is access to export logistics. Therefore, as with any market, the highest bidder or commodity with the largest elevation margin will be prioritised, and this may run counter to our fundamental analysis of a commodity’s worth at the FOB point.

Market Update

It was an interesting week for the local grain markets. This was not so much in market activity, which was mostly steady in the trade. However, there were some notable changes in the zonal pricing structures as buyers become more nervous about the ongoing rain on the east coast and the impact this will have on grain quality. ASW continues to be priced at big discounts to APW in all zones working back into Asian feed wheat values. New crop barley bids are being priced as the cheapest feed grain in the world on a farmer replacement basis, but this is not being seen at the FOB point as wheat outcompetes barley in the battle of elevation margins.

Wetter than normal September weather has locked in another massive Australian winter crop harvest. Below is the monthly rainfall map which shows just how wet it has been. NSW has been the epicentre of the rain where most of the state’s cropping areas have seen double the normal September rainfall with parts of northern NSW seeing up to four times the monthly average. The excessive rain has also extended north into Qld and south into Vic. More concerning is the outlook. All of NSW and Southern Qld are expected to see another 25-50mm in the coming days, which will only add to the current problems and looming quality concerns.

The extended outlook is also a worry. The Bureau of Meteorology said October to December rainfall is likely to be above median for the eastern half of Australia, but below median for the west coast and the northern and central Western Australia. Mostly dry weather is giving exporters some confidence that activity will ramp up in WA in the coming weeks. The same can’t be said about the east coast. The cool, wet season is expected to put the harvest dates back by around two weeks behind average. However, this could be put back even further if the rain doesn’t let up. Wheat harvest is just starting in Central Queensland. Southern Queensland won’t start until late October, possibly later, which will have a knock-on effect on new crop shipping programs which will be delayed.

Quality is clearly a big flag for the upcoming harvest and will need to be watched closely.

AgScientia Australian Balance Sheet update

It’s shaping up to be the second largest winter crop behind last year. Our analysts have just raised their forecast for Australia’s 2022/23 wheat harvest to 34.2MMT. Barley production is pegged at 12.35MMT and canola production at 6.8MMT. Wheat production is up on our August update on the back of a significant yield increase in South Australia and smaller increases in Victoria and Western Australia. This isn’t the case in New South Wales where crops continue to struggle with the late planting dates and excessively wet conditions in most areas.

The only change to domestic consumption is a 5% increase in dairy grain feeding in most states on the back of good returns.

Australia’s 2022/23 wheat exports are forecast at 25.1MMT, down from the 27.5MMT forecast for 2021/22. Barley exports are forecast at 6.1MMT but can go higher if demand permits. Canola exports for 2022/23 are forecast at 4.5MMT down from last year’s 5.6MMT.

Australia’s wheat stocks are forecast to edge higher to 4.4MMT from 4.1MMT in 2021/22. Western Australia’s carry-over remains large at 2.2MMT which is a function of the export capacity constraints. New South Wales carry-over stocks edge higher to 1.2MMT but it’s not a burdensome number for the state with its large domestic demand base. Australia’s barley stocks swell to 3.2MMT which is 1MMT up on 2021/22. Australia’s canola stocks also climb to 1.5MMT, which is up 0.9MMT on 2021/22.

Seasonal conditions are clearly very similar to last year and this is what’s allowing for the well above average yield assumptions. There is a concern we will also see another year of below-average proteins. This is a concern for the domestic food market, but it also restricts the export markets where the surplus can be shipped to.

Shipping Stem and Ocean Freight

It was a quiet week for shipping stem additions with a lot of participants away as they take advantage of the public holidays in various states and across Asia. There was 277KMT of wheat added to the stem in the past week as well as 135KMT of barley and 35KMT of sorghum.

The Ocean freight market continues to move sideways although sentiment suggests further market weakness is just around the corner, although that may be more a factor of the Golden week holidays this week. The Atlantic and Pacific markets are basically trading at parity now, but it looks like the Atlantic will soon become a premium – returning us to a more traditional market profile where back-hauls have their purpose which is good news for our friends in the Red Sea and the Mediterranean.

Australian Dollar

Markets remain extremely volatile with thin liquidity and a declining macro picture making it difficult to have a clear view of the longer-term trend for the AUD. Having touched intraday lows at US$0.6363 last week, the AUD seemed set on plumbing new lows against the USD and may still do so. However, the UK government’s U-turn on fiscal policy helped ease tensions and allowed the AUD to recover near 2% climbing back above US$0.65 to mark intraday highs at US$0.6520.

Our attentions turn now to RBA policy update. Momentum for another 0.50 basis point hike has built through the last 30 days as persistent signs of inflation and a robust labour market support a sustained and aggressive tightening of financial conditions. Key will be how the RBA signals or justifies any future slowdown in the pace of future hikes.

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Basis Commodities – Australian Crop Update – week 38 2022

Fri, 23 Sep 2022 16:00:00 GMT

Market Update
New crop wheat, barley and canola bids were mostly softer for the last week as we started the wheat harvest in Central Queensland where yields are expected to be above average. However, showers are slowing early harvest progress.

From a weather perspective, New South Wales received more unwanted rain last week. Most of the state’s cropping areas received a general 20-30mm while the northwest received 30-60mm. An already saturated water table means rivers are running at capacity and flooding risk is high ahead of more rain hitting the state yesterday and today.

Our analysts drove back from the NSW central west to Melbourne during the week. The Canola crop on the drive was at varying degrees of very good to excellent. Most of the canola was planted early and thereby avoided the worst of the excessive rain that NSW saw in May and June. However, there is still a question mark over yield due to the danger of disease loss. Wheat and barley on the other hand are struggling with the excessive moisture and much of the trade is now nervous we will lose milling wheat quality if the wet weather continues through October. In general, the cereal crops in central and southern NSW looked well-behind last year with many farmers only talking of average yield potential in these parts. Further south, the yield potential remains very high.

Victoria and South Australia are both in better shape than last year. South Australia has improved significantly in August and early September with some timely rains. Western Australia has a similar vegetative profile to last year.

Overall, Australia is in for another big crop year. Production declines in NSW will partially offset better crops in Vic and SA, and another huge WA harvest. At this stage, the losses in NSW have seen the wheat crop come back to 32.6MMT, 12.2MMT for barley and 6.7MMT for canola.

ABARES released its September crop report. Total winter crop production in 2022/23 is forecast to reach 55MMT, which would be the fourth largest ever. Wheat production is forecast to be the second highest on record at 32.2MMT, which is an 11% decrease from the record level reached last year. Barley production is forecast to reach 12.3MMT, the fourth largest on record. Canola production is forecast to also reach the second highest on record at 6.6MMT, a 2% decrease from the record reached last year, although we think this is understated and could still surprise to the upside.

Ocean Freight

After the last two weeks of weakness, the ocean freight market finally started to consolidate last week with indexes all having a firmer feel. Bunker prices have also eased off and charterers remain wary of fixing too far ahead of their shipment windows.

Australian Dollar

Last week saw some consolidation in rates and FX, but not before fresh USD strength saw more milestones reached in the FX market with the AUD trading down to .6610 overnight – a year to date low.

Stronger monthly Chinese activity data, across retail sales, industrial production, and fixed asset investment, were brushed off by the market, with investors still focused on the headwinds to Chinese growth from the ongoing slowdown in the property sector and China’s zero-Covid approach (although the lockdown of Chengdu was lifted over the weekend).

One final piece of economic data to note is the fact that Russia-China Bilateral trade has increased 32% versus last year’s pace. Payments between the countries are in Yuan and Rubles – food for thought.

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Basis Commodities – Australian Crop Update – Week 35 2022

Mon, 29 Aug 2022 16:00:00 GMT

Market Update

Australian cash markets remain relatively quiet. Buyers are well covered on the old crop positions while farmers, guided by local farm consultants and a wet medium-term forecast, are showing little interest in chasing markets lower for new crop. Australia is on track for another 32MMT plus national wheat crop, 12MMT or more of barley and more than 6MMT of canola. This will result in stock builds in all crops as we simply do not have enough export logistics to move that crop, particularly if we get another wet summer as forecast. In addition, we are seeing intense competition from Russian CFR sellers into the Middle East, East Africa, and Asia.

Widespread rain across Western Australia (WA) will help to lock in another massive WA grain harvest in 2022. Recent rain across other states is also lifting national production prospects, although New South Wales (NSW) could do with a breather. WA crop conditions aren’t quite as good as last year at the same time, but they are not far behind it. Most of the countries cropping regions are well positioned heading into spring, where the BOM is forecasting wetter than normal weather. South Australia’s (SA) Eyre Peninsula is the best in a decade as is Victoria (VIC). Other parts of SA are improving with the recent rain and warming temps which is allowing crops to grow. The southern third of NSW is well above average and the northern 25% is well positioned for well-above average yield. The rest of the state is improving as temperatures climb. Queensland (QLD) crops are also well positioned for above average yields. 

The bottom line is, a 32MMT plus crop wheat crop justifies another year of low basis levels. Not to the same extent perhaps as the past six month when global cash markets, including Australia, ignored the massive runup in U.S. futures, but a continuation with the current low levels needed to push Aussie wheat exports deep into the western hemisphere, which is needed to shift 24-25MMT of wheat exports.

Last week we passed on our analyst’s forecasts for Australia’s wheat, barley, and canola balance sheets. Interestingly we are using national 2021/22 wheat exports at 27.5MMT, barley export at 8.2MMT and canola exports of 5.5MMT. The barley exports are below USDA’s 9.0MMT which looked optimistic from the start. This leaves wheat carry out stocks at 4.1MMT, barley at 2.3MMT and canola at 0.6MMT. The most notable feature of the carryover stocks is that wheat and barley stocks in WA are building on the back of last year’s massive crop. WA has 2.5MMT of the 4.1MMT national wheat stocks and 0.8MMT of the 2.3MMT national barley ending stocks at Oct 1.

Ocean Freight

Despite an avalanche of negative sentiment last week, the ocean freight market in Southeast Asia managed to buck the trend and held up well. Although that positive sentiment was starting to wane by the end of the week. Elsewhere, it has been a desperate week – Panamax rates in both oceans leading the charge to the bottom with older sub-index types staring at a sub $10k market soon if things don’t pick up. The disparity between Ultramax rates touching mid/low $20k’s pd and Panamaxes is stark and will surely rebalance itself. Any cargo over 40KMT that doesn’t need gear and can fit 200+ m loa is going to be a Panamax lift on these rates.

Australian Dollar

The Australian dollar is weaker this morning (29/8/22) trading just below 69 US cents. On Friday the AUD was one of the hardest hit amidst the sharp pullback in risk appetite falling 1.2% against the USD after the Federal Reserve Chair Jerome Powell delivered his much-anticipated keynote speech at Jackson Hole sending an unambiguous message that the Fed is committed to getting inflation back to the 2% target. From a technical perspective, the AUD/USD’s first support level would be at 0.6855. Once cleared, the next stop would be 0.6810, followed by 0.6770. Any resistance will be seen at 0.6960 followed by 0.6990.

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Basis Commodities – Australian Crop Update – Week 33 2022

Fri, 19 Aug 2022 16:00:00 GMT

Market Update

The BOM (Australian Bureau of Meteorology) ENSO Outlook has been raised to La Niña ALERT. Historically, when La Niña ALERT criteria have been met, La Niña has subsequently developed around 70% of the time. La Niña events increase the chances of above-average rainfall for northern and eastern Australia during spring and summer. In addition, the Indian Ocean Dipole (IOD) index has been very close to or within negative IOD thresholds since early June, with the latest weekly value one of the strongest observed so far during this event. All surveyed climate models indicate that negative IOD conditions are likely to continue into late spring. A negative IOD event is typically associated with above average winter–spring rainfall for much of Australia, so in short, the fear is we are in for a similar year of wet conditions in the run into 22/23 Harvest with all the challenges that brings.

Indeed, too much rain is the concern for most of NSW. That said, last week’s rain across the state was heaviest in the north where crops will benefit from the rain and lighter across the central west where they have been struggling with the excess moisture. The northwest received 20-30mm in the past week while falls across the central west were mostly limited to 5-10mm. The north and the south of the crop are positioned for above average yields but production in the central west will be constrained by the excess moisture. 

Australia’s other cropping regions are well positioned heading into spring with regular rainfall helping to lock in another massive winter crop. To that end GIWA (WA growers) updated its crop estimates on Friday and said the state’s total grain harvest has the potential to climb above 20MMT for a second consecutive season following the recent rain. They put the WA total grain harvest at 19.6MMT vs 24.0MMT. They pegged the 2022 wheat crop at 10.3MMT (12.9MMT LY), barley at 5.1MMT (6.37MMT LY) and canola at 3.16MMT (3.13MMT LY).

In discussion with FOB sellers, it feels like old crop export sales are largely in the execution phase with logistics and scheduled maintenance shutdowns severely limiting FOB liquidity. Similarly, concerns about new crop protein and weather risk are also limiting new crop appetite after the initial rush to fill Chinese new crop demand.

Barley was softer in both the old and the new crop. The issue for barley is one of demand. Aussie barley will be priced to find export demand in the new crop, but will this demand be enough to shift the crop without China and as Saudi’s imports shrink? Exporters will be cautious about building length, and this is evident in the grower bids for new crop. 

Australia exported 2.798MMT of wheat in June, up from 2.366MMT in May. WA shipped 920KMT, the most since Feb while NSW shipped 736KMT. China was the largest destination taking a massive 711KMT followed by Indonesia with 318KMT, then Vietnam with 225KMT and then the Philippines with 200KMT. Australia has exported 20.8MMT of wheat so far for Oct/Jun.  Barley exports for June were 563KMT down from 681KMT in May and 758KMT in April. Saudi took 293KMT, Japan 158KMT and then Vietnam with 68KMT. Australia’s Oct/Jun barley exports are 6.4MMT. Sorghum exports were 273KMT which is about the same as May. China took 196KMT and then Japan with 69KMT. Canola exports were 481KMT. Australia has shipped 4.72MMT of canola in the Oct/Jun.

There was 323KMT of wheat added to the stem in the past week. There was no wheat added in WA in the past week. Vic accounted for 123KMT of the weekly wheat additions followed by 80KMT in NSW, then 65KMT in Qld and 55KMT in SA. Sorghum was the next largest grain with 135KMT which was split between NSW & Qld.

Ocean Freight

It feels like last week the market over-corrected to the downside - if that is a thing. Certainly, the feeling this week is more positive but it feels notional and until owners and charterers come off the fence, the market maintains a status quo of sorts albeit at lower levels.

Australian S & D Update (Agscienta)
Our Analysts Agscienta released changes to our forecasts for Australia’s wheat, barley, and canola balance sheets this week. There were multiple changes. 

Firstly the 2020/21 wheat, barley and canola production estimates have been adjusted following the release of the ABS 2020/21 survey data a few weeks back. Changes to the 2021/22 balance sheets are limited to export progress. I am using national 2021/22 wheat exports at 27.5MMT, barley export at 8.2MMT and canola exports of 5.5MMT. The barley exports are below USDA’s 9.0MMT which looked optimistic from the start. This leaves wheat carry over stocks at 4.1MMT, barley at 2.3MMT and canola at 0.6MMT. The most notable feature of the carryover stocks is that wheat and barley stocks in WA are building on the back of last year’s massive crop. WA has 2.5MMT of the 4.1MMT national wheat stocks and 0.8MMT of the 2.3MMT national barley ending stocks at Oct 1. This isn’t because of a tardy WA export pace which has been up and about 1.6MMT/month, but more a function of the size of the crop.

We have raised 22/23 national wheat production to 32.0MMT from 30MMT previously. A low 30’s crop is justified, and it could climb to a 34 and possibly 35MMT. A national crop of 32MMT equates to a national wheat yield of close to 2.5 t/ha. Extended weather models point to a cool mild finish. WA crop conditions are extremely good and will continue to improve heading into September following recent widespread rain. SA’s Eyre Peninsula is the best since 2016. Other parts of SA are improving following a late start with recent rains. Vic is the best in more than a decade. NSW is mixed. The south is very good, Central areas are late and too wet but are starting to improve.

We are pegging the national barley crop at 12.2MMT. This is down from the past couple of years but still large by historical standards. Domestic feeding and malt will be maximised, but it still leaves a large export surplus of about 7MMT to keeping ending stocks close to unchanged. This will be a challenge without China/slowing Saudi imports and stiff export competition from cheaper corn, but the bearishness of the barley situation needs to be offset against slot availability as different commodities vie for place on the stem. 

We have lifted the 2022/23 canola crop to 6.1MMT. This is down from 6.8MMT in 2021/22 but still a massive crop. We are using exports of 4.5MMT which is the same as the USDA and this leaves a stock build of 300KMT to 0.8MMT. We are using a crush of 0.9MMT. Some have raised the national crush to about 1.0MMT. Either way, stocks are building.

The post Basis Commodities – Australian Crop Update – Week 33 2022 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 27 2022

Thu, 07 Jul 2022 16:00:00 GMT

Market Update

Australian cash values continue to slide with further sharp falls in U.S. and Matif futures after Russia unveiled changed to its grain export tax. The Australian dollar has also aided competitiveness with its weakness against the USD but for old crop at least, cash wheat is struggling to compete with EU new crop values in the international market.
As an observation, it is interesting to see cash values continue to remain disconnected from U.S. futures and this has created value for basis buyers both on the way up, when we saw basis drop to historically low levels, and now on the way down, hopefully with an option strategy in tow to protect the cash purchase.

The bottom line is that U.S. wheat futures have been incredibly volatile, but I would argue, haven’t accurately reflected where the global cash markets have been for a while now. I suspect consumers are going to be reminded of that when they try to secure supplies into Q3 and Q4.

It’s been the busiest week for export stem additions in Australia since mid-May. Close to 700KMT of wheat was put on the stem in the past week, 160KMT of barley, 100KMT of canola as well as some oats and pulses. The CBH export capacity auction was well subscribed with, encouragingly for consumers, an increasing number of export participants. We now look forward to Viterra’s export capacity going under the hammer next month.

From a weather perspective, the Bureau of Meteorology (BOM) continue to predict July to September rainfall is likely to be above median for the northern half of Australia, northern and eastern South Australia, New South Wales, and northern and central Victoria.

National crop conditions have improved over the past month. Western Australia has been picking up regular showers and conditions are above average. South Australia received a late break (planting/germination rain) at the end of May, but June has been favourable and crops are catching up. Victoria is excellent and this pattern extends into southern New South Wales. Central and northern New South Wales is patchier, and we have lost acres to flooding and farmers not being able to get into the paddocks to plant despite a drier June.

Ocean Freight

Rates continue to be put under pressure by an overwhelming level of supply and at last some weakening in bunker prices in the Pacific.

AUD – Australian Dollar

The Australian dollar extended the recent downturn, marking fresh 2-year lows below US$0.68 amid sustained recession fears and a broadly stronger USD.

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Basis Commodities – Australian Crop Update – Week 25 2022

Sun, 26 Jun 2022 16:00:00 GMT

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.

The post Basis Commodities – Australian Crop Update – Week 25 2022 appeared first on Basis Commodities .

GrainCOM 2022 – Geneva 17-19 May

Thu, 23 Jun 2022 02:46:00 GMT

With in-person industry events back on the cards, it was the promise of a conference committed to looking forward and to addressing a range of topics important to the industry currently that saw our Chris Whitwell on a plane to Geneva for GrainCOM 2022.

As you would expect, a key focus was the impact the Russian and Ukraine war is having on grain around the world and the flow-on effects we’ll see from this medium to long term. It was humbling and enlightening to hear the efforts being made by Ukraine to export what remains of the 2021/22 crop. What stood out for Chris was the feeling it is likely to get harder, not easier, as logistics start to be diverted into moving the European crop, and fuel, fertiliser and storage shortages start to impact the ability to grow, harvest and store the new crop, and beyond that, plant the 2023 winter crop.

Outside the Black Sea sessions, the general theme was one of production concerns and logistics challenges in all major producing countries along with a global weather outlook that has many “hot spots” that may provide further volatility to an already tight grains and oilseeds outlook as the way things stand currently. There was much discussion about what could be, and maybe done by various bodies, to bring more of the Black Sea production back into this and next year’s trade-flows, but in Chris’s view, the level of optimism about what may be achieved is not being matched by the realities and progress at ground level.

From a demand perspective, the level of demand destruction to be expected from high prices was debated and the conclusion that this will be region-specific with sub Saharan African and parts of Asia particularly hard hit resounding for those participants who are interacting with those markets day in and day out. Many of these economies were badly hit by COVID and their populations were not supported by stimulus cheques. As a consequence, they are struggling to live with grain prices that have doubled in the last eighteen months. It is very likely that the balance sheets will see demand shifting to more local substitutes such as plantains and rice.

Although it was difficult to be positive in a market that is facing such challenges and the potential for even greater volatility, there is always an upside. “This too shall pass” and it was great from a personal point of view to catch up with old friends after such a long time “locked down“ in Australia and I would like to add my thanks to the organisers who put on the conference. Geneva put on some great weather for those of us who have been living with record rains on the Eastern Seaboard of Australia.

For more information on Basis Commodities and how we can assist your business to manage the current pressures being placed on logistics throughout the country, send the team an email at info@basiscommodities.com .

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The post GrainCOM 2022 – Geneva 17-19 May appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 24 2022

Thu, 16 Jun 2022 16:00:00 GMT

Market Update

Cash bids remain variable across the various export zones, but it was evident that traders are stepping up efforts to shake out remaining old crop longs. Traders reported improved liquidity throughout the week. Barley bids were generally softer across the east coast which is likely to reflect that farmers are selling more barley than wheat ahead of the end of financial year.

ABARES released its first detailed 2022/23 crop estimates earlier in the week. Their forecasts indicated soaring grain prices and mostly favourable planting conditions are expected to result in a third consecutive bumper winter crop. In its initial estimates for the 2022/23 season, ABARES said Australia is forecast to produce 30.2MMT of wheat. Barley production is forecast at 10.9MMT with canola projected at 5.6MMT. Other forecasters are saying the wheat crop will be larger. However, as mentioned last week, early cautionary flags have emerged in multiple states which highlight the 30MMT national wheat crop is far from guaranteed. South Australian farmers have welcomed recent soaking rains but a late start means above-average yields will depend on good winter rains and a soft spring. It is still excessively wet in Southern Queensland and Central West New South Wales and this is hampering winter crop planting in these areas. The areas most affected in New South Wales account for 60% of the state’s wheat area (Northern, North West and Central West). A lot of this is already planted, but a significant proportion isn’t. Some of these areas are only partially planted. Dry weather is a building concern in Western Australia.

The mix of high grain prices and historically cheap Australian basis leaves a volatile and dangerous mix for domestic markets in the coming months. Global markets are set to remain strong, even if a deal is reached to allow grain exports from Ukraine. New crop basis is historically cheap at A$-90/MT. We have included a long-term basis chart with ASX, CBOT and basis all in A$ terms.

USDA Report Summary

The USDA’s June WASDE report failed to offer many fresh inputs. In the United States, the USDA trimmed HRW wheat production, but this was offset by a larger SRW crop. They didn’t change the HRS forecasts. Some private forecasters have lowered forecast US wheat plantings by more than 1.0 million acres on the back of the late plantings. This equated to upwards of 1MMT of lost production based on average yields. It’s also likely that some of the intended spring wheat acres in the Canadian Prairies (Manitoba) may not be seeded because of wet weather delays. This will leave the North American high protein balance sheet extremely tight for the 2022/23 season with no room for further weather problems. Russian wheat production was increased by 1MMT to 81MMT and exports were raised by 1MMT to 40MMT. Other private forecasters are calling the Russian crop 5-6MMT higher. India’s wheat crop was lowered by 2.5MMT to 106MMT and exports were cut by 2MMT to 6.5MMT. World wheat trade was trimmed by 0.3MMT to 204.6MMT. We expect this will prove too high when the extent of demand rationing can be better assessed in the coming months as importers pare back purchases at the current high prices. The bottom line of the above changes is the world is still heavily reliant on exports from the EU and Russia. Russian exports of 40MMT will depend on commercial shipping companies gaining guaranteed safe access to the Black Sea shipping routes. This is not guaranteed. Ukraine’s wheat production was unchanged at 21.5MMT with exports of 10MMT. Global weather risks remain. Dry weather is restricting wheat plantings in Argentina which has private forecasters lowering production estimates.

The USDA’s June WASDE didn’t offer many fresh inputs for corn. USDA cut the US 2021/22 corn exports by 50 million bushels on the sluggish shipping pace which lifted the carryover stocks. New crop US plantings and production were unchanged. Plantings could fall by 1 million acres with the slow progress in North Dakota and Minnesota, but USDA is waiting for the June seeding report for further inputs. The US 2022/23 balance sheet will be driven by final planted area, yields and strong domestic biofuel margins. The US 2022/23 ending stocks were lifted to 1.4 billion bushels on the large 2021/22 carry in stocks. Globally, USDA raised Ukraine corn production, but can it be exported? There is limited downside to corn with the strong domestic premiums and threatening weather as well as questions around yield assumptions.

USDA lowered its forecast for world 2022/23 barley production by 1.7MMT on smaller crops in the EU, Australia, and Ukraine. Saudi’s 2021/22 imports were cut and the 2022/23 were pulled back by 0.5MMT to 5.0MMT. China imports were unchanged at 10MMT. As with wheat, soaring prices are likely to erode global demand for barley. This is already evident in Saudi Arabia.

The June WASDE report was bullish soybeans, with the USDA raising old crop exports and lowering 2021/22 ending stocks to just 205 million bushels. Old crop stocks are tight, domestic processing margins are high, export demand is robust, and the US weather threatening. Markets will remain extremely sensitive to the slightest of weather concerns in all the US summer crops, but particularly soybeans. Global soybean supplies are relatively tighter than corn because of the changes in the Brazilian supplies. Demand rationing is the next step as there are no global buffer stocks for soybeans.

Currency

The Aussie Dollar rallied sharply overnight with the US Federal Reserve raising interest rates by an aggressive 0.75%. The drivers were a stronger message on interest rates from the RBA and some stronger‑than‑expected economic date from China. The Aussie is suffering more than most because China’s economy remains at risk of further COVID lockdowns.

The post Basis Commodities – Australian Crop Update – Week 24 2022 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 23 2022

Wed, 08 Jun 2022 16:00:00 GMT

Market Update

According to our analysts and ABARES, we are looking at third consecutive winter crop where wheat production will be over 30MMT. Barley production is forecast at 10.9MMT with canola projected at 5.6MMT. Total winter crop production, including pulses and oats, is forecast to come in at 50.9MMT.

Other forecasters are saying the wheat crop will be larger. However, our analysts have raised some cautionary flags such as a late break in South Australia and excessively wet weather in Southern Queensland and Central West New South Wales which is already hampering planting the winter crop production in these areas. Dry weather is a building concern in Western Australia.

Cash Markets

Cash markets ended last week mixed with zonal factors driving price activity. Difficult logistics and tightening supplies are keeping the northern grain markets supported, but bids in the southern markets softened as more rain was received. Barley values across eastern Australia remain well supported. Overseas demand was up over the week although many private buyers remain unable to consider current pricing levels as they sit well above their costs of replacement given current prices for the various end products.

That said, we are starting to see an inverse to new crop begin to appear in Fob values across wheat and barley.

Australian Balance Sheet Update (AgScienta)

Our analysts have cut back their forecast for Western Australia’s 2021/22 wheat exports for the third and fourth quarters due to shipping delays. Shippers are reporting loading delays of up to 2-4 weeks, depending on the port. This lifts the Western Australia 2021/22 wheat ending stocks up to 2.2MMT.

For the 2022/23 season, we have raised the Queensland wheat areas to 900,000 hectares on the back of smaller chickpea plantings. Other wheat areas are unchanged, and we are working on a national wheat area close to unchanged on 2021/22, barley down 3-4% and canola up by 10% and more in places.

Excessively wet conditions are still slowing winter crop plantings in the New South Wales Central West. The region has seen 175-250mm of rain in April/May which has significantly slowed plantings. A lot of the early planted canola became water-logged and will have to be replanted with wheat or barley. In a lot of cases, it is still too wet for this and they are already outside the optimum planting window. We are hearing of farmers preparing to aerial plant wheat as paddocks will many areas still weeks away from being able to hold machinery, assuming there is no more rain.

We are using above 10-year trend yields for wheat, barley and canola. Extended weather forecasts for the winter point to a continuation of the wetter than normal patterns across eastern Australia on the back of the lingering La Niña and the likelihood of a negative IOD emerging. Both of these patterns support the wetter than normal winter weather for eastern Australia. Dry patterns in Western Australia are a concern, with the BOM’s extended ACCESS model forecasting this likely to persist through the winter.

We are working on a national wheat crop of 30.2MMT and barley at 11.2MMT. Canola production will exceed 5.0MMT based on the higher plantings. Domestic feeding is already starting to ration in some industries. Northern feedlots are reportedly already winding back numbers. We are working on a 10-15% reduction in the northern COF numbers in the next six months but this comes off the record high JFM 22 quarter. The Vic dairy industry is also likely to cut back on grain feeding from September forward when the spring arrives and farmers have to pull back the volume of grain feeding. Some other industries, like chickens and pigs are not expected to ration.

We are forecasting 2022/23 wheat exports of 22.3MMT and barley exports of 6.1MMT.

Ocean Freight

The ocean freight market has seen an easing over the last week with charterers’ bids evaporating for Asian business. Owners are generally not discounting forward positions yet, but spot tonnage is having to face lower levels to get fixed and our team sense the owners are getting nervous. The Atlantic remains weak, and the Pacific is coming down to parity so we don’t see there will be much decline in the back haul numbers which would help freight moving back to the Atlantic.

At this stage sitting on your hands looks like the best strategy.

Australian Dollar

The Australian Dollar jumped after the RBA announced a 50 basis point interest rate increase which surprised most of the markets and economists. The RBA is now seeing inflation higher than they expected a month ago as global raw material costs and a domestic energy price have been pushed up sharply. It then gave up those gains and actually began trading lower than pre-meeting levels. The 0.7270 resistance region now represents a solid area of resistance while the 200 day moving average also sits around 0.7250.

The post Basis Commodities – Australian Crop Update – Week 23 2022 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 21 2022

Wed, 25 May 2022 16:00:00 GMT

Market Update

Last week was an interesting one for the old crop cash markets. Cash bids rallied strongly before the surge in values bought out fresh famer selling which allowed end users and trade shorts a much-needed buying opportunity.

There is no doubt soaring grain prices are likely to result in a rationing domestic demand. This is a view we have already shared but it’s likely to emerge as a reoccurring theme in the 2022/23 season both in Australia and overseas as we remain at these elevated prices. Our analysts, AgScienta, have already started lowering our domestic demand estimates in the recently circulated 2022/23 balance sheets. Feed grain demand rationing will take time with feedlots a prime example of where the domestic demand will ration. Some other industries are also expected to come to a similar conclusion. Agscienta expect the volume of grain users in the dairy industry from September onwards could contract by at least 20%. Rationing is more difficult in other feed sectors, such as poultry.

Export elevation additions have slowed over the past couple of weeks which is likely to reflect loading delays with most ports operating at capacity and a decline in end consumers seeking forward coverage. FOB liquidity is still tight through to September.

So where are we now from an Australian cash position? As we move closer to the northern hemisphere new crop, we struggle to be optimistic that the Black Sea origination will flow in the volumes needed to keep destinations supplied. Good work is being done to increase volumes from Ukraine and in my mind, there is no doubt Russia will find pragmatic partners to trade with, but the challenges are still many with respect to exporting the Black Sea crop. In our view, this will continue to place an enormous amount of pressure on the other origins, specifically the EU and the southern hemisphere now that India has stayed its hand. As such, consumers will need to be mindful of the demand pressure on these supply chains and the logistics attached, even at a time when their local markets are telling them to sit on their hands – these are difficult times indeed.

Australian Weather

Ocean Freight

According to our freight team, we need to throw the Baltic index in the trash – index numbers this week bear zero relation to the physical reality in the Pacific market. Numbers for Supramax have rallied and large Handies have quickly re-established the dollar/dwt range we had a few weeks back. Lack of tonnage combined with consistent cargo enquiry seems to be the main drivers. Geared tonnage in Southeast Asia remains a solid premium to panamax which suggests Indo coal is playing a major role here. It’s obviously very difficult to sort fact from fiction, but it cannot be a coincidence that back hauls are still expensive, the Atlantic is becoming tonnage heavy, and the Pacific is tight again. We have also had another push in bunker prices over the last seven days – presently not far from the $1000/mt marker for VISFO from Spore. Unprecedented times continue.

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Basis Commodities – Australian Crop Update – Week 20 2022

Tue, 17 May 2022 16:00:00 GMT

Market Update

The last week saw rain across much of the country. Western and South Australian farmers will welcome the rain as planting continues but many farmers in the east will be hoping for a gap in the rain as it is now so wet, planting is being held up. That said, east coast plantings are already advanced. Most of the canola is already in the ground. Some areas may end up getting replanted to wheat or barley as it’s been too wet.

Looking forward, the Bureau of Meteorology said June to August rainfall is very likely to be above median for much of mainland Australia. The chance of exceeding the median is greater than 80% across most of northern Australia, southern Queensland, New South Wales, north-western Victoria, and the north-eastern half of South Australia. Large parts of eastern Australia have a 40% to 60% chance of being in the wettest 20% of past June to August periods. This is around two to three times the normal likelihood of a very wet season. There is an elevated chance of below-median winter rainfall for parts of Western Australia’s Southwest.

The cash markets were sharply higher this week on the bullish global news and some domestic market shorts being squeezed. Grains are very difficult to buy. At this stage, it feels like Australia will continue to find both export and domestic demand and therefore we feel it is likely values will remain firm into new crop. Wheat is just one of a number of commodities that will be pushing for space on the export elevators this year so our expectation is there will be little or no inverse to new crop this year at the FOB point. Indeed, new crop (2022/23) bids were steady to higher in all zones.

High prices have many domestic demand sectors assessing if they can ration back grain demand. This is only possible for a few; others will be assessing how they can pass the prices back on. We expect that feedlot numbers will decline as there is plenty of natural fodder. Overall, the capacity to pare back domestic grain usage is limited as most of the industries are domestically focused.

On the International demand side, many consumers are seemingly trying to reconcile local commercial realities with current values and certainly, the issue of demand destruction has at some point got to impact FOB values. Although, there seems little evidence of it to date.

As time progresses and the Russia/Ukraine war continues, the impact of limited Black Sea exports only becomes more acute as French and Hard Red Winter crops struggle with dry weather. Weather remains too wet across the US Northern Plains which is likely to result in less spring wheat and corn plantings for North Dakota and Minnesota.

Add to this India’s seismic decision to ban bulk exports on Friday night – albeit with caveats – and it feels like we are witnessing the emergence of a wheat balance sheet issue, the likes of which many of us have never witnessed.

Interestingly, the USDA touched on this issue in its latest report. Globally, world wheat production is forecast to fall by 4.5MMT to 774.8MMT. World wheat stocks are set to fall by 12.7MMT to 267MMT which is the smallest since 2016/17, although global trade has grown by 20MMT since then. Pardon the pun, but that is food for thought…

Ocean Freight

A month of holidays across the globe starting from Easter and finishing with Golden week in Japan and May Holidays has certainly been disruptive, but fundamentally we remain in the same spot we were two months ago. The freight market is jittery and seeking clear direction and it’s hard to pick out the true drivers from the myriad of factors that are potentially in play. Not the least of these is that China remains beset by COVID which is causing congestion. This should be tightening tonnage supply in the Pacific, but it has been matched by an absence of orders to really tilt the tonnage balance in the owner’s favour.

The Atlantic has generally firmed – rates ex US Gulf/East Coast South America have seen most improvement and we would say the Atlantic has now re-gained its freight pre-eminence over the Pacific…but it has not caused a traditional “back-haul” rate structure to re-emerge which helps importers in the Middle East and East Africa. Fuel prices remain stubbornly high, and it doesn’t appear there will be any relief in the near future as oil prices remain supported by supply issues that seemingly outweigh the drag being seen in reduced demand.

USDA Commentary

The USDA US Hard Red Winter Wheat production was cut by nearly 6MMT and world wheat production was lowered some 3.6MMT to 774.8MMT whilst consumption was forecast at 787.5MMT. Russian exports were posted at 39MMT and Ukraine at 10MMT, and whilst the world needs these volumes, it seems difficult to see how either can achieve these numbers. Indian production was posted at 108.5MMT (the Government last was 105MMT and the trade is around 95MMT) but most importantly exports for 2021/22 were pegged at 8.2MMT which today would be around 6MMT and for 2022/23 were set at 8.5MMT which basis the export ban, will be close to zero.

The market was surprised USDA cut its estimate for U.S. corn yields to 177 bushels per acre, down 4 bushels from February. Spot corn ended modestly higher with stronger gains in the new crop December.

Soybean futures closed higher on expectations for limited U.S. supplies. USDA said U.S. farmers will harvest a record large soybean crop for the second year in a row this year, but supplies will remain tight due to soaring demand.

World barley production for 2022/23 is forecast at 149MMT up from 145MMT in 2021/22. There are some big changes in the annual changes at the country level. Canada’s crop is up by 3.55MMT to 10.5MMT following last year’s drought.

Australian Dollar

The Australian dollar fell to new year-to-date lows as markets maintained a firm risk-off mood. Fears the global economy is poised to tip into recession, as the sustained conflict in Ukraine heaps pressure on Europe’s energy crisis, China’s COVID-zero policy hampers supply chain productivity and central banks begin aggressively hiking interest rates, all weigh on investors, prompting an evaporation of positive sentiment. The AUD plunged below supports at 0.6915/20 to mark fresh intraday lows at 0.6830. Equity markets plunged, while copper, iron and other key metal exports all tested new lows. Often seen as a barometer for global growth, copper prices plunged nearly 3% while iron ore futures were down over 4%. Fresh fears Beijing will soon be plunged into lockdown sparked concern supply chain disruptions will only worsen in the months ahead.

Agsicenta latest Australian Balance Sheets

The post Basis Commodities – Australian Crop Update – Week 20 2022 appeared first on Basis Commodities .

Basis Commodities – Australian Crop Update – Week 15 2022

Mon, 11 Apr 2022 16:00:00 GMT

Market Update

Apologies for the delay between reports. With much of the grain markets focus elsewhere and international travels, unfortunately the weekly report had to be put on hold.

Last week was a steady week for Australian grain markets, with the grower remaining proud sellers. Those needing to are being forced to pay up and this looks set to continue as we head into the Easter holidays. Interestingly, barley also strengthened against feed wheat on the east coast with traders continuing to report that barley continues to be difficult to secure.

Milling quality wheat was generally up $10/MT for the week in most port zones which reflected the ongoing success of Australian milling wheat in the export markets where it feels most of the stem is well sold through to June and even most of July.

The Australian Bureau of Statistics (ABS) released its February export data last week and it confirmed what the domestic trade is acutely aware of – logistics are stretched to the max. Australia shipped 2.8MMT of wheat, 885KMT of barley and 608KMT of canola in Feb for a combined 4.3MMT.

In terms of sales pace, so far this marketing year (Oct 21/Sep22) Australia has shipped 10.62MMT of wheat which is 38% of the forecast Oct/Sep exports of 27.5MMT, 3.65MMT of barley which is 46% of the forecast Oct/Sep exports of 7.92MMT and 2.18MMT of canola in the Oct/Feb which is 52% of the forecast Oct/Sep exports of 4.23MMT. The shipping pace indicates Australia’s wheat ending stocks at the end of Sept will be below 5MMT despite a harvest of around 36.5MMT and this is testament to the amount of demand Australia has picked up, and is expected to continue to fill, due to the Russian invasion of Ukraine.

A quick update on logistics. Queensland and New South Wales shipping operations have been significantly slowed in March due to floods and associated supply chain disruptions and the BOM has forecast above average rain for April as well. In speaking with some east coast exporters, this disruption looks set to continue with damage to rail lines affecting the ability to accumulate grain along with an increasing list of vessels waiting to load.

On the positive side, much of the country is in great shape ahead of planting the 2022/23 crop. With 2021/22 exports maximised, this will leave smaller than expected carryover stocks than we had been forecasting prior to the outbreak of Russian hostilities in Ukraine.

Our analysts Agscientia expect canola plantings for 2022/23 will be held at similar levels to 2021/22 while their initial assumptions will be a wheat crop of 28.5MMT, barley 11.0MMT and canola at 4.6MMT. Pulses will increase on the margins. Higher yield assumptions will hinge on above average spring rains and a mild finish in Sept/Oct. Australia is off to a good start, but history tells us it’s too early to bank on that and there are some drier areas out there.

Weather

USDA April WASDE report summary

WHEAT:
USDA cut world wheat stocks by 3.1MMT to 278.4MMT. Most of this was in India where USDA raised domestic usage by 4.4MMT while production and exports were unchanged. Global wheat imports were lowered by 3.0MMT to 200MMT which is 2.5MMT less than 2020/21 as demand slows with the high prices and difficulty in accessing supplies with the war in Ukraine. Old crop wheat balance sheet issues are easing with the big Indian exports and slowing demand. The markets focus is now firmly on the 2022/23 crop where dry weather in the US central and southern plains, and the second worst winter crop conditions on record are helping to keep futures supported.

CORN:
USDA left the US 2021/22 corn balance sheet unchanged.

BARLEY:
There were limited changes in the USDA’s barley numbers. USDA cut 1.0MMT from global barley output to 145.1MMT. World barley trade was close to unchanged at 34.7MMT. Chinese and Saudi imports were unchanged at 10.5MMT and 5.9MMT respectively.

Ocean Freight

The freight market remains relatively soft as we enter the Ramadan and Easter periods. Sentiment remains neutral with both owners and charterers content to just let the market drift. Charterers point toward Ramadan and Easter, fewer coal stems from Indonesia, COVID issues in china and the potential for lower fuel prices as reasons the market should continue to ease. Owners talk up a still strong cargo picture and point to last year when the market pulled back only to soar away in Q2. If charterers are right, then we are experiencing a circuit breaker moment when we break out from the positivity of the past year, and if the owners are right then we are going to see an unseemly scramble for cover in early May. Despite the current market weakness (tonnage lists are still lengthening around the nearby positions), it is notable that period numbers remain a solid premium to spot – albeit that charterers are actively attempting to push those numbers down to be more in line with voyage levels. Handymax are fixing spot around the pacific at close to $30kpd dop, Supramax tonnage is heading toward mid $20k’s per day for the benchmark pacific round, while Panamax is hovering just over $20kpd for the same route.

Australian Dollar

Last week we saw the Aussie dollar surge through 0.76 US cents on the heels of a hawkish RBA policy update that saw interest rates on hold but a subtle shift in rhetoric fuelled expectations the board will raise rates in the coming months. However, by the end of the week a slightly weaker risk appetite from the market in general saw the Australian dollar fall below 75 U.S. cents.

The post Basis Commodities – Australian Crop Update – Week 15 2022 appeared first on Basis Commodities .

Australia’s Logistical Challenges

Tue, 29 Mar 2022 03:39:00 GMT

The 2021/22 harvest is behind us and now comes the task of moving this record crop to its destination, whether that be to domestic end users or via the export pathway. We knew logistics would be strained given the sheer size of the Australian crop, however this has been exacerbated by the added pressure of mother nature.

Western Australia had another bumper season, setting a new winter production record of 23.1MMT. Their logistics issues started early in the season with the lack of staff to run rail lines through the state due to staffing reductions, a result of the ‘covid recession’. As time went on, the staffing situation was resolved, and rail lines picked up pace again moving grain to port. However, a new challenge struck with bushfires ravaging parts of the state. This added further pressure to an already stressed supply chain moving grain to the state’s major export elevators.

On the east coast however, we have seen the opposite weather issue with severe floods bringing the supply chain to a halt in some areas. From November 2021 until now, we have seen rainfall records set with Southern Queensland and Northern New South Wales seeing their worst floods on record. This not only hampered access to on farm storage, but completely cut off roads and rail moving grain to domestic homes and export elevators.

The combination of fires and floods has led to a backlog on the shipping stem with vessels waiting up to four weeks to load. The grain terminals in southern Queensland (Fisherman’s Island and QBT) as well as Newcastle (GrainCorp Carrington and NAT) and Port Kembla (QUATTRO and GrainCorp Port Kembla) in New South Wales have all been disrupted causing significant delays for vessel and increasing the demurrage bills for shippers.

Overall, the last five months have been the most challenging in memory for logistics. This pressure will stay in place for the foreseeable future with continued high demand for Australian grain on the back of the war in Ukraine. As a consequence, shippers and receivers alike will have to continue to have one eye on the weather and domestic logistics as well as the traditional considerations of quality and price when making a determination where and when to buy their Australian grain requirements.

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The Middle East Drought, War in Ukraine and Food Security

Wed, 23 Mar 2022 03:44:00 GMT

The Gulf Co-operation Council (GCC) countries have traditionally been dependent on imports to meet their flour and feed needs. However, this year countries like Iraq, Iran, and Syria that usually produce a decent portion of their own domestic consumptive needs are looking abroad and tendering for grain to maintain their local grain and feed supplies as they reportedly are suffering from their worst droughts in 50 years. In a ‘normal’ season where world wheat supplies are ample, this would be a relatively simple process. However, with countries that are commonly relied upon to supply wheat to the world experiencing droughts, political unrest, export caps, tariffs, and war an already tight grains balance sheet seems to be getting tighter and supply problems are mounting. The war in Ukraine has already pushed prices to multi-year highs and it is possible this increase in demand may push grain prices higher still as net wheat importers commence the tug of war for the world’s available export wheat stocks.

Last month, Iraq’s agricultural minister announced the country is expected to produce just 3 million metric tonnes (MMT) of wheat this season, half of what was produced last season. Iraq has an inelastic wheat demand of 4.5 – 5MMT used to support its local food rationing program and it has started tendering for international supplies

Syria is reporting its wheat production as the lowest in 50 years, down 60% in 2021 and barley production at just 10% of its 2020 numbers due to a combination of drought, increasing costs and worsening economic conditions sparking fears of mass starvation through the region. Last month they released a tender to import 200,000MT of milling wheat to be filled within the next two months. It is reported Syria is expected to import more than 1.5MMT of wheat, with the majority coming from Russia. This is currently being hampered with Black Sea exports blocked due to Russia and Ukraine tensions.

Finally, Iran is set to import around 8MMT of wheat after its crop was ravaged by their worst drought in 50 years. This is an increase of around 7MMT from its usual annual 1MMT of wheat imports and the Government Trading Corporation of Iran has already begun a series of tenders to secure supply.

With demand outweighing supply in the Middle East, tenders have been and will continue going out to the usual wheat exporting countries to make up their short fall. However, with the world’s largest wheat producer, Russia, imposing export tariffs and quotas, coupled with the supply disruption caused by its war with Ukraine, competition is high, as is the price.

So unfortunately, for many countries in the Middle East, ‘put out a tender and see who takes it up’ isn’t quite that simple this year. If we look over the horizon though, the increasing price of wheat is a big incentive for a larger 2022/23 plant but prices for soybeans, corn and other grains are similarly high so in the event mother nature is kind, it is not a guarantee that we should see the wheat balance sheet move to a more comfortable level over the next 12 months. If the war in Ukraine extends for longer than the analysts (many of whom got the possibility of war wrong in the first place) predict, then we are moving into a period of higher prices for much longer than three to six months and this is likely to have a major impact on how many countries in the Middle East approach their food security needs into the future.

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Basis Commodities – Australian Crop Update – Week 11 2022

Mon, 14 Mar 2022 16:00:00 GMT

Market Update

It’s been an interesting week for Australian domestic markets. US futures fell by 10-15% before Friday’s modest bounce, but local cash markets were decidedly unmoved. Australian exporters that were short against nearby positions held bids, despite the decline in US futures and they were joined by domestic shorts who, until the invasion, were comfortable with limited cover on account of the record crop size.

Exporter bids for barley were higher across all port zones and this extended into the 2022/23 bids which emphasised what we have known for a while now – the disconnect between US futures and local cash markets. This disconnect has been evident for the past 18 months with the extreme weakness in basis and this may provide some longer-term opportunities as we move forward, although for now, caution is required.

It’s unlikely the Ukraine war will be resolved quickly. There may be a ceasefire, but removing sanctions takes a lot longer than putting them on and global buyers are now extremely sensitive to securing their supply chains given the reduced origination options.

For now, the market has covered what they can ahead of the northern hemisphere new crop inverse. The EU, we are told, is close to being sold out. Argentina is also down to fumes and although Indian exports will continue, it has its limitations from a phytosanitary and volume perspective. Australian export capacity is now largely booked through July and some in Southeast Asia have extended coverage into August/September and beyond.

Ocean Freight

Ocean freight remains firm, although we are starting to see some light on the horizon with fuel prices finally starting to drop. Whether this is a permanent fix or just a short-term blip is open to question and probably more influenced by OPEC than shipping. The ongoing imbalance between Atlantic and Pacific tonnage will continue at least in the short term. We are seeing vessels in Med being considered for Australian listings, such is the price disparity between the two. Although, the cost of the canal transit plus up-front bunker costs is a huge cashflow hit so it is not a major influence yet.

The paper markets for bunkers and freight are also stressing due to the potential for defaults on margin calls. The size of the margin calls and the risk of having Russian money somewhere/somehow in the chain has everyone questioning the very basis of their operations. Is that bunker hedge going to get paid even by a cleared exchange?

In this environment, anything other than spot or near-term business is very hard to execute.

Export Destinations

Australia exported 2.76MMT of wheat in January up from 2.18MMT in December as exports move into top gear. Exports are now running quickly in all states. Western Australia accounted for 899.5KMT followed by South Australia with 683KMT, New South Wales 548KMT, Victoria 449KMT and Queensland chipped in with 183KMT. Container wheat exports were strong at 264KMT. China was the largest destination with 687KMT. China has now taken 2.0MMT in the past three months. It’s being shipped from all states. Indonesia was the next largest behind China with 460KMT followed by the Philippines with 345KMT and then Vietnam with 222KMT. Yemen also took 187KMT.

Barley exports for January were 623KMT split between Western Australia, South Australia and Victoria. Saudi was the largest destination with 229KMT and has now taken just over 1MMT in the past four months. Jordan took another 126KMT. There is also a steady volume of shipments heading to the UAE, Qatar, Kuwait and Oman. Mexico took another 33KMT lifting the total shipments since September to 127KMT.

Canola exports for January were a whopping 763KMT. Most of this went to Europe apart from 70KMT to Japan, 111KMT to the UAE and 18KMT to Bangladesh.

Combined wheat, barley and canola exports for January were 4.15MMT.

Pulse exports were also very strong with Bangladesh the major destination.

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Basis Commodities – Australian Crop Update – Week 6 2022

Tue, 08 Feb 2022 16:00:00 GMT

Market Update

Domestic market price changes in the past week were variable and reflective of the nearby exporter coverage. Most of the focus is on logistics with exports now running at maximum capacity and most exporters are well sold through to June.

Shipping is at capacity and loading stems are seeing some slippage in the business ports of Western Australia and New South Wales as logistics, weather and bushfires have an impact. Even though the combined February wheat, barley and canola loadings are up to 4.3MMT, some of this won’t be loaded until March.

Grain exports in December combined for a total of about 3.5MMT for the month and January should be at 4.0MMT or more across wheat, barley, canola and other grains.

Interestingly, given the political tensions, China was the major wheat destination accounting for 715KMT, or about a third of all wheat shipments in December with Indonesia the second biggest.

Barley exports topped 1MMT in December.

Ocean Freight

As most of the Asian market returned to work after the Lunar New Year holidays, the ocean freight market, or more particularly the owners, were looking to start the year of the tiger with higher rates. However, charterers are currently resisting that assumption. From here, the market looks to be at a pivot point but with a lot of vessels committed to the backhaul to the Atlantic, we feel there may be a risk of a tonnage short emerging in Southeast Asia. It is more apparent on smaller sizes where tonnage lists are surprisingly short, but a quick glimpse at all the Baltic indices shows positivity in most areas.

Australian Dollar

The gains in commodities were supportive for the AUD, however the USD was much stronger after the U.S. employment data, which saw AUD/USD down 1% on the day. The AUD starts the new week below 0.7100.

Last week the Reserve Bank of Australia (RBA) decided to maintain rates at record lows and its monetary policy unchanged in its February meeting. The RBA statement indicated that “the Board judged that it is too early to conclude that inflation is sustainably in the target range,” a dovish stance that prevented the Australian dollar from rallying. From a technical perspective, we continue to expect support to hold on to moves approaching 0.6970. A breach of these levels would open the door to further Australian dollar weakness.

The post Basis Commodities – Australian Crop Update – Week 6 2022 appeared first on Basis Commodities .

Middle Eastern Trade – Relationships and Culture

Tue, 08 Feb 2022 03:33:00 GMT

In October 2020, it was estimated the total urban population in the Middle East was 65% of the total regional population, 10% above the global average of 55% and continuing to grow at an average of 2% per annum. Urbanisation often leads to increased access to economic, and social benefits as well as increased food consumption, all creating opportunities for the right businesses to expand into the Middle Eastern market and capitalise on that structural demand. So why aren’t we seeing more companies taking the leap? One of the main reasons is relationships and culture!

If you take a look at the fodder market in the Middle East, each country in the region has a different way of sourcing and buying their animal feed, and their business culture is based on existing relationships, so tapping into that market without the local knowledge, language and relationships isn’t an easy venture, one that could take years to develop.

This market knowledge aligned with our cultural sensitivity is the reason Basis Commodities was asked to assist one of Australia’s largest fodder exporters, Balco Australia , back in 2018. A venture that continues to provide real value to Middle Eastern customers and to Balco.

Balco Australia, based in South Australia has been exporting quality oaten hay to multiple countries around the world since the 1990’s including Japan, China, Taiwan and Korea. Understanding that the significant population growth in the Middle East combined with many countries in the region phasing out local animal feed production due to water management concerns would lead ongoing structural demand for fodder, Balco enlisted Basis Commodities to assist in developing this new export pathway.

“Our investment in additional processing capacity created the need for new markets, and the Middle East offered so much potential for Australian fodder in particular, so we needed a regional expert to set us on the right track. We started working with the Basis Commodities team in 2018. They have a large and trusted network of contacts in the feed and foodstuffs sector in the Middle East as well as an office based in Dubai, so we were looking to tap into that network..” – Rob Lawson, CEO of Balco Australia.

Expanding into any international market, for any purpose, isn’t as simple as investing in some flights, infrastructure, making a few phone calls, putting a pretty picture on the product or service and subsequently being accepted. It takes significant research to understand the culture and business customs of the country or the region you want to operate in. Understanding those customs, culture and ‘way of doing things’ is the key to success when expanding into and carving out new markets, particularly in a region like the Middle East.

For more information on how Basis Commodities can assist your business to expand into the Middle Eastern market, reach out to the team to discuss further.

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Basis Commodities – Australian Crop Upcate – Week 5 2022

Mon, 31 Jan 2022 16:00:00 GMT

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

Market Update

The local market remains relatively benign with the cash markets a little firmer week on week but largely ignoring overseas volatility. Farmers continued to trickle out sales in most states, but volumes appear to be small. ASX wheat futures finally traded on Monday after taking a week off. Most exporters are well sold and are instead focusing attention on logistics. With the exception of some smaller slots, most sellers are focusing on June forward now.

As always, the devil is in the detail and milling wheat bids were variable depending on the shipping zone which reflects exporter coverage against upcoming commitments for the regions.

South Australian wheat and barley remains firm in both the Adelaide and Eyre Peninsula while Western Australia was broadly softer as exporters get more comfortable. SFW and Barley 1 into Melbourne remain well supported due to a big container program while milling wheat grades appeared easier to buy.

Solid export demand continues to underpin SFW wheat bids which has encouraged domestic buyers to step up or potentially miss out. Additional feed wheat sales were made into both South Korea and the Philippines last week at about $335-340 C&F. This message is resonating with the domestic feed buyers, some of which were left chasing supplies through much of 20/21.

Sorghum harvest is being interrupted by the unsettled weather. Domestic demand at these values will be limited which means the vast majority of the 2MMT plus crop will flow into export pathways.

Weather

Unsettled weather patterns continue to draw moisture down from the tropical north into eastern Australia and the moisture profile should give the 2022/23 crop a good start when it goes in the ground in April. Western Australia remains hot and dry with the Bureau of Meteorology calling La Niña back to neutral by April.

Ocean Freight

The Ocean freight market is currently in hibernation as it waits for Chinese New Year (CNY) to end. Most owners anticipate a stronger market and so any forward demand is attracting a premium. Clearly, there is only so long this stand-off can prevail unless of course the expected does become reality and the wider market picks up after CNY. Indonesia is now back up and running for coal shipments and that appears to have stopped the rot in Asia but is not providing enough momentum in itself to push the market significantly higher. Rates in Southeast Asia, which have been weak for nearly a month, are improving but it’s not the vertical jump some expected. Needless to say, Bunker prices remain extremely firm as oil prices close in on 100 USD a barrel.

Australian Dollar

The Australian dollar bounced away from its downward correction on Monday. Fears inflation, an extended period of central bank monetary policy tightening and a slowdown in the global growth outlook prompted a further downward correction in markets appetite for risk. Having tested a break above 0.73 just two weeks ago the AUD has now given up over 3 cents. Key support is in place at 0.6930/50, a break below this handle could well signal an extended downturn toward 0.68.

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Basis Commodities – Australian Crop Update – Week 4 2022

Mon, 24 Jan 2022 16:00:00 GMT

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

Market Update
Local markets continue to be well bid following the hike in U.S. futures and slow farmer selling. However, gains in the local wheat cash bids were modest compared to the rally in overseas futures with basis doing most of the work. Demand for the lower wheat grades remains strong on the back of a well-advanced export sales program that has seen the bulk capacity well sold through April and into May.

Barley also remains well bid on the east coast where a lot of the New South Wales barley crop was downgraded because of the rain at harvest, so isn’t meeting the Bar1 export specs. It’s also expected Victoria yields came in a tad lower than forecast, also contributing to the tighter feel.

Sorghum harvest is just getting underway in southern Queensland while central Queensland farmers are planting. We expect strong yields should result in a large harvest. Most of the harvest will head into export markets at current prices, primarily China, with Australian feeders opting for feed wheat and barley.

Looking forward, the La Niña weather pattern continues to pull moisture down from the north across the major east coast cropping areas. The Bureau of Meteorology (BOM) said the February to April rainfall is likely to be above median for parts of northern and eastern Australia which sets us up well for a good plant for the 2022/23 crop. The wet summer is topping up soil moisture levels and reduces the need for big autumn rains for a successful 2022/23 planting campaign.

In terms of export profile, at least half of Western Australia’s program will be low protein. On the east coast, 75% of New South Wales wheat exports will be feed wheat. Australia’s combined low protein ASW and feed wheat exports will be around 10MMT of the forecast 24.5MMT national wheat exports. We think maybe only 2MMT will be higher protein wheat with the balance mid protein milling wheat.

On the demand front, it’s been reported that China has secured 4-5MMT of Australian wheat and the Philippines has bought close to 1MMT of feed wheat. So, the sense is a significant amount of work on selling the non-milling crop has already been done. The shrinking ASW discounts to APW is confirmation the lower quality harvest is finding strong demand at current values.

Australian Weather

Ocean Freight

The week proved to be quiet over-all with Indonesia’s ban on coal exports continuing to overshadow the freight market. Handymax, which have proved such a bastion of strength over the past year, eased from mid-$20k’s per day for a Pacific round voyage to sub $20k on the back of very weak Southeast Asian demand. We still feel the markets will be relatively quiet and under pressure until mid February.

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Basis Commodities – Australian Crop Update – Week 4 2022

Mon, 17 Jan 2022 16:00:00 GMT

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

Market Update

Domestic markets remain quiet for the most part. From a demand point of view the export capacity is being dominated by feed grain, lower quality milling wheat and canola at healthy elevation margins. Demand for the remaining milling grade wheat is holding to a hand to mouth buying pattern and feels expensive into the Middle East and East Africa as Black Sea and Argentinian values remain competitive.

Execution remains difficult and a number of ports around the country are suffering from congestion. In terms of capacity, most sellers are now looking at June forward as China seems to have quietly picked up a lot of the remaining first half stem.

Our analyst Agscientia raised their final 21/22 national wheat production update to 36.9MMT on the back of the massive Western Australia deliveries. Barley production is 12.7MMT, canola 6.35MMT and sorghum 2.33MMT. Larger plantings and favourable seasonal conditions have come together to allow Western Australian farmers to eclipse the previous record large harvest by over 30 percent, according to the Grain Industry of Western Australia (GIWA). GIWA said Western Australia produced just over 24MMT of all grains. The exceptional result was a function of a record planted area of 9.2 million hectares, up 7.8 percent on last year and a fifth more than the previous record harvest. Other contributing factors were the early plantings dates, good early moistures as well as mild temperatures which allowed the crop to get off to an excellent start. The favourable early start also prompted farmers to boost fertiliser applications, GIWA said.

The USDA delivered its February WASDE report last week which was in line with pre report expectations. USDA sharply reduced South American soybean production estimates for a second consecutive month while only making a small cut to corn output. This sent soybeans higher with bigger gains in corn as soybean futures have already factored most of the production losses. Funds were large buyers of corn and soybean following the report and to a lesser degree wheat. Soybean and corn futures set eight-month highs.

Weather

Ocean Freight

In ocean freight, owners have been trying to drag the market upwards with charterers that had waited for a clear market picture to emerge after the CNY/Olympics suddenly scrambling for cover. However, by early this week the sentiment was softening.

Australian Dollar

The AUD remained range bound.

The post Basis Commodities – Australian Crop Update – Week 4 2022 appeared first on Basis Commodities .

Australian Crop Update – Week 2, 2022

Wed, 12 Jan 2022 16:35:00 GMT

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

Market Update

Happy New Year and welcome back to our weekly commentary.

Wheat prices fell across all zones last week in line with the general decline in U.S. futures. However, quality remains a major problem. Half of the Western Australian wheat receivals were low protein ASW at <9% protein and about 75% of the New South Wales wheat crop is either SFW or GP quality which is sub 150 FN and not suitable for food milling. There is also about 0.75-1.0MMT of feed wheat in South Australia.

Global barley values have been steady in recent weeks in seasonally light trading. Australian barley quotes remain comfortably the cheapest origin at $266 FOB (Adelaide). Internal barley prices in Australia were firmer last week despite declines in wheat values as exporters struggle to attract farmer selling. Farmers are in no hurry to sell barley, which is typically their lowest-priced crop, to meet early shipments. Most appear content to wait and see what the planting weather looks like in March. Truck shortages through southeast Australia also appear to be playing a part, with more of the barley crop held on farm compared to wheat and canola, which eliminates using rail.

Our Analysts AgSc updated their Australian production and supply demand estimates yesterday. We have raised the national wheat production number to 36.2MMT which included 13.0MMT in New South Wales and 12.2MMT in Western Australia. Barley production is down on last year at 12.9MMT, while canola production is sharply higher at 6.1MMT on the back of the 3MMT plus Western Australian crop. We have raised Australian wheat exports to 24.5MMT, barley to 7.0MMT and pegged canola exports at 4.2MMT. Export capacity and a slow start will limit the volume of shipments.

Australian Supply and Demand

Australian Weather

Ocean Freight

Post-holiday lethargy, high fuel prices and a rumour concerning Indonesian coal bans is causing a slow start to the year for the ocean freight market. It seems the downside is gaining a bit of momentum in terms of expectations and rates in Asia are sliding accordingly. However, it’s hard to define where the real medium-term outlook is heading. Large Handymax’s are still holding a premium but it’s hard to see that lasting when Supramax is at such a discount. We also expect more participants to return to work next week so maybe volumes will pick up a touch again. However, we have an early Chinese New Year that then blends straight away into the Beijing Olympics.

Currency – AUD

The Australian dollar advanced above 0.72 U.S. cents amid an uptick across commodities and commodity currencies. The uptick in demand for commodities, coupled with a surge in domestic retail sales allowed the AUD to break resistance at 0.7190. However, the AUD remains firmly range bound. Inflation is now the primary driver behind monetary policy expectations globally and another robust print for U.S. inflation will all but guarantee a March rate hike and amplify the likelihood of four rate adjustments through 2022 and see the AUD break back below 71 cents.

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Australian Crop Update – Week 51

Wed, 22 Dec 2021 16:32:00 GMT

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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From Milling to Feed – the Downgraded Australian Wheat Crop

Wed, 22 Dec 2021 01:10:00 GMT

The 2021/22 Australian harvest was set to be a bumper in terms of quality and quantity. Overall, all Australian states saw favourable growing conditions. There was going to be ample milling wheat and records were set to be broken. We were a millimeter from the finish line when La Niña reared its head and changed the game for many farmers on the east coast of Australia, and in turn, the global milling wheat balance sheet.

If we look back on 2021, it was as close to a textbook growing season as you can get. Most areas had good moisture to sow into, there were timely rains throughout the year and great warm spring growing temperatures. We got through the frost window with minimal damage and the crop ripened at the right time. There was some mice damage at the start of the season, but overall, the sentiment in the industry, from primary producer all the way final destination was positive. Sales contracts were written. Harvest got underway in Queensland and Northern New South Wales, then the skies opened and in some instances didn’t seem to close, causing widespread flooding, crop downgrades and in some cases, complete losses.

At the start of December, ABARES released their December crop report citing a predicted new national record 58.4MMT winter crop made up of 34.4MMT wheat, 5.7MMT canola and 13.3MMT barley. Some analysts think this could move higher still, but the issue Australia is facing now is quality, not quantity as Western Australia’s crop profile also continues to disappoint on the protein front.

With harvest on the home stretch, what can we expect from the coming Australian export program?

First, domestic milling wheat and seed requirements will move to capture milling wheat before it moves into export channels leaving a high proportion of the 2022 export task weighted towards lower quality wheat, feed wheat, feed barley and canola. In our view this will cause already tight global medium and high protein wheat supplies to tighten further causing protein spreads to widen as a way of encouraging consumers to look for ways to use lower protein, lower quality wheat. However, this will put pressure on both exporters and consumers to ensure supplies are fit for purpose.

Another challenge facing exporters, and by definition consumers, is filling early new crop contracts due to logistics and harvest delays. The east coast shipment program for December has already been heavily effected and experience suggests it will take a while to catch up, with shipment delays an inevitable consequence. That said, exporters have been through this before in 2016/17 and have more resources and ports at their disposal this time around.

Knowledge of those logistics and working with our suppliers to try and ensure a “fit for purpose” performance is where the knowledge and experience Basis Commodities offers can cut through the complexity of a harvest like this and assist exporters and consumers alike to navigate its hidden dangers.

For more information on how Basis Commodities can assist your business, reach out to the team to discuss further.

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The post From Milling to Feed – the Downgraded Australian Wheat Crop appeared first on Basis Commodities .

Australian Crop Update – Week 50

Thu, 16 Dec 2021 16:28:00 GMT

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

Harvest and Weather Update

Last week was a volatile one for the Australian markets. Local cash values were trading the scarcity of quality milling wheat supplies and have remained relatively stable. Although, in the last couple of days we are starting to see feed wheat values, and interestingly, high protein values come under pressure.

Buyers are pulling east coast wheat and barley values as farmers start to release weather spoiled crops onto the market, while bids in Western Australia and South Australia are better supported as exporters chase supplies against shipping commitments.

Harvest is progressing quickly in most states, approaching 70% complete, with record receivals are being recorded in WA. The strong deliveries flag the potential for a further production number increase.

In respect of harvest quality, in NSW there are only a few areas where the wheat falling numbers are coming in above 200 and plenty where they are coming in sub 150. The test weights have held up well and farmers are still reporting high yields. Victorian quality has been good, with a reasonable volume of hard wheat ranging between 11.5% to 13% protein and APW now hitting the bin. South Australia is seeing a similar profile. Western Australia continues to have a crop profile dominated by ASW and low protein wheat.

Ocean Freight

It has been an uninspiring week in the freight markets. The Atlantic pushed up in the early part of this week with the Pacific market quietly following suit. Rates in Asia firmed for Handysize, Supramax and Ultramax, while Panamax has stalled a bit

It is hard to tell whether the firmness we are seeing this week is related to cargo interests fixing early, prior to the impending festive break, or whether there is a more fundamental movement of the cargo supply and demand equation. Time will tell. It feels like a lot of market participants are taking the opportunity to travel over the festive break and certainly, the market has an “end of the year” feel to it.

Currency – AUD

The Australian dollar fell through trade on Monday, unable to sustain Friday’s risk on move as fears surrounding the impacts of omicron and positioning ahead of this week’s key US Federal policy update.

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Australian Crop Update – Week 49

Fri, 10 Dec 2021 16:16:00 GMT

Harvest and Weather Update

The Australian domestic markets are starting to work through the aftermath of the torrential rains that fell across NSW a week ago, downgrading the quality of a large percentage of the state’s grain harvest. Harvest, which is a third complete in NSW, was underway again in the latter part of the week, but progress will be slow and the harvest in NSW may extend into January which is very late.

Harvest is advancing more quickly in other states. Victorian quality has been good with a reasonable percentage of H2 and APW coming out of the Mallee. South Australia’s grain deliveries are also advancing with quality reasonable.

ABARES issued its December crop report where they put national wheat production to 34.4MT. Barley production was forecast at 13.3MT and canola at 5.7MT. But the issue is quality and less so quantity now.

A lot of the wheat has been downgraded to GP and lower with some patches of ASW and the odd paddocks of APW.

Feed wheat is being offered into feed markets across the east coast. Good quality wheat bids came down with the weaker dollar and declines in U.S. futures, but higher prices are still being demanded and ASX futures for the January contract are still above 400. Feed barley came under pressure last week with markets turning from all bids to all offers on the realisation the big feed wheat event will displace a lot of barley feed demand.

Exporters are quoting Western Australia APW1 10.5 pro at a US$375 FOB vs ASW with no protein guarantees at $320 FOB. Feed wheat is being offered ex eastern Australia at $305-310 FOB.

Australia is off to a quick start to the 21/22 export program, unlike 20/21 where wheat carry in stocks were drawn down by drought. Australia exported 1.478MMT of wheat in October. Barley exports were solid at 482KMT.

Ocean Freight

We have seen the firmest week for a month as owners really found they had some traction again. In general, rates in Asia have improved about $2-3k per day this week. It still doesn’t feel like the market will fly again in the near term, but for sure rates have moved forward off-the bottom of the curve. The big question is whether this week’s renewed activity from China represents the end of a period of applied restraint or is it merely a temporary loosening of a tightly held economic noose.

Currency – AUD

The Australian dollar fell through trade on Thursday, unable to sustain the weeks upward trajectory amid a risk-off tone that enveloped financial markets. Added uncertainty surrounding the state of the Chinese property market. While Chinese officials have stepped into curb restrictions imposed on the property market and sought to add stimulus in a bid to contain any contagion event, there are ongoing concerns these failures will spill over into the broader Chinese economy. With investors moving away from risk assets, the AUD gave up highs at 0.7180 shifting toward below 0.7150.

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Australian Crop Update – Week 48

Tue, 30 Nov 2021 15:00:00 GMT

Harvest and Weather Update

Heavy rains fell across much of New South Wales last week and into the weekend and this is certain to result in a further substantial downgrading to winter crops in the state. The cash markets in New South Wales jumped by $50/MT for the week, on the realisation at least half of the New South Wales wheat harvest will now be downgraded to general purpose wheat or lower. Prices in other states followed New South Wales higher as the trade scrambled to cover export and domestic sales made in expectation of a record against milling wheat sales. This number could increase if the wet weather conditions and more of the Southern New South Wales crop is downgraded. Yields will also suffer more broadly following the heavy rains with lower test weights.

Weather in Western Australia was generally favourable, South Australia less so. CBH had taken 6.3MMT at the start of the week. A dry forecast should have them above 9.0MMT in deliveries by early next week. Wheat proteins have been low in Western Australia, with about half the crop coming in ASW and ¾’s APW2 or lower.

What does this mean for the likely quality profile so far?

Our Analysts are expecting there will be about 10MMT of other/feed (downgraded), 11MMT ASW, 10MMT APW and 3.2MMT of H2/APH. Domestic milling wheat and seed reserves will move to capture 3.6MMT of the milling wheat before it moves into export channels leaving a high proportion of the export task weighted into the lower quality spectrum (ASW and GP or below).

Importantly it’s likely that the volume of downgraded wheat increases from the above assumptions. 2/3’s of the New South Wales wheat crop is still to be harvested and there is more wet weather forecast.

Farmers will be rethinking sales plans now. They are working through existing sales commitments against likely quality downgrades. Further sales will stop until they harvest the rest of the crop and know what they have got. The exporters we have spoken to will be in a similar boat.

Australian Supply and Demand 21/22

Our Analysts released an Australian Supply and Demand update during the week. National wheat production is up to 33.9MMT from 32.9MMT previously and ABARES 34.4MMT. National barley production is at 12.3MMT vs last year’s 13.7MMT. We are pegging canola production at 5.4MMT

We have wheat exports at 24.1MMT (23.8MMT last year) and barley at 6.4MMT (8.0MMT last year) but this is likely to reduce as the quality of the crop is going to impact on logistics and the export pace. This is still a work in progress, but one would imagine December and January shipments from the East Coast and perhaps South Australia will be heavily affected.

So, what does this all mean?

Global milling wheat supplies tighten further, particularly for mid and high-protein users, protein spreads widen, and in our view, prices for milling wheat in Q1 and Q2 just lost their last “supply” anchor. Debate will switch to what level pulls more Russian and US wheat into the export matrix, the prospects for the northern hemisphere new crop, including the cost of fertilisers(!!) and the level to which we see demand destruction at destination.

Ocean Freight

In contrast to the grain markets, ocean freight was relatively stable last week. The wider market still remains relatively subdued and lacking in fresh enquiry which has had the knock-on effect of creating a vacuum of information. In a general sense, the market has a more traditional look to it with a stronger Atlantic and weaker Pacific market generating discounted back haul opportunities. At the moment, it is hard to feel the shipping market will change significantly without a pick me up from China, so in the absence of that, we would have to feel the situation will remain flat, give or take, until February.

Currency – AUD

The Australian dollar fell to a low of 0.7112 on Friday on the back of risk-aversion caused by the new Omicron variant of COVID 19. From a technical perspective, the AUD/USD pair is currently trading at 0.7130. We continue to expect support to hold on to moves approaching 0.7106 while now any upward push will likely meet resistance around 0.7153.

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Australian Crop Update – Week 47

Tue, 23 Nov 2021 15:00:00 GMT

Harvest and Weather Update
ASX wheat futures rocketed up to AUD $425 on Tuesday as traders scramble to cover nearby milling wheat shorts amid the threat that a significant proportion of the NSW wheat harvest could be downgraded. East coast ASX wheat futures are now up nearly AUD $100 since late October as wet weather stalls east coast harvest activity and jeopardises grain quality. The situation is starting to look reminiscent of 2010/11 when a large proportion of the east coast wheat harvest was downgraded to feed quality following a wet harvest.

New South Wales grain harvest is still less than a third complete. At this stage our analysts feel 1-2MMT of the New South Wales wheat crop is already downgraded and the 30-60mm of rain forecast for the remainder of the week could more than double this. For the moment, Victoria, South Australia and Western Australia are avoiding the excessive rain.

In Western Australia, barley and canola are still making up the bulk of the WA deliveries but wheat deliveries are starting to climb as harvest picks up. Wheat proteins remain lower than normal which is likely to push more export sales into feed markets like the Philippines as well as making it difficult to meet the specs needed for milling wheat destinations, which require higher protein.

On the cash markets, quality milling wheat premiums have rocketed, while low quality bids have tumbled in the absence of mid protein wheat which typically makes up the bulk of exports heading into overseas markets. The abundance of low protein wheat adds further complexity to the global market which is already extremely short mid protein wheat supplies.

The latest run of the weather models has 20-60mm for Mon/Fri for Northern New South Wales and 30-80mm for Southern New South Wales. South Australia and Victoria should see lighter falls.

Ocean Freight

The freight market continued its negative path with Chinese demand almost completely absent from the market, which is really underpinning the present freight market malaise. Our feeling is the market is getting temporary support here, but Chinese demand will continue to be muted until after Beijing Winter Olympics which is set for February.

Currency – AUD

Last week the Australian dollar was hampered by a flight to risk aversion and a stronger greenback, closing a full cent lower from where it began the week. The greenback remained bullish, supported by a more hawkish Federal Reserve. This was led by expectations that two interest rate hikes are now expected in 2022. The Australian federal reserve was more dovish, suggesting they didn’t see interest rates needing to rise until 2024.

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Australian Crop Update – Week 46

Wed, 17 Nov 2021 15:00:00 GMT

FOB replacement values using Australian track bid/offer (AUD) – not an indication

Harvest and Weather Update

Local markets were sharply higher with the strength in US futures (hitting nine-year highs yesterday) but also due to wet weather delays with wheat harvest and growing uncertainty over wheat quality, squeezing out early new crop shorts.

Widespread rain fell across most of Australia including Queensland, New South Wales and parts of South Australia last week. The rain further delayed an already later than normal harvest. At this stage, we anticipate this has seen around 1-1.25MMT of the crop downgraded, but this will easily be absorbed into the domestic market without the need to find export homes. Crops in the south remain green and are not vulnerable to downgrading at this stage. High protein wheat bids are rising while downgraded bids are slipping as traders wait to see what the quality is like when harvest resumes in the coming days.

In the west, CBH is receiving much more ASW than anticipated. Close to half of the wheat deliveries so far have been ASW or below while less than a third has been APW1/hard wheat.

Forecasts are showing another rain front hitting New South Wales and South Australia this weekend and this will keep the market supported.

Ocean Freight

Another incredible week in a volatile year for shipping. The market has continued to ease across the board in all sizes. It is hard to put the finger on specific causes, but to take a broad approach, it would be hard to look beyond the absence of China related business as the underlying reason. The tap has been turned off. Levels remain unpredictable, however, our feeling is the markets are close to bottoming – especially in the Handymax size.

Currency – AUD

The Australian dollar started last week advancing against its US counterpart, trading around 0.7440. However, employment and inflation data fuelled investors’ concerns and the Aussie dollar ended the week around the 0.73 level and has struggled to move away from here so far this week.

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Australian Crop Update – Week 45

Thu, 11 Nov 2021 15:00:00 GMT

Harvest and Weather Update
East coast milling quality wheat and ASX futures have moved significantly higher this week as we start to endure the second significant rain system in a week. South Australia and Western Australia also moved higher as a relative value response to east coast values rising. Overnight, storms in Western Australia’s Geraldton zone will stall harvest activity while the east coast and South Australia are waiting to see what’s happens with the forecast torrential rains.

The only saving grace is farmers have made reasonable harvest progress in Northern New South Wales and Southern Queensland, and much of the rest of the east coast, South Australia and Western Australia are still a little away from harvest. In addition, overnight runs of the BOM’s ACCESS model have significantly reduced the volume of rain forecast and have offered an improved vision of the weather for next week – let’s see.

AGsc Australian Balance Sheet Update

Australia’s 2020/21 export program was bought to a close at 23.8MMT and barley was around 7.8MMT. Our analysts updated the balance sheets late last week to reflect the final 2020/21 carry out based on ABS exports. This increase lifts Australia’s 2020/21 wheat production forecast to 34.0MMT and barley production to 13.75MMT.

In terms of 2021/22, forecast rain in the southern half of the country has seen our analysts raise their production forecasts 5% to just under 33MMT for wheat and 12MMT for barley.

Ocean Freight

We have had a more volatile couple of weeks in the bulk freight market. As soon as charterers got a feel that a widespread correction was in play, they all disappeared from the market and we have been left with something of a vacuum. There were some signs of support appearing back in the market this week.

Currency

The Australian dollar faced headwinds, dropping 1.7% for the week as both the RBA and offshore central banks provided more dovish stances to potential interest rate hikes compared to market consensus. In addition, China continues to pursue a COVID policy that has hampered Q3 and Q4 growth expectations. Concerns around the health of the Chinese property market also continue to grow. As such the AUD as a proxy to Chinese growth prospects remains vulnerable to further weakness.

USDA Report Summary

Changes to the wheat numbers played second fiddle to soybeans and corn, where much of the pre-report activity was focused. Globally, USDA lifted Russian wheat production by 2.0MMT to 74.5MMT adding to its very volatile year for them where the USDA has issued both the highest and lowest production estimates of any of the Russian privates or other reputable forecasters. Ukraine’s wheat exports were increased by 0.5MMT to 24.0MMT. EU wheat exports were raised by 1.0MMT to 36.5MMT. Australian 2021/22 exports were unchanged at 23.5MMT but the 2020/21 numbers were raised by 0.5MMT to 24.5MMT. India’s exports were increased by 1MMT to 5.0MMT. Global wheat imports were raised by 3.6MMT to 203.2MMT. Algeria was increased by 0.5MMT to 7.5MMT and Iran up by 1.0MMT to 5.5MMT, Turkey was +1.0MMT to 11.0MMT and Saudi was up by 0.5MMT to 3.5MMT.

World barley production was lowered by 1.8MMT to 146.2MMT, down 14.3MMT on last year. Global imports were unchanged at 33.6MMT but there were some notable changes. Saudi imports were lowered by 0.5MMT to 6.5MMT, Turkey was increased by 0.4MMT to 2.7MMT and China imports were raised by 1.5MMT to 11.1MMT

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Australian Crop Update – Week 44

Mon, 01 Nov 2021 15:00:00 GMT

FOB replacement values using Australian track bid/offer (AUD) – not an indication.

Harvest and Weather Update

It’s still very early days for Australia’s 2021 winter grain harvest. Harvest is still at least 2-3 weeks away in Victoria and Viterra has only taken about 1000MT of grain deliveries in its entire network.

Stormy, unsettled weather slowed last week’s harvest activity. There was 5-40mm of patchy storm rain across Southern Queensland, although the heaviest falls were generally to the east, so it missed the larger cropping areas. Northern New South Wales also saw some isolated storms, although only a few areas saw any significant rain. Daily showers across Western Australia’s cropping areas slowed harvest progress with totals of 10-40mm for the week across most areas. Unsettled weather is set to continue across eastern Australia next week with southern New South Wales and Victoria likely to see rain (15-40mm) in the second half of the week. The La Niña and negative IOD weather patterns are expected to result in a wetter than normal start to summer.

Grain Markets

Domestic markets came under pressure on increased farmer selling ahead of harvest. Wheat bids were down $5-15/MT except for Western Australia where Kwinana was steady. Barley bids were off $3-10/MT, again apart from Kwinana which was unchanged. Canola bids were down $10-35/MT. East coast wheat and barley bids came under pressure during the week on increased farmer sales ahead of harvest.

Prices for higher protein grades were stronger in the later part of the week which suggests there is a limited amount of high protein wheat coming off so far.

On a cash basis, Australian wheat and barley is comfortably competitive. IGC kept its indicative export quote for Australian APW wheat at $327/MT FOB Adelaide with ASW at $323/MT and feed barley export at $271/MT FOB Adelaide, and these feel about right. In terms of stem availability though, 2021 is just about done and Jan/Feb is getting tighter by the day.

Ocean Freight

Last week was extremely quiet. Charterers are holding off because they believe this is the correction they have been waiting for and owners are not willing to fix at a short-term dip. Lack of demand across the board on the near position seems to be the main reason for the correction. The bullish argument remains congestion in China and COVID inefficiencies still influencing tonnage supply. Bunkers remain firm and the current sentiment suggests they will remain so for the near term at least.

Broadly speaking, Supramax and Panamax have dropped around USD 8-9k for the benchmark Pacific Round Voyage. Handymax is holding better, but the spread to the larger Supramax suggests the Handymax will also have to ease.

It’s easy to forget that in 2004-2009, the last time we saw a substantial narrowing of S&D, we saw large fluctuations and it was not a straight line up nor down. Maybe we are seeing the same type of volatility?

Currency

What a difference a week makes. The market is currently pricing almost a 40% chance of a hike in interest rates in February next year. Data released over the weekend showed China’s factory activity contracted more in October than expected with high input prices and power disruptions.

The strongly inflationary data put a fire under the USD which saw material gains against the AUD.

In what is shaping up as a big week for the Australian dollar, today’s PMI’s out of China will be closely watched with market participants keen to gauge how the domestic manufacturing sector is navigating supply chain stresses and power outages.

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Container vs Bulk Export – where are we headed?

Wed, 27 Oct 2021 07:47:00 GMT

The movement of grain between countries around the world in bulk vessels has been a significant method of conveyance for centuries. However, while filling a bulk vessel with 60,000MT has been the preference for major exporters, the last twenty years has seen the movement of grain in containers become more prevalent.

In the early 2000’s smaller companies in countries like Australia introduced the concept of exporting grain in containers as an alternative to bulk export. It allowed importers to order smaller parcels of product and incur a lower financial outlay. Australia imports a large amount of goods each year from China arriving in containers with products like tech goods, clothing and other consumables. In contra-trade, China has high demand for grains and oilseeds for their milling, malting, crushing and feed industries which has traditionally been serviced via bulk vessels. Through utilisation of the empty containers from imported goods from China, the return voyage with grain meant that shipping lines could reposition empty containers to the demand origin to re-coupe voyage fees.

This new approach to smaller shipments quickly changed the dynamic of grain exports around the world. It allowed for cheaper logistics costs, smaller contracts of 500 to 1000MT compared to 60,000MT and the ability for niche products to move further around the world in a time-efficient manner. The movement of grain in containers continued to grow, however, this trend was broken with the arrival of COVID-19.

It is well documented that 90% of the world’s trade occurs via sea and container export is a significant method of conveyance to get products from origin to destination. China represents nearly 28% of the global export market, some US$2.6 trillion dollars a year in trade. After factory closures of COVID-19 in 2020 and the delays in return to production, many supply chains around the world have been affected as other exporting countries rely on China for parts to their products. From cars to smart phones, China’s disruptions had a ripple effect delaying the world trade.

The flow-on effects of a disruption to the global supply chain was underestimated. Since the initial pause of manufacturing in China at the start of 2020, the price of container freight has skyrocketed during the pandemic allowing the shipping lines to increase freight rates in some cases 3-4 times the normal prices. One of the world’s major trade routes, China to West Coast USA has seen average delays of 70 days from normal transit times with significant delays in discharging at USA Ports due to labor shortages and rail inefficiencies.

While some countries begin to return to operating at a normal level of manufacturing again, China is facing another crisis in relation to energy, and factory closures have once again caused issues in the ability to manufacture goods. The backlog of those initial shutdowns and increase in demand continue to wreak havoc on the container industry leaving many international customers without supply.

Another major contributor to the price increase of container freight was the Suez Canal disaster when the Ever Given, a container freighter became wedged across the import-export pathway that connects Europe and Asia. This supply chain blockage lasted six days, and backed up 369 cargo ships with an average of 15,000 TEU’s per vessel; an estimated 5 million containers.

In addition to these two major contributors affecting container export, other factors are affecting the supply chain. Issues such as rising fuel prices, a lack of labour at major ports, a backlog of containers to be unloaded and loaded, and further snap lockdowns across international terminals have all contributed to the supply chain crisis we all face today.

It is expected that high container freight prices are likely to continue for the next few months at least until new container ships come online and the supply of containers increases.

So what is the solution to the current challenges of containerised grain export and the return of reliability for supply for international customers?

For many businesses who have the storage capability and financial resources to do so, they will go back to the future and revert to the traditional and currently more affordable bulk export model. However, not all grain exporters around the world have that ability, particularly into those niche markets that were built from the concept of containerised export. This is where a third-party connector like Basis Commodities can add real value to your business. Our relationships with grain exporters, end-users and freight providers around the world, particularly in Africa, the Middle East and Australia, provides prime opportunity for bulk co-shipment.

What does this mean?

A customer may continue to purchase smaller parcels and Basis Commodities connects said customer with other companies requiring the same model, essentially sharing the freight savings of a larger bulk vessel while avoiding the excess fees and delays currently occurring in the container industry.

For more information on how bulk co-shipment works and how Basis Commodities can assist your business to manage contracts, reach out to the team to discuss further.

The post Container vs Bulk Export – where are we headed? appeared first on Basis Commodities .

Australian Crop Update – Week 43

Tue, 26 Oct 2021 15:00:00 GMT

FOB replacement values using Australian track bid/offer (AUD) – not an indication.

Harvest Update

Local markets were mostly lower before the rally in US wheat futures on Friday. Harvest progress remains slow with cool overnight temperatures and high humidity limiting harvest progress in Southern Queensland and Northern NSW last week. Harvest in Western Australia’s Geraldton zone is progressing, although CBH is still to issue its first harvest report for the season. Early yield reports from Western Australia are coming in better than expected, following the dry finish. Overall, Australia’s harvest is yet to crank up and probably won’t happen until early November.

Our analysts are keeping the national wheat production at 32.0MT coming into harvest but our bias is that production is likely to edge higher on the back of better yields with the mild spring. We could see another 33.0MT crop in 2021.

Weather

Grain Markets

On the cash side, farmers are becoming prouder owners of wheat and barley on the back of production difficulties in North America and Russia. At the same time, traders and exporters are happy to wait until harvest pace picks up to engage. The other notable feature of the cash market is that barley values continue to slide against wheat. We see this as a function of depth in export demand for wheat compared to barley. As previously highlighted, exporters are largely sold for December, January and probably most of February. The odd slot remains, but the premium being asked reflects the lack of liquidity for those positions and confidence on behalf of the seller that they will get their number. In discussions with exporters, it seems the Asian exporters have finally woken up to the need to move well ahead of the shipment slots, given the limited choice available to them, and are now looking to cover Australian wheat for March onwards.

We have been asked a few times ‘what does the elevation margin look like in historical terms?’. The answer is very healthy. The chart below (courtesy of Agscientia) is based on the difference between IGC weekly quarter Australian FOB (Adelaide) APW and the grower replacement based on Profamer best bid plus FOB costs.

Ocean Freight

From an ocean freight perspective, the Pacific freight market slowly crept upward for most of the week but as we enter a new week, the FFA’s have a distinctly choppy feel. It does not take much of a rumour or a new “issue” to push the market either way. Forward paper has eased and there appears a big disconnect between Q1 FFA’s and today’s spot levels.

The underlying wider market remains firm and even if there is a correction, it is highly unlikely we are returning to levels seen 12 months ago. Negative economic news from China does not change the limited nature of the supply-side of the equation, especially for smaller handymax vessels. There simply is not enough new builds being delivered in the next 12 months to satisfy the market. So, any near-term negativity should be viewed in relation to that dynamic.

Container freight remains the greatest obstacle to the container trade with the imbalance of equipment and schedule disruptions continuing. The greatest demand for containers remains repositioning back to China. However, at the same time, we are seeing the Chinese energy crisis start to impact China’s ability to export. Elsewhere, congestion off America’s West Coast has followed similar backups in Hong Kong and Shenzhen as they deal with in the aftermath of Typhoon Kompasu last week.

Currency

The AUD appears to have shaken the shackles that saw it drift between 0.7130 and 0.7360 through much of July, August and September, entering a new trading range and bouncing between support at 0.7460 and resistance on moves approaching 0.7550. However, with gains led by improvements in the risk narrative, the upturn could falter at any moment.

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Australian Crop Update

Mon, 18 Oct 2021 15:00:00 GMT

FOB replacement values using Australian track bid/offer (AUD) – not an indication.

Local Markets and Harvest update

Domestic wheat bids to the grower were back 1-3% for the week as the AUD rallied against USD weakness. Barley bids were softer, particularly in WA and SA. Canola bids tumbled $50-60/MT or 5-6% in line with international markets.

An unstable storm front pulled up harvest in Queensland. In NSW, the heaviest rain was in the east of the Newel Highway (25-60mm) with lighter rain in the west (5-30mm). However, most crops are still green, so yield will benefit from the wet mild finish both in NSW and Victoria. Last week’s late season rain will benefit crops throughout SA. In WA the Geraldton zone has begun harvesting but otherwise, WA is looking forward to rain in the early part of this week.

The unsettled weather is keeping farmers and exporters nervous about crop quality. This and the stronger USD FOB is slowing export sales. In general, most exporters are well sold into the New Year and feel no pressure to make sales given the competitive position Australia finds itself in. A general start to wheat harvesting is still a couple of weeks away and at this stage, there is no need to change the expectation of a 32 MMT+ wheat crop.

The only cloud on the horizon – pardon the pun – is the Bureau of Meteorology’s extended forecast which is increasing the chances of above-average rainfall for much of eastern and northern Australia.

So, what does this mean at the FOB level? A sucker punch?

Australia is comfortably the cheapest wheat in the world into Asia and extending its reach into the Middle East and Africa. The issue for the exporters is not demand, it is how many slots they have and how they can maximise export elevations between barley, wheat, canola and pulses. Export sales of Australian wheat are well above the farmer bid. Traders are achieving big margins on the sales that are made today, but they are also taking on forward price risk and this needs also to borne in mind.

Buyers on the other hand see a bin-busting crop, the grower not selling and therefore they wait, expecting prices to come down. However, I contend this year that the export sellers don’t need to chase the domestic track market down. With limited options, overseas consumers will come to them for their Q1 or Q2 needs or face the lottery which is the possibility of Russian export quotas or missing out altogether and being forced into more expensive or lower quality, an important consideration often overlooked, originations.

With high ocean freight rates being added into the mix, it is fair to say global buyers are balking at the current prices. Even Egypt’s GASC and Pakistan both passed on tenders last week without making any purchases. However, week on week we seem to get more expensive at the FOB level. The global consumer still has much to do, particularly given the problems being faced climatically in the Middle East and China. Reports that Iran may import as much as 8MMT of wheat in the 2021/22 season were particularly supportive given most will come from Russia. It has raised questions for the surrounding countries import prospects, including Pakistan, which has been on the buy side for some time now. It is also raising questions as to what role India and the US will play in putting a break on FOB prices march upwards.

FOB barley prices continue to be underpinned by the strength in European feed grain markets, Russia’s slow export program and limited appetite for Australian exporters. We expect this situation to continue in the near term.

WASDE

US ag markets finished the week mixed. USDA delivered its October WASDE which showed larger than expected soybean and corn supplies while US and global wheat supplies continued to tighten. Concerns of tight US corn and soybean supplies are fading, but this has been overtaken by improving demand aided by the strength in energy markets. Global wheat export supplies will remain tight through to the northern hemisphere winter wheat harvest in mid-2022.

Ocean Freight – Bulk and Container

At the risk of sounding like a broken record, bulk ocean freight is still an incredibly hard market to call and it is not just charterers who lack conviction. Owners are as confused as the rest of us about the market (though of course outwardly very confident!) and hence it is difficult to get them to rate forward at anything less than today’s spot rates – irrespective of what FFA’s indicate (unless they are higher!!).

Bunker prices are continuing to creep northwards and are adding more uncertainty into future rating.

On a practical level, the delays from various anti-covid measures across the globe are causing scheduling problems and are tying up vessels at times due to quarantine procedures which hardly helps when all supply chains are under pressure for one reason or another.

Container shortages continue to exist in Australia. Strained trade relations and global supply chain imbalances caused by COVID-related issues are limiting Australia’s ability to utilise empty containers for grain and pulse export. Consequently, there are less 20ft containers available and vessel schedules are constantly changing as lines look to manage their sailing schedules and equipment efficiencies. Unfortunately, although we have seen a slight decrease in the Shanghai container index over the last week, this seems set to continue.

Currency

The Australian dollar advanced for the fifth day in a row on Friday, touching a 5-week high. Set in context it was trading as low as 0.7170 in late September. The Aussie found its feet last week on the back of upbeat equity market movements which in turn were spurred on by better-than-expected quarterly earnings and retail sales figures in the US. Adding further support to the Aussie is reports that the Chinese central bank expects the Evergrande issue to be ‘“controllable”; easing market concerns about a chain reaction affecting the world’s second-largest economy. Closer to home, the relaxation of COVID-19 restrictions in Sydney and Melbourne also buoyed domestic markets.

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Australian Crop Update

Thu, 07 Oct 2021 15:00:00 GMT

FOB replacement values using Australian track bid/offer – not an indication.

Harvest Progress

The 2021/22 harvest is now well underway in the northern part of the country with the first harvest loads being received in Western Australia and Queensland.

Local Weather

Widespread rain fell across the East Coast after an extended period of dry weather, and this was well received by crops in need of finishing rain. WA also received rain, albeit lighter and patchier. Nonetheless, it’s beneficial for finishing crops and helps limit further yield losses. Parts of South Australia also picked up handy rain, particularly through the Murray Mallee.

Local Grain Markets

Cash markets for the nearby have had a bid side tone for the last ten days or so with a lower Australian Dollar leading to strong export demand from bulk and container traders. The wheat market has been further supported by the USDA small grains report, which was bullish for wheat, neutral for corn and bearish for beans. Farmers are already reasonably sold on canola, but the wheat sales should crank up in the next few weeks. The biggest risk now is a wet harvest and quality downgrades. Although it is still early and the majority of the crop is still green, it is a risk nonetheless.

Supply and Demand

We have updated the Australian wheat and barley balance sheets increasing national wheat production to 32.0MT from the previous 31.1MT on 20/9. Australian barley production is modestly higher at 11.6MT. NSW wheat production has been raised to 11.4MT (10.75 MT previously). Domestic demand remains unchanged.

Ocean Freight – Bulk and Container

On the ocean freight front, it is hard to tell where we go to from here. There are a myriad of factors potentially pulling the markets one way or another and consequently, it feels like we are going sideways. Period numbers are consistent, and it feels like despite on-coming holidays across Asia that the markets will remain steady. Bunkers have generally firmed in line with oil prices, but again, it is hard to say where they are heading over the medium/longer term.

The Australian container market continues to struggle with logistics and container freight issues. Exporters over the past six to nine months have seen ocean freight rates rise two to three fold. They’ve also seen a disruption in services and container supply. In general, the market is challenged with freight rate validities for containers as ocean freight liners are now primarily offering container rates on a one month validity, with general rate increases across all destinations month to month. Larger exporters with supply chains and their own packing facilities have been able to leverage container lines for space and equipment.

Internationally, there are several core reasons why the container shipping industry is in disarray. COVID has been the major disruptor with consumers not only focusing more on online purchases increasing demand for smaller shipments delivered to their door, but regulations for countries have also changed in relation to testing and quarantine protocols causing delays. The Ever Given vessel disruption in the Suez Canal continues to have flown effects in relation to a backlog of containers throughout Europe causing delays and demurrage for waiting vessels to unload. There is also a lack of logistics support for rail cars and trucking supply within the United states having a major effect on the China / USA tried lanes. All of these issues coupled by a sense of profiteering by the container lines continues to disrupt the industry. Expectations are that this new norm will be in place for the next 12 to 18 months before supply chains have adjusted.

Australian Dollar

The Australian Dollar continues to be range-bound against the USD.

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Australian Crop Update

Mon, 27 Sep 2021 15:00:00 GMT

FOB replacement values using Australian track bid/offer – not an indication.

Cash markets had a bid side tone all last week with strong export demand from bulk and container traders supporting the bids. Either way, Aussie FOB wheat and barley prices remain competitive and this will continue to buy strong export demand.

All states will benefit from rain, but yields in WA, SA and Vic will decline without rain in the coming weeks. Mild temperatures have helped to limit permanent yield losses so far despite the dry spring. The onset of heat will hasten yield declines without rain.

Weather forecasts added rain for eastern and south-eastern Australia after an extended period of dry weather. The rain fronts are not expected to offer any significant rain for WA or SA, although there are some follow-up rains in the 14-day forecast.

On the global front, we have the USDA report on Friday.

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Australian Crop Update

Mon, 20 Sep 2021 15:00:00 GMT

FOB replacement values using Australian track bid/offer – not an indication.

We are nearing the pointy end of the Australian season and most cropping regions are looking for rain to maximise yields or hang on to the current potential. The latest NDVI data saw crop conditions improve in NSW, South West QLD and SA. Conditions have remained steady in VIC, however in WA, conditions continue to slide as crops look for rain.

Dry weather in the west, along with talk of frost damage, strength in Black Sea cash markets and the weaker A$ are all offering support for local prices last week in both old and new crop. Looking at the weather models, there seems to be some rain for parts of WA and across SA, VIC and NSW at the end of September/early October. This will be watched closely.

Dry weather concerns and talk of frost damage in WA has most likely limited any further yield growth in WA but it is still a large, albeit likely to be low protein, crop. Our analyst cut WA wheat production estimates by about 5% due to the absence of any significant rain in August and likely September. Production losses in WA will be offset by higher output in NSW, at least for now. NSW veg index levels have trailed last year’s levels through the season after a slow start, but they continue to climb and the gap is narrowing. The favourable conditions and early September justify a 10.75 Mt NSW crop based on an average yield of 2.85 t/ha. This adds another 1 Mt onto the NSW crop from our previous forecast. SA and VIC production will decline without some late September rain.

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Managing the Complexities of Supply Chains into Niche Markets.

Fri, 17 Sep 2021 02:08:00 GMT

Managing the soft commodity supply chain can be a challenging job, with many moving parts and multiple opportunities for delays. Managing the supply chain while developing a new trade-flow adds an extra level of complexity and pressure. The time it takes to build the strategy, research the market, accumulate the produce, book and manage the logistics, iron out the processes, the list goes on.

In years past, trade flows throughout the world were relatively predictable, and if you look at the major commodities like wheat, the majority still are. Consumers in ‘this country’ purchase produce from ‘that country’. However, if we turn our attention to niche markets, like soybean meal for example, the supply chain shifts to more of a, company A buys from company B, C and D this year then possibly company E, F and G the next. And, with more players in the global supply chain occupying those niche markets, it’s hard to know the best way to manage that supply chain process from start to finish.

One of the recent projects for our General Manager of Basis Commodities Consulting DMCC in Dubai, Elias Azar has been to help one of our clients procure and execute soybean meal for monthly delivery by rail into Central Asia. The client asked for our assistance given our knowledge, experience and networks in the feed markets. We have helped to conduct a trial and are now assisting the client to:

With the project set up and well underway we are now working with the clients to make the supporting systems and processes sustainable to support a long-term and profitable trade flow into a niche market.

For more information on how Basis Commodities can assist your business to enter new supply chains, reach out to the team on the below details. And, if you’d like to receive regular market information from Basis Commodities, be sure to enter your details in the form below.

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Australian Crop Update

Tue, 14 Sep 2021 15:00:00 GMT

FOB replacement values using Australian track bid/offer – not an indication.

Sellers started to emerge last week with the weakness in US wheat futures and the favourable local crop outlook – The stronger Aussie dollar also weighed on exporter bids. It’s very early days in terms of farmer selling for the 21/22 crop but we are hearing reports of new crop farmer wheat selling in Queensland and Northern New South Wales. Southern farmers still appear more reluctant to let go of new crop tonnes.

ABARES said it now expects Australian wheat production for 21/22 to total 32.63 Mt, up from its June estimate of 27.8 Mt. ABARES said barley production would hit 12.5 Mt this year, up from a June estimate of 10.4 Mt. Australian growers are expected to harvest a record 5.03 Mt of canola. Our Analyst numbers are still running a little behind at 31.0 Mt with the avoidance of significant frost damage and finishing rains needed in some areas. The situation for rain is becoming more important for WA following the drier than normal August. Day time temperatures have been mild, but they will climb this week with high 20’s and up to 30 C in the Geraldton zone.

Crops are big and moisture demands are quickly climbing with the warmer temps. Below is a veg index anomaly map with the state cropping zone averages. they need more rain to finish crops.

Australia exported 1.95 Mt of wheat in July down from 2.76 Mt in June. Total wheat exports for Oct/Jul are up to 20.38 Mt. This includes 7.9 Mt from WA, 4.68 Mt from NSW, 3.6 Mt from SA, 2.95 Mt from Vic and 1.19 Mt from Qld.

Some of the heat came out of the pulse markets over the past week with the new crop lentils prices tumbling by $100/t plus. Nonetheless, they remain very strong at more than $1,000/t Melbourne.

Overseas we had a relatively benign, bearish even, USDA report. The Australian crop was raised to 31.5 Mt vs 30 Mt in August with exports up 1 to 23 Mt and Canadian production down 1 Mt to 23 Mt. The next report might be different for wheat when further acreage cuts are expected in spring wheat, and we find out how much wheat was fed when corn was rallying away from feeding in the US earlier this year. Another week and another hike in the Russian tax, this week it was up $6, but although demand is hesitant, it is still there.

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