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Wheat – With CBOT wheat futures up 18 cents for the week, (or A$7 per tonne) we would have expected to see cash prices up week on week. However, the buyers pulled basis back 15 cents with grower selling targets being triggered. This was most evident on Friday with futures up 11 cents yet the cash price only pushing up about $1 across the board. Good news for those with Grain95! We would now be less aggressive in cash sales for wheat (with the exception of ANW1) with Thursday nights USDA report quite bullish and plenty of carry in the wheat futures market meaning traders will want to keep remaining long. If needing to sell for cash flow or feeling undersold, we believe Grain95 is the better move than selling cash at this stage.
Feed barley – Is starting to look a lot tighter now with a heatwave hitting the eastern states severely impacting sorghum. Also a very heavy shipping program of barley out of Australia into Saudi Arabia and China is quite bullish. Similar to wheat, traders will want to remain long barley and to do that will need to ramp up buying of feed barley for this to happen. Currency will have a big influence on markets in the short term. We can’t see massive downside in barley so perhaps holding is a strategy to consider now.
Malt Barley – The marketing window for malt barley is closing by the week. Have price targets in place as this is the best way to achieve your targets. Chinese buying interest should return following Chinese New Year’s celebrations but at what level is hard to gauge. Premiums should be $20 above feed for most malt 1 varieties.
17/18 Canola – With rain forecasted across much of the wheat-belt this week, growers will look to getting some cover. Canola is the only grain to consider at the moment as it is at a decile 5-6 compared to other commodities still at about a decile 1-2. Planting expected to be up considerably due to pricing and early moisture so we suggest to get some cash sales cover at current levels.
Wheat – If you require cash-flow within the next 4-6 weeks, we suggest looking to sell lower grade what this week rather than wait until it is too late, as there is increasing harvest pressure coming from the east coast as well as locally. If you aren’t looking to sell right now, look to sit until the second quarter of 2017. If you’re not happy with today’s prices, look into using the Grain95 product.
Barley – Not unlike wheat, we suggest off loading your malt barley soon if you need cash-flow within the next month or two. If there isn’t a need to sell right away, look to sit on your barley until at least Feb 2017.
Canola – This is still the best value at present. For any low oil canola, speak to your broker about flat oil contracts to find the best value. We also suggest looking at selling some 17/18 canola.
Oats – As said in last weeks strategy we suggest holding onto oats until more buyers come into the market to create some healthy competition and drive prices up.
Lupins – Not unlike last week, there is still very little competition out there for lupins at present. There is little movement in the delivered market for any lupins stored on-farm, so speak to your broker about what price can be generated.
Wheat – Recommend growers establish minimum tonnes they need to sell as required for
cash flow accompanying sales of other grains. Understanding quality is a concern, where
possible make sales or fill contracts using APW. ASW and AGP1 under-priced at current
discounts and suggest holding these over better grades. Hard wheat is extremely rare, if you
have hard wheat you have the upper hand in negotiations.
Barley – We feel feed barley can still be priced sharper than current values, at $190/t we are
the cheapest option for feed barley out there, be prepared to hold for up to six months and
target $200/t, protect downside at $185/190. Current malt premiums are strong considering
the size of the crop and quality of receivals to date. Suggest a sell at current premiums.
Canola – Supply and demand continues to be tight but current values present exceptional
value at harvest for cash. High oil values could possibly erode grower values at some point
as end user markets are generally capped at 45% max oil. Suggest make sale off the header.
Oats – Values have rallied $15-20 in the last 6 weeks and look to have flattened out. There is
a couple of buyers chasing right now so suggest selling off the header once quality is known
and contracts are filled accordingly.
Wheat; The market has hit a bit of stand-still to wait for harvest to begin sot hat everyone can get confirmation on the quality and quantity of grain being delivered. That being said, we suggest holding off on entering into any contracts until we know what product is being delivered.
Barley; Still has a tighter balance sheet than other feed grains, would suggest holding off on sales of feed if sales of alternative grains can be made, not much reward at current price levels. Malt premiums however are reasonable at this stage. It may be worth covering off against some of the current malt spreads using a MG contract.
Canola; Most growers should have reasonable level of price cover on 16/17 canola. With harvest now upon us and prices holding a reasonable level of value we recommend continuing to make sales of canola off the header as true production levels become known.
Oats; Still seems to be the cereal with the greatest value at present. It is however important to check the OAT1/OAT2 spread as they do vary from buyer to buyer.
Wheat; Old crop; sell remaining tonnes. Look to lock in noodle spreads early, especially if no quality hiccups reported in WA. If cash flow dictates a need to sell, price average sales over the next 6-8 weeks. Basis likely to weaken once harvest is underway. Grain95 should be considered to lock in basis with exposure to international wheat rallies. Wheat presents better cash sales opportunities than feed barley currently.
Barley; Sell Old crop; If looking at above average production continue to consider pricing a portion of your crop with farm gate margins in mind. Malt premiums are also worth fixing, season is looking favourable for malt so get some protection at current levels.
Canola; Continue to view as most favourable pricing opportunity. Growers will be viewing as cash crop off the header so protect against harvest pressure on price. Large Canadian crop likely to put pressure on canola.
30/08/16
Wheat; Old crop wheat should be 100% sold as per our previous strategies. Hard wheat could
be the exception with East Coast markets showing strong +20 spreads on H2 from APW1. New
crop, we believe that growers should not be selling at these levels unless comfortable with
production. We believe noodle growers should grab opportunities that are presenting (+20
APW1). Strong yields expected in traditional noodle areas is likely to see an oversupply by the
time harvest has wrapped up. If not comfortable at current pricing, sell with exposure to
international futures (Grain95).
Barley; For most growers, we believe that new crop barley should not be sold at current levels.
If very confident on production (3.5t/ha+) and you require harvest cash-flow, consider some
sales now as farm gate margins still positive. Fix malt spreads as season looking to have
adequate malt supplies.
Canola; We believe that growers should be aggressive in forward sales of new crop GM and
Non-GM canola. Prices are still very strong and growers across the country will see the canola
as this years cash crop. Not enough buyer demand to fill supply if growers across the board are
aggressively selling canola leading into harvest. Basis very strong still. Worth being proactive
with strong yields across the board.
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