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Thursday, November 17, 2016

Harvest is underway so what’s the plan?

By Angus Brown  |  Source: Graincorp, Trade

Key points

  • Harvest is underway, with volumes running 2-3 weeks behind last year.
  • Prices appear to maintaining pre harvest levels in Queensland for wheat, and Barley for Victoria.
  • If current wheat basis is maintained, it looks to be a sell, with access to upside available in derivatives.

2016-11-14 Grain Fig 1

2016-11-14 Grain Fig 2

The East Coast Grain harvest is finally underway, and while some a calling it a month late, receival figures tell a slightly different story. With grain being delivered, we can at least get some gauge on what is happening with prices, and come up with a harvest sales plan, which as always will be subject to change.

Figure 1 shows receivals at Graincorp sites on the east coast, with the 2016 number as of the 14th of November.  Receivals so far have been small, as shown on the chart, where we had to add an arrow to make sure you could see it. 

Graincorp have had 859,000 tonnes delivered in Queensland, which should be a large proportion of what is finally received.  Last year Queensland received 1.12 million tonnes.  Queensland is actually not that far behind normal.

New South Wales Graincorp depots have received 330,000 tonnes.  This week last year NSW had 1.5 million tonnes, and we can’t yet compare the wet harvest of 2010-11, as market reports weren’t published until the end of November.

In Victoria this time last year 300,000 tonnes had been received, this week it was just 27,000 tonnes.  In southern states figure 1 shows harvest is running 2-3 weeks behind the last couple of years.

As would be expected this early in harvest, we are yet to see any real impact on price. Figure 2 shows ASX wheat is maintaining its basis to CBOT.  Some recent trades on the Clear Grain Exchange have been cheaper than ASX in Queensland, with APW selling for $216/t Gladstone.  In the Brisbane Port Zone prices are a bit stronger, with ASW selling for at up to 216/t Brisbane.

In Victoria at least someone has bitten the bullet, selling F1 at Ouyen for 129.25/t, or $172 Port, which is around where Feed Barley Futures are priced. 

What does this mean?

With harvest running late we are yet to see any real pressure come on to wheat markets.  The good news for those producing feed barely or wheat is that the forecast doesn’t look like we are going to see a repeat of the 2010 wet harvest, although the real delays didn’t occur until late November.

We have been saying for a while that APW basis looks good at current levels, and if it remains strong, it suggests APW or better quality wheat should be sold at, or soon after, harvest.  Lower quality wheats and feed barley might enjoy some post-harvest upside, but it will be a case of watching spreads and basis to get a guide as to what is a sell, and what will be a hold.

Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 

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