It has been a tumultuous month in global grain markets as mounting fears of trade protectionism have shaken markets, causing grain values to plummet at one stage by 10 to 14 per cent (pc). Worst hit were corn and soybeans which were also pressured by a turnaround in south American crop fortunes where rain fell in a nick of time to save crops across southern Brazil and Argentina. Brazil is currently harvesting a record large soybean crop.
French grain futures followed US markets lower as exporters tried to win some business away from Black Sea suppliers. Black Sea values have risen the past few months as supplies tighten and they gradually cede some business to other origins.
This chart shows US and French wheat futures in $A/t. Source: LSEG Workstation
This chart shows ICE (Canadian) canola futures and MATIF (European) rapeseed futures in $A/t. Source: LSEG Workstation.
Oilseeds have been the hardest hit with China’s move to lob 100 per cent tariffs on Canadian canola meal and oil. China takes a significant portion of Canada’s canola meal exports, while the US is threatening April tariffs on Canadian canola oil imports. If the US imposes tariffs on Canadian imports as promised in April, Canada would be stripped of its two highest paying markets and would be forced into lower value markets in competition with Australian canola.
Australia benefitting from Chinese tariffs on US corn and sorghum
Local markets have avoided the worst of the declines witnessed in international markets with east coast feed grain markets gradually strengthening on slow grower selling. Australia is also benefiting from some of the shifts in trade flows as the Chinese tariffs on US sorghum has shifted some demand away from the US to Australia. International demand for Australian feed barley is also strengthening as European supplies tighten and as China diversifies its feed grain imports away from US corn.
Australian growers are heavily sold on chickpeas and canola and have mostly been shielded from the worst impacts of the price falls in these commodities. After falling sharply as shipments from Australia arrived on the sub-continent post-harvest in early December, the chickpea market has stabilised around $820 to $850/t as traders assess sub-continent production potential as the Rabi (‘spring’) harvest nears in Apr/May.
Growers in northern cropping areas of the east coast are harvesting very large sorghum crops with average yields of 5-8t/ha and reports of isolated crops reaping around 11t/ha. Queensland harvest is mostly finished with headers moving down into the Liverpool Plains. At prices near wheat values, farmers have been selling sorghum off the header at $300t/ha delivered silo Goondiwindi/northern NSW and $340/t Downs packer and $360 to $370/t delivered Newcastle and Brisbane.
Australian growers look to northern hemisphere spring for price volatility
In terms of the outlook, our prices should continue to grind higher for the next few months as international buyers extend cover through the normally volatile Spring period in the northern hemisphere. Feed barley and sorghum are being favoured by China’a shift away from US feed grains and wheat should be supported by a tightening new crop balance sheet and forecasts for reduced production in Russia.
Longer-term prospects for prices will be governed by how northern hemisphere crops fair the next few months with watches on Black Sea and US Plains wheat growing areas, where moisture deficits are larger than normal and India where forecasts are for a hotter spring. Indian crops could well hold the key for both wheat and pulse price prospects.
Oilseeds will continue to be a pawn into international trade relations and will most likely be in for a period of instability until the trading environment becomes clearer. It is likely that the premium for non-GM crops will continue to be maintained at high levels, given Canadian canola may be forced to compete against Australian GM canola in secondary non-EU markets.
This table shows grower trade bids for grain in major Australian grain markets. Source: Clear Grain Exchange
If you are interested in listing your grain for sale, contact CGX on 1800 000 410. Growers listing on CGX have been able to sell grain at prices consistently above advertised trade grower bids with 7-day guarantee settlement.
Read previous reports
Cropping update - December 2024
Cropping update - November 2024
Cropping update - October 2024