The final harvest reports are in, with further updates likely to offer minimal changes. Western Australia has received the promised bumper crop, while receivals on the east coast appear to be significantly lower than last year.
Figure 1 shows receivals in WA dwarfing other states, with over 24mmt of grain delivered into CBH. SA was the second largest, with 5.3mmt delivered to Viterra, while Queensland, Victoria and NSW receivals totalled 9.3mmt received by GrainCorp. With more diversification in grain receival sites on the east coast, the GrainCorp numbers are a good indication without being total receivals.
It will be interesting to see the final production numbers from the Australian Bureau of Agricultural and Resource Economics (ABARES) in their March Crop Report. The last report was forecasting a decline in NSW, and GrainCorp receivals were down 1.93mmt, or 28%. How much of the decline was grain going elsewhere, and how much was lower production, remains to be seen.
Victoria was forecast to have stronger production, and this seems to have come to fruition, with receivals up 0.45mmt, or 19%. South Australia was forecast to have a strong lift in production, and again this was right, with receivals up 2.1mmt, or 64%.
WA was forecast to have a stronger crop, but with CBH receivals up by 4.57mmt, or 23% on last year’s good crop, the west might have had an even bigger year than expected. This doesn’t bode well for what is left of the WA sheep flock.
We covered canola prices last week, and they have recovered somewhat from harvest pressure, and had a lift from an international rally. Cereal prices have been unremarkable, other than to see wheat slide in late harvest (Figure 2), while barley held its ground (Figure 3).
The world appears to have enough wheat, while barley might be a little tight. This makes wheat cheaper on an energy basis for local feeders, and it appears there will be enough for some carry-over this year.
What does it mean?
Based on receivals, WA had a larger crop, and the east coast, including SA, was roughly steady. It makes sense that prices relative to international values are relatively static compared to last year. Growers waiting for a price rise will be sweating on some issues as northern hemisphere crops come out of dormancy.
Key Points
- Grain receivals reached records in WA, with east coast close to expectations.
- Cereal prices have been relatively steady through harvest, with wheat weakening a little.
- International issue will be needed to see price rally in earnest.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: CBH, Graincorp, Viterra, ASX, Reuters, Bloomberg, ABARES, Mecardo
