Southern Queensland wheat prices surged higher for a second consecutive week as the ongoing dry weather has buyers preparing for a tough season.
New crop stock feed wheat into the Darling Downs jumped by $25 last week to top $300 a tonne for the first time in more than two years, as grain buyers hiked prices to get some coverage for next year.
Above average yields across Southern Queensland and northern New South Wales in 2016 and 2017 resulted in ample grain supplies for the grain-hungry south east Queensland stockfeed markets. Plentiful grain supplies over the past eighteen months has kept Darling Downs stockfeed wheat prices in the $210 to $260 range for most of this time. This was in stark contrast to the 2013, 2014 and 2015 when the north was never far away from drought which kept the key Downs wheat prices comfortably above $300 a tonne for most of this period.
Farmers are hopeful that weather conditions start to improve, knowing that winter crops still have time to respond to rain, but are deeply concerned at the dry outlook.
Last week ABARES forecast that Australia’s 2017 total winter wheat crop production would fall by 33 per cent to 40.1 million tonnes, on a return to average yields following last year’s record large harvest. Australia’s 2017 wheat crop was projected at 24.2 million tonnes, compared to last year’s harvest of 35 million tonnes.
Queensland’s winter crop plantings are expected to be close to unchanged on last year at around 1.3 million hectares, but yields are expected to be sharply lower on the assumed return to average yields. Wheat production for Queensland was forecast at 1.1 million tonnes down from 1.9 million tonnes in 2016, according to the report. Queensland chickpea crop for 2017 was forecast at 740,000 tonnes down from one million tonnes in 2015.
However, ABARES assessment the 2017 winter crops are becoming increasingly optimistic as the dry weather conditions. The 20 per cent plus rally in Southern Queensland grain prices in the past eight weeks is a good indicator that traders and grain buyers aren’t buying into the near average yield assumptions used by ABARES.
End user demand for grain remains solid on the back of the plentiful grain supplies from last year. The first quarter cattle on feed survey showed that Queensland and New South Wales feedlots remained at near capacity levels.
Global wheat markets pushed sharply higher last week on building global weather worries. United States spring wheat futures rallied to near-year highs as yield prospects tumble with the hot, dry weather in the Northern Plains states. Dry weather in France, and more recently Australia also added to the sharp rally in CBOT wheat futures last week.
High protein wheat is expected to remain scarce through 2017 with smaller than normal spring wheat crop and below average proteins in the Hard Red Winter harvest. The Hard Red Winter harvest is now in full-swing and the average protein levels are 10.8 per cent, which is sharply lower than normal.