Friday farmgate data (week ending 2 July)
The ANZ had some great news for farmers, saying the latest trade balance figures gave the bank confidence that rural goods will continue their strong performance in coming months. They attributed the positivity to good growing conditions and favourable international factors putting upward pressure on export prices and volumes.
Rural exports improved 6 per cent on the previous month and 31 per cent on the same time last year, while wool was up 16.3 per cent for the month and cereals up 11.3 per cent. ANZ noted Russia's wheat export tax, Chinese demand and Argentina's 30-day ban on beef exports were all helping Australian rural export outcomes.
This week also saw some great data out for Australia's dairy industry showing confidence was running high helped by positive price movements. Nonetheless, milk production levels are holding at a constant, not increasing, level.
We also saw the NSW lifting of the GM moratorium on Thursday, isolating Tasmania and Kangaroo Island as the only Australian places with GM bans.
Thomas Elder Markets noted on Monday that the limited impact COVID-19 had on the Australian economy (relative to the rest of the world) saw some bank economists in the first quarter of 2021 revising upwards their forecasts of the AUD vs USD to 85 cents. The dollar instead peaked at 79US cents in February and has been shedding ever since. TEM attribute the USD strength to central bank's bullish talk of full employment and raising interest rates there, whereas Australia may be nudging towards full employment but a bearish central bank on hiking interest rates.
On Thursday night, one Australian dollar is buying:
75.01 US cents, down 0.76 on last week
83.43 Japanese yen, down 0.39
63.27 Euro cents, down 0.18
54.23 British pence, down 0.05
107.18 NZ cents, down 0.17.
Water - Rainfall
There can always be too much of a good thing, as is the case in some of the more northerly parts of New South Wales that were on positive cropping outlooks, but now could be too waterlogged. Literally, sentiment is dampening in some districts as more rain fell this week.
Impacted areas can be seen in this Bureau of Meteorology graphic for the Murray-Darling Basin, showing heaviest soil moisture inland of Port Macquarie:
For the last week, rainfall proved the Bureau of Meteorology to be largely spot-on with its prediction, although rain spread further north-west into western Queensland than they had predicted.
Crafers West had the week's best rainfall this week in SA with 93mm, Belair and Mt Lofty not far behind at 86mm. Naturally, the alpine regions in NSW and Victoria were prominent in this week's rainfall totals, Perisher with 149mm and Thredbo 98mm in NSW, Falls Creek 129mm and Mount Hotham 119mm.
The Bureau noted that the week's rains were good for north-west Victoria:
Rainfall in the past week eased deficiencies slightly in affected areas of north-west Victoria and south-west New South Wales. Affected areas have received less than 50 to 60% of their average for the period (February to June).
For the coming week, as indicated a fortnight ago on the Flow Morning Show, the recent week was the best for the preceding four weeks, with next week looking a lot drier on the mainland. Western Victoria however could receive healthier continuing rains:
Water - Irrigation
Murray-Darling Basin water trade spiked in volume this week at the highest level since 11 January, at 300GL traded. Since 550GL was traded in the week of 13 July 2020, only two other weeks have seen more water traded in a single week. Heavy Victorian Murray trade (140GL) and NSW Murray (61GL) were major contributors to the sales activity.
Average southern Basin prices stood at $94.80 per megalitre, similar to the SA Murray down $5 to $95, Vic Murray down $6 to $94 and NSW Murray down slightly $1.50 to $88.50. Vic Murray high reliability entitlements are at 21 per cent, low reliability at 0, while NSW Murray are at 97 per cent on high reliability and 3 per cent in general security.
Murrumbidgee prices still languish after their plunge last week up $4 to $24, with low demand at present. General security allocations would play a part, up to 30 per cent compared to 11 per cent the same time last year.
Hume Dam gained 4 per cent capacity this week, compared with 38 per cent the same time last year. Only the 2013 and 2016 years have been better at this stage of the season in the last 8 years. The Dartmouth stands at 66 per cent, just 1 per cent higher than last week.
While there has been recent excitement about water levels in the Menindee Lakes, they have some way to go before they reach the 2012-13 levels, according to the new water information portal at the Bureau of Meteorology:
Darling River allocations are at 100 per cent in general and high security categories nonetheless, with general security up from 30 per cent the same time a year ago.
Dedicated South Australian storage entitlements are at 61 per cent across the SA Murray, compared with 45 per cent at the same time last year.
Sheep prices continue to climb, especially in Merino, heavy and trade lamb categories while cattle prices have doggedly held to their record high levels clocked last week.
The developing wet winter conditions are filling the saleyards with confidence, however it could be that farmers have now fully stocked their intended numbers as restocker prices in lambs and yearling steers stumbled in recent weeks.
The Eastern Young Cattle Indicator has done it again, tipping 941.78c per kilogram on Thursday to push that supposed price ceiling even higher. The record high was helped by a 24 per cent reduction in yardings, down to 9,410 head in the east. MLA believes the market could go higher yet with good rains predicted in critical parts of eastern and southern Queensland and northern New South Wales.
The weekly cattle slaughter reached its highest level for the year at 105,921 head. However, the continuing low levels compared to other seasons (the lowest in 16 years, according to ABARES last week) suggest that producers are intent on holding on to breeding herds and produce calves to cash in on the domestic and improving international market.
As with most categories in the saleyards, prices were up or steady this week, but heavy steers fell 24.8c to 384.3c, shedding the previous week's gains. Processor yearling steers kept climbing to 499.6 (up 18.5c), while medium steers rose by the same amount to 416.9c nationwide.
Cattle - New South Wales
NSW prices are the best in the nation for restocker yearling steers (557.3c) despite slipping a little this week, but otherwise fell back from nation-leading honours in most categories last week.
Medium steers worked hard to catch up after falling behind Victorian and SA prices last week, rising the most this week by 28.7c to 433.3c. Processor yearling steers kept climbing, up 14.2c to 508.1c.
Southern NSW lost its best price in the state crown on vealer steers (552.1c, -8.8c) and processor yearling steers (508.6c, despite rising 6.7c) but held ground in feeder steers (493.2c, +1.1c) and medium steers (521.1c, up a huge 56.1c).
Last week's strong post-long weekend yarding saw Wagga rank 5th nationwide in yarding numbers behind the big Queensland yards, just shy of Dalby in 4th place. Wagga prices continue to run strong, also fourth-best in the country behind fellow NSW saleyards at Singleton, Casino and Scone. However, on Monday Wagga Wagga's cattle yard shed the previous week's post-long weekend gains, down 553 head to 2,147. MLA reported Leann Dax attributed the stumble to wet weather, particularly impacting heavy cattle numbers. The yarding comprised mostly secondary cattle, seeing an erratic market that firmed by the end of the sale.
Cattle - South Australia
Processor yearling steers kept climbing after the previous week's recovery from a slump a fortnight ago, now up 25.7c to 516c, taking out top honours in the available pricing in the nation. Vealer steer prices were back up 36.6c to a healthy 540c, ahead of Victoria and Queensland but lagging NSW and nation-leading WA in that category.
Medium steers slipped heavily, down 39c to 378c but still nonetheless ahead of the nation's worst price, Queensland at 366.6c.
Mount Gambier yardings fell this week to 358 head, with quality again mixed but last week's 'buoyant' sale activity was not present on Wednesday.
The day before at Naracoorte the yarding lifted 274 head to a healthy 830, with quality improved to 'generally good' thanks to some supplementary fed pens. The market was mainly dearer despite the smaller number of trade buyers present this week - perhaps deterred by last week's poorer quality offering.
Tuesday's SA Livestock Exchange sales at Dublin slipped slightly by 40 head to 260 with extremely mixed quality 'again including Angus, Angus Cross and Bos Indicus cattle from the Port Augusta pastoral region.' Store prices rose 10-20c or more in places.
Cattle - Victoria
Victorian medium steer (450c, +21.6c) and heavy steers (409.6c, -5.5c) prices remained strong, no longer best in the nation thanks to WA prices but still best in the east. Medium cows (326.5c, +11.1c) boast the best prices in the nation.
Vealer steers improved the most in Victoria, up 34c to 506.9c while the national trend on falling restocker yearling steers was also seen here, down for a second week, falling 10.7c to 418c. Despite the better quality and resultant prices last week, Warrnambool yardings fell heavily after last week's improvement, down 396 head to 537 with mixed quality. The better finished beef cows contributed to reported unchanged to dearer prices across the yarding.
At Swan Hill this fortnight on Thursday, a small winter yarding was again recorded at 328 head, up 38 head on the previous offering. Price trends were mixed with cows, comprising almost a third of the offering, selling strongly.
Grain Central noted that there's strong demand for dairy land on the back of very positive industry confidence:
"Dairy country in Victoria is meeting renewed demand as the sector enters a period of confidence not seen for decades as milk prices firm and a painful rationalisation period comes to an end.
"Supporting the market is demand from beef producers and dryland croppers looking for additional area, as well as private and institutional dairy investors.
"Vegetable producers looking to relocate to cheaper well-watered country away from Melbourne are also in the mix, as are lifestyle buyers.
"It means dairy farms large and small are spending little time on the market."
Southern Region opening prices that are more than $1 per kilogram MS (20 per cent) above the Commodity Milk Value (CMV) indicator for cheese, butter, SMP and WMP, according to the Australian Dairy Products Federation on Thursday.
At the latest indicator the CMV stands at $6.77, while price comparisons for dairy regions for the quarter shows for a farm size in the 2-2.5mL range of average fat and protein content and seasonality:
Central SA at $7.91 (up from $6.88 in Sep-Nov, $7.36 in Dec-Feb)
Western Victoria and south-eastern SA $7.36 ($6.65, $6.98)
NSW $9.13 ($8.68, $8.90)
The ADPF say farm size and production seasonality remain important, with larger farms with a less seasonal production curve attracting significant premiums.
ADPF president Grant Crothers said:
“Another year of high milk prices being offered by processors to dairy farmers is good news for agriculture and great news for dairy. It appears we are in a super cycle – a third year of what is likely to deliver record prices for raw milk.
“Demand from the processing sector for raw milk continues to be strong, enhancing prices and providing advantages to dairy farmers. In addition, the recent softening of the Australian dollar is good news for FMP supporting processors decision to ‘go hard’ at opening."
The Global Dairy Trade price index was down 1.3 per cent on the last indicator on 15 June, with 6 July the next trading event.
As at Wednesday, the Eastern States Trade Lamb Indicator was up 3 per cent to 849c per kilogram (per ABARES). MLA reported on Thursday night that Merino lambs are up the most this week, rising 52c to 812c, followed by heavy lambs (842c, +35c) and trade lambs (853c, +34c). The fadeaway on restocking seen in cattle was also in sheep too, the only category to fall with restocker lambs down 31c to 809c.
MLA confirmed that the current spike in prices in light, heavy and trade lambs is to be expected at this time of the season with tightening winter supply. They estimate promising weeks ahead:
With favourable weather forecasts providing optimism for the critical winter lambing period in key sheep regions, the early drop of 2021 lambs may deliver a higher-than-average volume of heavy lamb supply during the spring flush. An uptick in supply will have impacts on the price of heavy lambs – this will be an important factor for producers to consider when turning off lambs.
Sheep - New South Wales
Like the State of Origin series, NSW has taken the crown on restocker lamb prices as they rose 4c to 918c, this week holding ground against Queensland's fast-fading fortunes (now 838c, after leading the nation last week). NSW prices are otherwise mid-range in the other categories, shaded by Queensland in light and trade lamb categories.
Merino lambs' rise added pace this week, up 52c this time to 801c, with all other categories rising, heavy lambs next best, rising 33c to 837c. Southern NSW prices remain strongest in all categories except trade lambs (857c, eclipsed by 870c in central west).
Wagga Wagga remains well out in front in the national yardings with 40,700 last week far ahead of Forbes at 26,550 and Ballarat at 26,400. Yardings climbed further on Thursday to 47,700 with the damp weather having no impact on supply. Quality was reported to be excellent with the offering mostly above 26 kilograms.
This was consistent with the Meat and Livestock Australia observations that 75 per cent of lambs yarded in NSW were classified as heavy weights, with producers cashing in on strong seasonal and market conditions.
After ranking fourth nationwide last week in total yardings ahead of Yass and behind Dubbo, Corowa saleyard offerings remained fairly constant on Monday at around 12,300 head. Quality improved from the mixed offering last week. The market was dearer in all categories.
Sheep - South Australia
With the late start to the season, restocking is still on in South Australia as restocker lamb prices fell hard by 59c to second-best in the nation this week at 905c, with NSW surging out in front at 918c. In all other categories, SA prices continue to be modest, light lambs slipping 50c to be well behind the herd at 756c. Trade lambs rose 43c to 811c.
After a couple of weeks of solid Naracoorte yarding gains and dearer prices, volume fell heavily this week by 2,670 head to 3,871. Quality fell away to be 'mixed at best' on Tuesday, however buyer competition was still strong seeing a dearer lamb market and firm to dear sheep market.
SA Livestock Exchange at Dublin on Tuesday slipped back 3,000 head to 4,000. Some extreme heavy weights were reported in Merino and crossbred offerings, helping to push prices up by as much as $30 per head.
Sheep - Victoria
Trade lambs improved 49c this week to 873c, placing second in the nation behind Queensland, while heavy lambs' (+35c this week) strong recent run was rewarded by taking out top billing at 862c. Merino lambs' price climb reached the summit also, rising 53c this week to now sit at 834c, while other categories lag prices interstate.
Horsham yardings yo-yoed up again this week, rising 3,200 head to 8,550 with a new agent reportedly selling at the rail this Wednesday. Quality was again reported to be good, bringing a dearer market.
Nutrien reported on Wednesday that the Eastern Market Indicator fell 17c to 1,423c per kilogram, fairly closely matching falls on the northern, southern and western indicators.
Australian Wool Innovation confirmed on Thursday the slide was more pronounced, with falls of between 3 to 3.8 per cent across the currency.
AWI reported the pressure to buy was eased by expectations of large volumes in coming weeks' trade, enabling more opportunistic purchasing by local exporters and overseas customers.
Grains and Oilseeds
AWB noted early this week that the indicators were that a bumper season was in the offing, looming as large as 2016-17:
"... this year’s crop treading a similar path to that of the 2016/17 season, another harvest that most growers would be happy to revisit.
"Unlike 2016/17, and last season for that matter, New South Wales will enter the coming harvest with a considerable carry-in, in fact will be carrying the vast majority of the country’s surplus. This is despite the export program running at full capacity and likely to continue to, until the headers start rolling. Demand for feed grains into the Darling Downs is such that requirements are being met with supply from the north of the state, however it is the export channels that are providing the benchmark for pricing."
In the pricing indicated below, AWB suggests the gap between road-reliant site price offers and railway sidings will widen:
"With trucks in short supply, the tight road freight situation has seen the spread in bids between road-only sites and rail sites widening, with exporters and domestic consumers with rail assets well incentivised to own grain in rail sites."
International wheat prices recovered after two weeks of slides, up 3 per cent to US$284 per tonne (US No.2 hard red winter wheat, fob Gulf) while domestic prices again held stable.
So too there was a general $1 improvement in prices on offer around the receival sites in the Flow family:
NSW - Brocklesby back up to $269.25 ($268.25 1 week ago, $270.25 2 weeks ago), Grong Grong up to $260.25 ($259.25, $257.25), Henty West $273.50 ($272.50, $276.50), Narrandera $259 ($258, $261)
Vic - Charlton $280 AWB ($281, $283) and $282 at Graincorp, Donald $279 ($278, $280), Murrayville $274.75 ($273.75 , $275.75), Rainbow $274.25 ($273.25, $275.75), Ouyen $271.25 ($270.25, $272.25)
SA - bouncing back at Port Lincoln and Adelaide $305 ($294, $300), steady at Mallala $297.30 ($297.30, $302.30) and back up at Pinnaroo $278.83 ($274.83, $278.83)
After a couple of weeks of gains, barley domestic prices slipped 1 per cent to $329 per tonne.
Tracking 2021/22 BAR1 prices on offer across the Flow Family,
NSW - Grong Grong $198.25 at AWB ($197.25, $208.25), but $205 at Graincorp, Lockhart $209.50 ($212.50, $213.50), Temora $205.75 at AWB ($206.75, $219.50) but $213.50 at Graincorp
Vic - Charlton $221 at AWB ($221, $226) but $225.50 at Graincorp, Donald $220 at AWB ($220, $231) but $227 at Graincorp, Murrayville $215.50 ($218.50, $219.50), Ouyen $205.25 at AWB ($205.25, $218.50) but $214.50 at Graincorp
SA - Adelaide and Port Lincoln $230 ($248, $247), Pinnaroo $219.83 ($219.83, $226.83), Crystal Brook $230.39 ($230.39, $237.39), Warramboo up $2 to $228.61 ($226.61, $233.61)
Canola international prices kept sliding downwards, shedding 2 per cent at Vancouver to US$649 per tonne and losing 1 per cent to $733 per tonne at Kwinana, WA.
It was a much rosier story for 2021/22 prices on offer as the financial year began, with $45-55 price increases per tonne across the receival sites.
Tracking 2021/22 prices on offer across the Flow Family, canola offers across the network:
NSW - Temora $742.75 Graincorp (GC) ($683.75, $683.75)
Charlton AWB $746 ($692, $695), GC $755 ($695, $693),
Wycheproof AWB $740.75 ($686.75, $675.75), GC $752.75 ($670.75, $690.75),
Rainbow AWB $739.25 ($685.25, $672.25), GC $747.25 ($687.25, $687.25)
SA - Port Adelaide AWB $768 ($716, $719), Keith AWB $739.50 ($687.50, $690.50), Cummins AWB $760 ($708.01)
Dairy Australia reported for the week ending 25 June that there were good reports to that date across that week, with many farmers reportedly planning feeding programs to get stock through winter months until new grass grows in the spring. They add:
Most trade continues to support local demand, which has remained subdued for some time. There are reports of some farmers beginning to feed out stock from stored fodder over the last few weeks.
While there is continued strong demand for Australian red meat, there are reportedly high volumes of straw moving into feedlots.
They report for southern Australia:
Straw has been baled mostly in South Australia to meet contracts for the next twelve months for mushroom and chicken farms, as well as feedlots.
Demand still expected to be down for some time.