It's been another great week in the commodity markets in most respects, a hiccup on the wool market due to high bale numbers coming through the markets this week but yet again beef took the headlines.
The Eastern Young Cattle Indicator is marching towards 1,000c for the first time, and sheep prices are positive as well.
We bring you the wrap across currency, water, livestock, grains, oilseeds and hay here on the Friday Farmgate, updated across the day every Friday.
Meanwhile, you know optimism is high when farmers are buying up on farm machinery. Grain Central reports that not just the new machinery market, but the second-hand market, are 'super charged' - with the government's asset purchase tax write-off opportunities playing a big role.
Currency
On Thursday night, one Australian dollar lost ground hardest against the yen and greenback, trading at:
74.35 US cents, down 0.66 after shedding 0.76 the previous week
81.76 Japanese yen, falling hard at the end of the week to be down 1.67 yen on last week
62.99 Euro cents, down 0.37
54.01 British pence, down 0.22
106.69 NZ cents, down 0.49
Water - Rainfall
Rainfall contracted this week closer to the ranges and peninsulas of south eastern Australia, with healthy falls also in SA's south-east and the Victorian south west coast.
NSW's north coast had the best falls for this week at Mullumbimby 136mm, Kingscliff 115mm and Murwullimbah 107mm, whereas in Victoria it was the southwest coast with the best falls. Portland enjoyed 79mm and Cape Nelson 75mm. Across the border the south-east's Mount Schank recorded the best at 45mm, followed by Robe with 38-41mm.
The week ahead looks decidedly wetter, with falls generous in the Great Dividing Range south of Queensland and in the Murray-Darling Basin catchment areas. The south-east of SA and western Victoria look set for another strong week in the rainfall rankings.
Water - Irrigation
Water trade in the southern Murray-Darling Basin had an 'end of financial year' rush feeling, with 300GL traded in each of the final two weeks compared to a weekly average 120GL across most of the trading year. Prices fell on the back of the higher volumes, down to $90 per megalitre.
On the latest data available, SA Murray allocations tumbled $15 to $80 per megalitre despite very little water trade in the district.
By contrast, Victorian Murray prices fell $6.40 to $88.60, on the back of the second week of high volume trading, almost 200GL this week. That volume of trade has not been seen since one week in January this year, and June last year.
NSW Murray trade remains steady in volume and price at around 40,000 ML a week at $90 per megalitre, up $1.50 this week.
Due to the low volume traded the latest Murrumbidgee data could be an outlier, but nonetheless, it shot up from $24 to $158 per megalitre in the latest week, a price unseen since September last year.
Dartmouth Dam picked up a further 1 per cent to 67 per cent storage this week, while Hume Dam rose to 62 per cent and Menindee Lakes stand at 63 per cent (was 27 per cent at the same time last year).
Livestock
The big talking point yet again is the surging cattle price, but sheep are doing their winter run as well into upward territory.
While sheep will drop off in the next month or so, there seems to be no end in sight to cattle's run.
Cattle
As reported on Thursday, the Aussie beef stampede appears to be charging towards an imposing 1,000c per kg cwt which the Flow Morning Show's Wayne Phillips said could happen by AFL Grand Final day.
Nationwide prices have kept inching upward with minor corrections in some categories, heavy steers among high volumes falling another 6.9c to 392c, after last week's 25c fall. Medium steers kept rising this week, up 10.5c to 412.4c but restockers rose the most this week, up 14.9c to 571.6c.
Cattle - New South Wales
The hunger for restockers (up 26.8c this week) continues to drive NSW prices in that category as the nation's best now for a second week, standing at 590c ahead of Victoria next best on 580c. Heavy steer NSW prices are also the nation's best at 438.9c (+36.9c), with processor yearling steers (+9.8c) best among reported states at 508.1c.
Southern NSW prices continue to be strong, the best in the state for vealers (552.1c, +2.4c), restockers (606.7c), heavy (472c) and feeder steers (495.8c, +2.6c).
Wagga Wagga sales on Monday picked up 313 head after shedding 553 the previous week, up to 2,460 yarded. MLA reporter Leann Dax attributed these declining numbers to wet weather, but said heavy cattle numbers lifted and saw a notable improvement in quality, with outstanding quality on heavy steers and bullocks delivering significant price lifts.
Cattle - South Australia
Feeder steers are close to the eastern states' best price at 473.5c in SA after rising 5.5c this week, now just tailing NSW's 475.3c. Processor yearling steers shed recent gains to drop 32.9c to 483.1c.
Mount Gambier yardings picked back up 202 head on Wednesday to 560, with improved quality thanks to better weight and condition across the pens - but MLA reporter Peter Kerr said the market sold 'to some mixed results'.
Tuesday's yarding at Dublin's Livestock exchange fell heavier this week than the week before, down 111 head to 149 - but with improved quality. MLA reporter John Traeger reported specialty butchers provided good competition on suitable young cattle.
Tuesday's Naracoorte yarding shed the previous week's gains, down 195 head to 635 head with 'very mixed' quality but, as with the recent weeks, still selling to firm to dearer levels.
Cattle - Victoria
Victorian prices are second best in the nation on restockers (580c) but fell away in medium steers (414.4c, -36c after last week's 21.6c gain).
Warrnambool yarded 636 head on Wednesday, up 99 on the week before.
Dairy
Australian Dairyfarmer reported on Wednesday that Global Dairy Trade average prices fell 3.6 per cent at auction on Tuesday night, taking the average price to below $US4000 a tonne for the first time since March. But prices are still almost 20pc higher than at the same time last year.
New Zealand bank ASB economist Nathaniel Keall told AD the price fall was well ahead of the futures market expectations and came despite Fonterra reducing the amount of volume on offer.
"Prices are moving lower a shade faster than we had previously anticipated, and the fact the fall comes despite the fall in volumes on offer is a bearish sign.
"The contract curve also now has a sizeable downward slope, showing prices falling substantially for later dated contracts.
"This suggests prices have lost a bit of momentum as we head deeper into the new season."
The latest Dairy Australia Situation and Outlook report issued on Wednesday has positive news for dairy farmers:
Much of Australia’s dairy industry has been riding on a wave of positivity over the last few months. Improved operating conditions, robust domestic demand and supportive global fundamentals have continued to underpin a reasonably strong market outlook.
A vast majority of farm businesses are expecting to make an operating profit this season, and with mother nature mostly playing her part, industry confidence has bounced back.
Several factors, including higher opening milk prices in 2021/22, suggest this momentum could be maintained well into next season.
Dairy Australia observes that production should, at last, lift in the Flow Family states whereas the record beef prices could hold production expansion back in the northern states:
A vast majority of farmers in SA and western Victoria have reported profits over the past two years, with an increasing share of businesses entering an ‘expansion phase’.
This is likely to see milk production grow in 2021/22. Despite a relatively dry autumn, plenty of water remains in catchment systems in northern Victoria. A boost in per-cow yields is anticipated to grow the region’s milk pool.
Similarly, as livestock numbers in NSW are limited, an increase in per-cow yields is likely the key driver of any production response next season.
The Australian Dairy Products Federation reported that skim milk powder suffered its worst percentage fall since March 2020, dropping $230 per tonne or 6.9 per cent on average to US$3,126/t. Fonterra MH C2 lost US$270/t to US$3,175/t, with similar losses in C3 and C5. European SMP did a lot better to lose only US$148/t.
Whole Milk Powder lost US$133/t (or -3 per cent) on average to US$3,864/t, with worse losses in later contracts. Regular product C2 WMP lost US$170/t to US$3,875/t. Instant product prices in C1 and C2 didn’t fall as far and restored the typical premium above regular product.
Fats prices continued to slide, with butter again taking a bigger hit, losing US$154/t or 3.3 per cent to average US$4,458/t, with inconsistent losses across contracts. C2 did by far the worst, losing US$232/t to US$4,373/t.
Anhydrous milk fats lost US$55/t on average to US$5,632/t, but the damage was done to early delivery periods which were elevated coming into this event. C2 dropped US$200/t to US$5,650/t, while C1 fell US$229/t but ended at US$6,088/t.
1,072 tonnes of cheddar sold across six contracts for an average of US$3,949/t, down US$379/t (-9.2 per cent), with C2 achieving US$4,095/t. Prices for C3 and C4 deliveries were cut by US$439/t (to US$3,916/t) and US$550/t (to US$3,767/t) respectively.
Sheep
Meat and Livestock Australia reported on Thursday that lamb slaughter and yarding volumes are up 19 per cent for the month of June compared to the previous June, and 4 per cent stronger than the five-year average. MLA predicts producers who have ample lambs might turn stock off to sell into an 'appreciating' market.
They graph the longer-term trend since 2016 thusly:
So whilst prices are rising positively this season, they will usually peak in July and could dive anytime - last year being an exception as the flock was rebuilt as the drought broke.
Nutrien Ag Solutions Bendigo livestock manager Nick Byrne told Fairfax Media he doesn't believe the price rise will have any great impact on throughput and is confident the tight supply of lambs will continue.
"There aren't the old lambs around for a price reaction to bring them out of the woodwork.
"I can't see any huge numbers coming forward. New season lambs, here especially, it will still be a month or two before we start to see significant numbers of them.
But he does expect to see more mutton coming forward, which may ease the price in the next month to six weeks.
"Given there was a lot of sheep either brought in or retained on farm last year, producers might offload those sheep to cash in on the higher mutton price early rather than taking them out to a September shearing," he said.
"I think the industry expected lamb to get dearer earlier than what it has, but I think the season determined that given the break was late and there were probably lambs brought onto the market due to the lack of paddock feed."
Thomas Elder Markets also observed this week that lamb exports had pushed outside the usual bounds to record levels recently.
This week saw 50,000 heavy lambs yarded nationwide, 14,000 trade and Merino lambs respectively. A small volume in restocker lambs at 2,500 perhaps expecting to find lesser restock interest nonetheless found willing buyers, bringing the strongest upward price movement this week of a 23c gain to 846c nationwide.
On the latest available data, trade lambs rose 15c to 865c this week and mutton were up 16c to 702c.
Sheep - New South Wales
NSW prices remain healthy across the board, but not taking national leading honours any longer. After clinching the national restocker lamb price ranking by a bare margin last week, a 105c fall to 887c saw that price fall back to the pack. However, southern NSW restocker prices remain strong at 929c compared with 863c in the north and 788c in the central west.
Trade lambs (873c, +20c) are NSW's strongest performer, just behind Victoria on 882c. Merino lamb prices slowed this week after recent gains, down 20c to 774c. NSW has a strong mutton price on the back of a 27c rise to 720c this week.
Corowa yardings continued to rank highly nationwide with 15,080 yarded this Monday, up 2,780 head. Quality was reported to be mixed with pens passed in due to lack of finish - nonetheless the market was firm across most categories.
Sheep - South Australia
SA prices have been, well, sheepish in the national comparisons and remained so this week due to falls, some heavy, across the categories this week.
Heavy lambs rose 41c to 807c after losing 50c last week, but all other categories fell - restocker lambs down again - this time by a big 150c to 755c. Trade lambs fell again by 36c to 775c and light lambs were down 20c to 736c.
Naracoorte yardings fell away again on Tuesday, this time by 765 head to 3,106. Quality was reported to be very mixed with a 'wintery feel over the pens', resulting in 'firm to slightly softer' prices on lambs and easier prices on sheep.
Sheep - Victoria
Merino lambs peaked last week, with prices correcting backwards 18c to 810c - but all other categories rose. Restocker lambs were up 82c to 872c, light lambs up 25c to 828c and trade and heavy lambs both up 11c. Trade lambs were at the best price nationwide at 882c.
At Swan Hill on Thursday, yardings bounced back 4,500 head to 8,500 with a bigger and better quality yarding of lambs, led by some exceptional heavy grainfed stock. MLA reported a dearer trend of $5-$10 over most of the yarding compared to a fortnight earlier.
Horsham yardings had their now familiar see-saw drop across the fortnight, falling back 3,115 head to 5,435 yarded. Quality fell to mixed after a good offering last week, with less heavy lambs penned.
Wool
A challenge with the timing of the Friday Farmgate report is the late arrival of wool data on Fridays, forcing reliance on the previous week's data for indications. However, on Friday afternoons on FlowFM, the Country Viewpoint program speaks with Michell Wool for the latest from the markets.
Nonetheless, Nutrien reported earlier on Friday that the Eastern Market Indicator was up 7c to 1,420 this week as the anticipated high bale volume came through the system, while the Southern Market Indicator rose 11c to 1,363.
The latest AWI indicator available from 1 July showed a poor price outcome from the final auctions for the 2020/21 season due to the large volumes scheduled in these current weeks. The Eastern Market Indicator fell at that point by 45c per kg to 1,423.
Elders' wool report last Friday said the Australian market recently had the correction 'we had to have', saying the price drop was predictable with confirmation the July 6 offering would be 56,000 bales. Elders explained:
"So, the bubble hasn’t burst, it is just that the market has let off a little of the price pressure which had built up over the past 6 weeks with back to back to back rises.
"A lot of the participants at the far end of the pipeline, at fabric or final garment stage, had been asking questions about why the greasy market was going up so much. To them it didn’t make a lot of sense, when they themselves were just manufacturing the product for the coming season, not increasing consumption yet, and still nervous about whether consumers would come out in force in September.
"The exporters, traders and early stage processors had all got a little over-exuberant and kept pushing prices for greasy wool higher and higher, without regard for what their clients further downstream were telling them.
"Thus, a little slap-down, reality check driven by a sudden increase in supply brought about by the new financial year rolling over."
Grains and Oilseeds
AWB reported this week that a market rally came off the back of unexpected news from the United States:
"The key news event out of the last week was the USDA stocks and acreage report which caught the market off guard and had all futures exchanges rally higher.
"The big surprise came with US corn planted acres being reported as 92.7M which was well below market expectations that were pegged at 93.8M. This had US corn futures close limit up with most other grains and oilseeds following the charge higher."
Wheat
NSW Department of Primary Industries reported good conditions have increased private forecasts of wheat plantings to 14.2 million hectares in NSW, above the ABARES 13.1 million. National prices fell 0.7 per cent last week.
Thursday's indicators from ABARES put wheat at 2 per cent down to US$279 on the international market, but milling and feed wheat both up 1 per cent at Port Adelaide to A$381 and A$376 respectively.
Data arriving - please stand by.
NSW - Brocklesby $262.25 ($269.25 1 week ago, $268.25 2 weeks ago), Grong Grong $253.25 ($260.25, $259.25), Henty West $266.50 ($273.50, $272.50), Narrandera $252 ($259, $258)
Vic - Charlton $268 AWB ($280, $281) and $275 at Graincorp ($282), Donald $272 ($279, $278), Murrayville $267.75 ($274.75, $273.75), Ouyen $264.25 ($271.25, $270.25), Rainbow $267.75 ($274.25, $273.25)
SA - Port Lincoln and Adelaide $281 ($305, $294), Mallala $284.30 ($297.30 , $297.30) and Pinnaroo $265.83 ($278.83, $274.83)
Barley
The latest indication from NSW Department of Primary Industries is that their barley crop is looking on track to match the 2016-17 season based on early-season satellite imagery.
ABARES data indicated feed barley prices at Port Adelaide were down 1 per cent to $326 per tonne, or around $3 per tonne. As shown below, prices on offer for the 2021/22 season were down further, around $5-7 this week.
Tracking 2021/22 BAR1 prices on offer across the Flow Family,
NSW - Grong Grong $191.25 at AWB ($198.25, $197.25), but $200 at Graincorp ($205), Lockhart $204.50 ($209.50, $212.50), Temora no record at AWB ($205.75, $206.75) but $208.50 at Graincorp ($213.50)
Vic - Charlton $211 AWB ($221, $221) but $220.50 at Graincorp ($225.50), Donald $210 at AWB ($220, $220) but $222 at Graincorp ($227), Murrayville $210.50 ($215.50, $218.50), Ouyen $195.25 at AWB ($205.25, $205.25) but $209.50 at Graincorp ($214.50)
SA - Adelaide and Port Lincoln $238 ($230, $248), Pinnaroo $211.83 ($219.83, $219.83), Crystal Brook $222.39 ($230.39, $230.39), Warramboo $218.61 ($228.61, $226.61)
Canola
NSW Department of Primary Industries reported last week that prices had risen 3.4 per cent, although in the Flow Family price increases for the current season were more in the realm of 8 per cent. DPI say dry conditions in North America spurred a rebound in global prices, with concerns likely to linger until the US spring harvest gets underway.
Mercado reported this week that soybean price hikes in the USA scared the canola market into upward territory, as it was higher movement than had otherwise been expected. As AWB noted, planted US soybean acres came in well below expectations.
ABARES data for canola showed the international indicator at Vancouver stable at US$649 per tonne, while domestic price indicators at Kwinana were up 1 per cent to A$740 per tonne. Even so, at the prices indicated below on offer for next season, last week's spike largely vanished this week.
Canola prices have been wobbly of late, as a survey across the last few weeks' offerings on 2021/22 prices show going into that harvest year. Data received across selected Flow Family receival sites showed:
NSW - Temora $698.75 Graincorp (GC) ($742.75, $683.75)
Vic -
Charlton AWB $713 ($746, $692), GC $708 ($755, $695),
Wycheproof AWB $707.75 ($740.75, $686.75), GC $705.75 ($752.75 , $670.75),
Rainbow AWB $706.25 ($739.25, $685.25), GC $702.25 ($747.25, $687.25)
SA - Port Adelaide AWB $737 ($768, $716), Keith AWB $708.50 ($739.50, $687.50), Cummins AWB $729 ($760, $708.01)
Hay
Dairy Australia reported crops are coming up nicely in most districts and prices for hay remaining steady across the nation:
Most regions across Australia are now reporting good crop emergence, with some areas saying it is the best season they’ve had in a long time.
Demand for purchased fodder is still anticipated to lift in the coming weeks, hinging on if cattle and dairy farmers continue to use stored and homegrown fodder and need more feed to get through the winter months.
Conditions are favourable in Gippsland, the western districts and northern Victoria, with reports only a small amount of rainfall is required to support growth through to spring. Current weather conditions are wet and cold with consistent misty rain making it difficult.
Trade continues to be limited with the subdued level of local demand. There are reports many farmers have started to utilise stored feed for stock in the last few weeks
Carbon
This week we begin tracking the carbon price in corporate Australia, as big corporations like Qantas choose to weigh into the carbon market regardless of whether the federal government establishes a carbon price, tax or otherwise.
Some farmers will pursue carbon offset opportunities whether through soil sequestration or carbon sink opportunities.
Australian carbon prices pushed past $20 per tonne this week (up 5 per cent) for the first time, but RepuTex Energy noted they are well behind prices in Europe that have grown 65 per cent this year to A$85.
RepuTex observed this price level is close to what it was under the Labor federal government before the Abbott Coalition government was elected and those pricing arrangements were repealed.
RepuTex noted on Wednesday:
While on the surface, the Australian carbon offset market lacks the target, the compliance framework, and the political support to replicate the carbon boom seen in Europe, in practice, the local ACCU (Australian Carbon Credit Unit) market is on the move, underpinned by an increasing number of corporate net-zero pledges, and a growing investor push to align their portfolios with net zero emissions