ALL eyes are on global grain markets as weather conditions in Australia leave growers in a cautious mode as dry seeding takes place over much of the country.
Releasing its monthly agribusiness report, Rabobank said west coast grain prices had been dragged down recently by a "somewhat better, though still in the balance, 2019/20 production outlook for Western Australia and higher incoming stocks have worked with global price declines to bring west coast prices down".
"Kwinana APW2 went below $A290 a tonne for the first time in nine months during April," the report said.
"West coast basis remains only marginally above the five-year average of $A51/t, and only the arrival of east coast ships can lift prices because global demand will not."
Rabobank grains and oilseeds senior analyst Cheryl Kalisch Gordon said it was coming into the part of the northern hemisphere season where crop weights and yields were developing.
"Things are looking fairly good, conditions have improved in the US, where there were concerns about them getting a crop earlier as it was a bit wet," Ms Kalisch Gordon said.
"That situation has improved and in the Black Sea region we are seeing that Russia is ahead of pace on spring planting and things are looking ok.
"There are no weather concerns for winter planting of cereals, and in some circles it is being said that there may even be a record harvest in Russia.
"That is not an industry consensus but it does suggest there is an expectation of a very good crop out of that region and that has weighed on our wheat market globally.
"If you also put that together with the fact that expectations for corn have improved also, particularly out of South America, that lays over the whole grain complex and has brought wheat prices down with it.
"So we are still looking at an increase in corn price over the next 12 months, but that has been ratcheted back on these expectations.
"There is a good production outlook globally on the horizon and WA is most prone to the impacts of that, both because of its export focus but also because it is about the only State in Australia that has any stocks really."
Ms Kalisch Gordon said in the east there had been a drop in grain prices as rainfall emerged at the end of last week.
"There was a fair amount of hope factored into this, given there is still a dry outlook," she said.
"WA is still looking for demand from the east coast and we will probably see those boats continue until we have some sort of harvest over there - it is just the extent of that harvest that hangs in the balance."
Ms Kalisch Gordon said while the China barley issue was still to be resolved, China would have to come back into the market at some stage for malting barley.
"Australia malts a good barley and you can't just easily turn away from Australia in that perspective but feed grain demand may not be there because of African Swine Fever in China changing dynamics," she said.
There is also good availability of other grains in the world and China has actively been looking for alternative sources for grains over past year and a half."
CBH general manager marketing and trading Jason Craig said the co-operative was still executing and getting last year's big harvest out.
"That is going reasonably well and we are moving a lot of grain and probably a lot more than people anticipate," Mr Craig said.
"In terms of wheat, since October 1, 4.5mt will have gone out of WA to the end of May and in the same period 2.1mt of barley has gone so it has been a strong program.
"The Eastern States demand has been a constant and we have probably had 1mt of wheat and 550,000t of barley and a little bit of canola go around and we will probably see another 1mt go there.
"Given there has been rain across some States we may see a slow down in demand for the second half of the year, which is positive for them and enable them to get a crop in the ground, but they will still have some time of the year where they will need grain."
On the WA side, Mr Craig said it was a slow start to the year as growers wait for rain.
"There is not a lot of selling of old or new crop going on at the moment," he said.
"Growers were reasonably aggressive at harvest time and sold quite a significant amount but there is always a little bit that growers keep over and that would normally start coming out after they have put in their program and are comfortable with the rainfall amount," he said.
"Traditionally we will start to see that released in June, July or August, but again a lot of grain was sold at harvest with those record prices."
Globally, Mr Craig said there was talk of Russia looking at an 80-85mt wheat crop and the Ukraine at 27-28mt.
"They are big crops and the Black Sea region does have an impact on pricing for Australian wheat," he said.
"Obviously it is having some impact if you look at US futures markets which sees Chicago at a 10 or 11 year low, so we are seeing that impact in some of our markets, such as South East Asia, where they are buying new crop into July-August.
"In terms of Australian wheat, the Philippines is going to be our largest export market and North Asia is still there in terms of Japan and Korea.
"The east coast has probably been our second or third biggest market, but that is not going to be there every year.
"It is in a very unfortunate situation with the drought, so you would probably say it is a one off and next year, based on an average season this year, that grain will have to go somewhere else, so we become price competitive again into South East Asia."
