Quarter Time for Australian Exports
- By: "Farm Tender" News
- Cattle News
- Jan 31, 2018
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COFCO INTERNATIONAL WEEKLY MARKET REPORT – 30TH January 2018
Dim Ariyasinghe – COFCO Research Analyst
With February almost here, the Australian grain export program is almost four months into the marketing year (October-September) and far enough to gauge how exports have progressed for the first quarter.
Against a tighter level to start of season cereal grain stocks than the market had originally anticipated (somewhat confirmed by ABS’ recent assessment of the 16/17 crop), exports out of Queensland and New South Wales have had a muted start in respect to previous export years.
Total grain production for 17/18 across the eastern states is estimated to be 9-10 MMT, and combined with higher prices relative to other states, does not support a robust export program. Though it is expected shipments will pick up towards the middle of the year, season-to-date vessel activity shows only around 300KMT of grain shipped. The majority of which comprised of last season’s grain. Customs data confirms this as the slowest start to the marketing year since the droughts of 2006/07 and 2007/08.
Moving to Victoria, the case for Australia’s export program improves. Consistent weather over the winter months had helped maintain production levels on par with historical averages. Total exports out of Geelong, Portland and Melbourne have just topped over 1MMT since October, consisting of wheat, barley and canola. January’s shipping schedule accounts for a third of total volumes and February’s shipping program is steadily building. Whilst this is no comparison to last year’s significantly larger program, it tracks closer to an average first quarter for exports.
In South Australia, the export program continues to trend closer to average, with the 17/18 crop supporting the strong end of the previous season. November rains salvaged production over the Eyre Peninsula and with the rest of the state generally in-tact helped provide a floor for Australian grain production. Bulk cereal exports to January has passed 6MMT and 1.5MMT is already on the shipping program for February. Combined with the fact that there is no remaining capacity for Port Adelaide and Port Lincoln for the first half of 2018 and it looks like business as usual.
Western Australia’s export program is keeping pace with previous years, showing 3.4MMT to January versus the 3.5MMT average. The question now is whether the pace of exports can continue for the first half of 2018. After a pessimistic start to the season, timely rains had helped push the state’s wheat crop closer to 8MMT along with 3.5MMT of barley also confirmed in the bin.
For W.A and S.A, the question turns away from a ‘supply’ focus, as Australia’s exportable surplus after domestic consumption should be able to handle a 15-16MMT wheat program. Australian wheat has an uphill battle ahead of it though with Black Sea and Argentine wheat remaining competitive for APW and ASW markets. In addition, India will be nowhere near as active for Australian wheat as they were in 2016-17.
Nevertheless, inelastic demand remains and mainly from China and our South-East Asian partners. On the barley front, demand has been more consistent into China for this time of year, and largely responsible for allowing total export volumes to remain closer to average.
All in all, it looks like Australian grains will make a go of it this year on the international arena. It will be however, a lower scoring affair than last season.
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