Insights November 2024

Commodity Overview

• Harvest of the 2024/25 crop is well underway with Queensland, New South Wales and Western Australia leading the charge. Nationally 5.7 million tonnes of grain had been delivered into the main bulk handlers.
• Markets are gradually recognizing that most regions are likely to have an exportable surplus of wheat, which will eventually need to be priced. The direction of prices will depend on our quality, global demand, and Black Sea supplies in early 2025. We hold view that Black Sea supplies will tighten, leading to continued appreciation of global values.

Harvest of the 2024/25 crop is well underway with Queensland, New South Wales and Western Australia leading the charge. The Northern New South Wales and Queensland harvest is past its peak with the latter now in the final stages. The harvest pace is a record for these two states. A total of 3.4 million tonnes have been delivered to GrainCorp sites. This beats the 2012/13 benchmark of 1.8 million tonnes for this time of year. Western Australian growers had a good run at harvest in the first week of November. They delivered 1.5 million tonnes to CBH sites. So far, the season's total is 2.1 million tonnes. Harvest across Victoria and South Australia is off to a slow start. Grower deliveries are 200,000 tonnes, down from 1.6 million last year. On a national level 5.7 million tonnes of grain had been delivered into the main bulk handlers for the week ending 5th of November. For the corresponding time last year 6.3 million tonnes had been delivered.

A recent industry crop tour in Victoria and southern New South Wales, plus early harvest results, suggest that September frosts caused less damage than feared. As harvest advances in impacted regions of South Australia over the next few weeks, the full extent of this damage will become more apparent . Australian Crop Forecasters' production outlooks are unchanged at this stage. Wheat is at 30.3 million tonnes, barley at 11.1 million tonnes, and canola at 5.4 million tonnes. Mostly fine conditions to date have seen no quality issues arise with wheat grades ranging from ASW through to APH2. Barley is probably the most harvested commodity to date and is showing variable quality. A good proportion is said to be making malt grades in New South Wales. For Western Australia, malt conversion has improved but is still below average at around 10 percent. Canola yields are coming in mixed across the country with some happy and others reporting it ‘as expected’.

Source: ACF and Profarmer Australia

Source: ACF and Profarmer Australia

Wheat prices have been mixed over the past month. Markets in Queensland and northern New South Wales firmed slightly as peak harvest pressure eased. In contrast, prices in Victoria and South Australia dropped by about three percent. These markets are in a holding pattern as they await clearer signs on yield and quality as harvest activity intensifies. Western Australia saw the largest gains, with prices up five per cent, supported by significantly higher trading volumes in canola and barley. Canola prices remain the standout rising by around 10 per cent over the month to reach decile 9 levels. We have seen strong selling at these levels. As harvest progresses, we will need good offshore price support pressure.  Barley prices were flat to slightly higher over the month. There is some emerging export interest for barley, however merchants have had no trouble filling requirements so have not had to push bids up. Malt premiums are firming slightly and range from $20 to $35 dollars per tonne across port zones. This will be one to watch as harvest progresses, and quality becomes clearer.

Source: Profarmer Australia

Source: Profarmer Australia

While there is still a considerable way to go before harvest is complete, markets are gradually recognizing that most regions are likely to have an exportable surplus of wheat, which will eventually need to be priced. The direction of prices will depend on our quality, global demand, and Black Sea supplies in early 2025. We maintain the view that Black Sea supplies will tighten, leading to continued appreciation of global values. Additionally, any new crop scare events in the northern hemisphere could create further marketing opportunities in the coming months.