South Australian barley prices have continued to trend higher, seeing a fair amount of support from the surging wheat market.
Barley is currently priced at $450 a tonne on an Outer Harbour basis for the 2021/22 season.
The spread between Australian Standard White 1 wheat and Barley 1 has widened significantly to $80 as compounding production concerns in the northern hemisphere, and a ban on exports from India sends old crop wheat prices to new highs.
Despite these lofty prices, at a global level, Australian barley is still some of the cheapest feed grain available, and our malt is even cheaper on a FOB basis.
New season prices have also been pushing higher, trading between $390-400/t in Outer Harbour.
Fundamentally, global feed prices have continued to march higher as the market tries to digest the availability of supply from the upcoming spring crops in the northern hemisphere.
The major market driver has been the conflict in Ukraine, restricting a significant portion of global corn supplies from hitting the market.
Ukrainian spring planting is nearing completion, progressing remarkably well given the circumstances.
The Ukrainian agriculture ministry has reported that the total area is likely to be around 14.9 million hectares, down from 16.9 million hectares in 2021, a drop of nearly 12 per cent.
The rate of planting this year is roughly 25pc slower than the same time last year due to the ongoing fighting in many regions coupled with logistical constraints stemming from fuel and worker supply.
Yield potential also remains a major unknown as access to fertilisers, pesticides, and herbicides is limited. Exports from Ukraine have been limited to rail, road and small upriver ports.
The maximum capacity is currently estimated to be between 1 to 1.5 million tonnes a month of total grain. However, actual totals have so far been lower.
Meanwhile, US corn futures have been trading in a wide range.
December corn has been trading between US717c/bu and US760c/bu since mid-April.
Over the past month, corn has tested both support and resistance levels, failing to successfully break through either.
Corn will likely continue to oscillate between the upper and lower bands until new information is fed to the market regarding either Black Sea supplies (Ukraine) or the upcoming US crop.
US growers have shown that with even minor breaks in the weather, they can get a lot in the ground very quickly.
US corn seeding progress jumped to 72pc complete verse 49pc from the previous week.
The primary concern with regards to seeding progress is in the Northern Central Plains and far north Midwest, where field conditions are the worst and continued cold temperatures will hamper emergence.
The inverse between December and July has widened to US49c/bu.
US corn has been in an inverted market since late October 2021, demonstrating the market's front-end demand profile.
Until the spring crop condition and production estimates become better realised, global feed markets will likely remain rangebound at historically high levels.
With such tight global supplies, it would take a surprise increase in production forecasts for prices to ease.
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