Many growers have urea on farm, but are concerned that further supplies for top-dressing their winter crops will be hard to get at an affordable price. Photo: Mark Modra

HEAVY rain and flooding in parts of Queensland, and compounding uncertainty around supplies of urea for the upcoming winter-crop season, have created some big spikes in the northern market this week.

In the south, the impact of dearer fuel and urea prices is being softened by the rosy start to the season thanks to rain that fell at around the same time hostilities between Iran and US-Israeli forces escalated.

Table 1: Indicative prices in Australian dollars per tonne.

Rain, mixed conditions impact north

Some cropping areas in Central and southern Qld received some very heavy rain in the week to 9am today.

Higher registrations include: Clermont 110mm; Dalby 73mm; Emerald 185mm; Jondaryan 50mm; Macalister 114mm; Miles 217mm, and Roma 72mm.

However, many districts received no rain, and the experience was similar in northern New South Wales, where higher registrations include: Narrabri 86mm; Pallamallawa 45mm; Parkes 59mm, and Quirindi 20mm.

In Qld, rain caused some road closures, but growers were generally able to outload their sorghum to export.

Uncertainty around fuel pricing and supply has been a bigger issue following a diesel price rise of around 25 percent since the Middle East conflict closed the Strait of Hormuz.

“We’re going to take a hit this week because it is so hard to change existing contracts,” Ambrose Haulage managing director Jim Ambrose said.

“We’ve priced new freight at rates to regain losses, and our customers have been wonderful.”

They include grain-trading companies, and runs include triples at Hebel on the Qld-NSW border going to feedlots into Condamine.

Mr Ambrose said the fuel hike has added around $3.50/t to the base central Downs to Brisbane rate of $30/t.

One grain trader said he acknowledged the higher fuel prices trucking companies were paying.

“We were paying $30/t freight last week from the central Downs to Brisbane, and now they’re up to $35; that’s our margin gone,” the trader said

The Goondiwindi-based Ambrose Haulage is running 35 trucks, and Mr Ambrose said even their trucks on the Hebel-Condamine run have been able to access fuel.

Mr Ambrose explained the economics, and said the company tries to be transparent on its pricing to customers.

“That western work is expensive on fuel; it’s 30-40c [per litre] more.

“Western fuel is dearer; our cheapest fuel is always in Brisbane.

“Transport’s not easy at the moment.”

Mr Ambrose is hopeful prices will drift lower by next week as Australia takes comfort in assured supply for the domestic market, despite the Middle East conflict.

“I’m assuming this will be a storm in a teacup and it will be back to normal in a fortnight.”

Sunrise Commodities managing director Scott Merson said farm gate values for sorghum rose by around $10/t over the past week.

“A lot of delivered values were higher than that,” Mr Merson said.

The stronger prices were paid into the delivered Brisbane market, where recently harvested sorghum is being exported in bulk to China.

“The rain slowed down selling, but logistically, it was not a massive issue.”

Most sorghum on the western and central Downs, and in northern NSW beyond the Liverpool Plains, has been harvested.

Some sorghum downgraded because of the rain has been trading in small amounts into piggeries at a discount of around $20/t to the top grade.

“On the whole, it’s not a big problem.”

Traders report little interest from Qld and northern NSW growers in selling wheat at current levels, and with barley stocks limited north of the border, NSW growers are holding what they have.

That means most new business is being executed out of up-country warehousing.

With limited subsoil moisture in most cropping districts in northern NSW, and growers alarmed by the prospects of in-crop urea being expensive and hard to get, the region’s winter crop may be a small one.

“If this continues, we could run to cover the cost of execution (of cereals) to the Downs from South Australia; it’s happened before.”

ASW-type wheat has traded into some Downs sites at a high of $370/t in the past week, although most trades have been closer to $363/t.

“Growers are not selling; where the grain is, they’re bone dry.

“What farmers are saying to themselves is: Even if we do get rain, are we better off fallowing through to summer crop?

As growers look at the heady cost of production for new-crop, based on the Middle East conflict’s impact on fuel and fertiliser, they are feeling that new-crop owes them even more than current crop.

“In Queensland, we’ve got 900,000 head of cattle to feed…and then there’s the chooks; that’s a lot of demand.”

AgVantage Commodities broker Brendon Warnock said this week has seen increased volatility and uncertainty based around the fuel and fertiliser markets, both price and supply wise.

In contrast to this time last year, when ex-Tropical Cyclone Alfred set up northern NSW for a strong start to winter cropping, Mr Warnock said confidence in new-crop planting was limited.

“People are mentioning that if things don’t change, [they] just won’t plant,” Mr Warnock said.

“If we were to get an east-coast low…and a widespread 200mm, they would go ahead and plant something.

“We haven’t seen a widespread rain event, and growers are saying that maybe this is the grain that’s going to have to last me for two years,” he said of on-farm stocks.

Mr Warnock said the steady increase in prices, as has been evident on AgVantage Commodities’ Market Place trading platform, shows consumers are extending coverage as prices firm.

Southern sales subdued

In Victoria, Pinion Advisory broker Andy Brown said grower selling has remained thin, with higher road freight rates to reflect dearer fuel negating firmer cash prices for wheat and barley.

“The market has snuck up, but we’ve probably lost more in freight to get it to port,” Mr Brown said.

Despite expensive fuel and urea, he said the mood in Vic was upbeat following “unbelievable rain” of 50-200mm over much of Vic’s key grain-growing regions.

“It doesn’t get much better.”

Mr Brown said he fielded three questions from just about every grower that rang him after the rain.

“The first was about fuel, the second was about urea, and the third was about canola seed.

“Everyone is upbeat, other than the fact that inputs are more expensive.”

Canola’s in-crop appetite for nitrogen has not dented its appeal to Vic growers.

“Gross margin-wise, canola is going to be well ahead of wheat; at $750/t Geelong, it’s stacking up.

“Potentially we’ll see a few more pulses going in the ground, just because of the price of urea.”