By Darcy Ingram - AWB
In what feels like a theme that will persist throughout the Australian harvest, the first weeks of header activity have faced some early challenges from Mother Nature. Queensland farmers experienced improved harvest conditions last week allowing them to finally make some solid progress on crops. Harvest activity to that point had been intermittent following showery conditions that while beneficial for soon to be planted summer crops, would be more welcome in a few weeks. Northern NSW receivals coincided with the warmer weather as the region experienced a much more cooperative week of early activity while growers in Western Australia will be watching forecasts closely as persistent rain halted headers in most of the state. Similarly, harvest activity had barely gotten off the ground in South Australia before experiencing their own delays due to rainfall.
Weather delays won’t just threaten quality and patience but also the movement of equipment and personnel that follow the harvest from north to south. Much has already been made of labour shortages the industry is facing and early holdups will have a flow on effect if contractors, carriers and receival staff are forced to sit and wait out the weather. Farmers and the trade alike are relying on freight contractors to be available once crops are ready and a logistics squeeze will certainly cause headaches with such a large crop to shift.
Early indications on yields and quality across the country have been positive so far with the mild finish to spring proving beneficial to most crops. Quality will be closely monitored and concerns will grow if the wet conditions persist. The Bureau of Meteorology recently upgraded their forecast for a La Nina event developing to seventy percent, signalling a likely increase in spring and summer rainfall. Following disappointing harvests in the Northern Hemisphere, supplies of high quality wheat and malting barley are tight globally and importers are looking to Australia to fill a significant portion of the deficit. Shipping out of Australian ports is filling quickly with wheat export slots fully booked for December and already most of January.
Local grain prices have been steady to soften in recent weeks despite strong global demand and rallying overseas futures markets. A combination of supply concerns, rising Russian export taxes and increased demand saw numerous futures contracts hit multi-year highs for milling quality wheat while basis softened due to an overall stronger Australian dollar and harvest selling pressure. With a big crop coming our way and prices relatively high, the selling activity of the Australian grower will have a significant influence on market direction in the coming weeks. As previously mentioned, shipping slots are filling fast as exporters connect with overseas buyers and purchase more grain from Australian growers. The market is currently pricing at an inverse to the second half of the year and at this stage the trade will be reluctant to make shipping commitments past June when the Northern Hemisphere crop becomes available. With a near record crop to come off and strong demand for high-quality Australian grain the harvest race is well and truly on.