AWB - Weather woes as market slows

As The Australian Bureau of Agricultural Resource Economics and Sciences (ABARES) recently released its June report, tipping Australia to produce its fourth largest winter crop on record at 50.9 million tonnes. 23.4 million hectares are expected to be sown, only slightly behind last year’s figure, with significant moisture and high commodity prices key drivers of the bullish outlook. Wheat and canola are touted to see the biggest increase in area with canola hectares forecast to increase 12pc while wheat will up by 1pc, barley and chickpeas are expected to see a reduction to make way for these changes. The La Nina weather event that was responsible for above average rainfall across the country in recent months has provided an abundance of soil moisture and early confidence that Australia could be in-line for another massive crop. However, as the sowing window starts to close and paddocks fail to dry out in parts of the east coast, concerns are mounting that planting programs won’t be completed in time.

Cropping regions across Queensland and New South Wales have endured relentless rain throughout Autumn hindering the end to the summer crop harvest and leaving some paddocks virtually inaccessible for months now. Many areas that have been sown are showing waterlogging issues and growers are facing difficult decisions in how to proceed with their intended planting programs from here. Resowing is underway where possible but if the cold, wet conditions continue then the decision will likely be made for them and hectares are likely to be abandoned in favour of fallowing or summer crops.

In contrast, Victoria and South Australia have experienced a far easier run with planting all but finished across the states. Parts of north-east Victoria experienced some weather related delays but still progressed well while the north-west are enjoying what some have called their best start in years thanks to good sub-soil moisture, a clear planting window and solid follow-up rain events. Conditions were much drier through south-west Victoria and South Australia where growers pushed on with dry sowing as they awaited a since arrived late-break. Crops in Western Australia may be required to fill much of the deficit if Australia is to reach ABARES lofty production forecast. Most of the western state has enjoyed a near-perfect start to the season with ideal rainfall through summer and autumn providing ample moisture along with sufficient sowing opportunity.

Australia’s crop prospects will undoubtedly be cause for much speculation over the coming months. The world is working through an ever-changing and fundamentally tight global grain balance sheet that can ill afford too many significant hiccups. Grain prices have softened in recent weeks and Australian grain values remain at a disparity to global markets. The Australian trade are likely to remain cautious in their bids as they frantically work to execute the significant volume of grain from last year’s record harvest whilst staring down the barrel of another one.

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