Big global Crop muddies the outlook for Australian grains

By Angus Groves - AWB

A weaker system moved through NSW and QLD last weekend with totals ranging from 2-25mm across the respective states.

This was largely a welcome boost for all grain growing regions, although some low-lying areas are calling for a drier few weeks as crops begin to show signs of waterlogging. The areas of concern are those in the south of the Central West, with towns east of the Newell Highway calling for a break to the regular, weekly systems that have been common in the past few months.

In welcome news for some NSW farmers – it looks like we have a drier period ahead, which will allow crops to begin using the abundance of water and nutrients available to them. Dare I say it, we could be one timely rainfall away from locking in a record NSW grain crop this year. And with WA and VIC collecting some decent rainfall totals in the past month, Australia could be on track for one of its largest crops in decades if conditions in spring are favourable.

On the marketing front there have been some developments in the Northern Hemisphere which are cause for concern for the Australian grain grower.

Last week Russian analytical agency IKAR revised their production estimates up to 81 million tonnes – a far cry from the 72-75 million tonnes many analysts were predicting only weeks ago. This upward revision to the world’s largest exporter has put some pressure on global wheat values, with large crops also expected from the Unites States, Canada and Australia this year. This is all pointing to a downward trend for wheat values, with the only potential blemish in global wheat crops being Argentina, which has suffered from a considerable run of dry weather on top of frosts.

The other factor keeping a lid on global values is the expectation of bumper US corn and soybean crops this year. The USDA last week pegged the average corn yield at 181.8 bu/acre, which is a mammoth 12.23 t/ha! There is some concern for the crops across the US Midwest with reports of damaging winds having flattened crops.

Crops in Iowa, the largest corn growing state in the US, are of the greatest concern with winds exceeding 100m/h (~161 km/h). Storms have also damaged storage bins and grain receival sites which may impact storage capacity during the upcoming harvest.

Soybeans were perhaps somewhat more reserved at 53.23 bu/acre or 3.58 t/ha, but with renewed buying interest from China, soybeans still managed to pick up considerable gains on the week with China reportedly picking up another 126,000 tonnes from the United States. This might not be the end of the soybean purchases from China as Brazilian stockpiles are exhausted, the US is the destination of choice for all Chinese soybean needs.

This increase in soybean values bodes well for Australian canola growers. We’re optimistic the struggles of global canola crops will translate to more demand for Australian canola this marketing year.

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