Yes volatile but not unprecedented

Not a member of Farm Tender yet? Join the others and register here.

Extracted from the Farm Tender weekly Newsletter - Sign up and get the email every Wednesday morning before 5 am. www.farmtender.com.au

By Dwain Duxson

We are in volatile times in Agriculture at present. I think the word volatile can be used when there are lots going on around the things we can't control. You know, weather, markets, inputs, world issues, etc.

Well, the weather is pretty extreme right now, droughts, fires and floods all in the space of 2-3 years. But not unprecedented, it's happened before.

Inflation is rising and so too are interest rates. Someone wrote the other day that interest rates are just getting normalised, "back to 5 or 6 percent overdraft rates is where they should be" this person wrote. They also said that we have been experiencing super low rates, which is a detriment to the economy and now they are just going up to where they need to be. I guess that's an economic opinion from one person. The next economist might have a completely different view.

Our markets are volatile right now. The Grain market could do anything now that Russia has cancelled the Black Sea Grain Export agreement. Apparently, this affects some 218 ship loads (yep, ship loads) of Grain, of which 95 have already left the port and might have to turn around. One commentator said that this would push Grain prices out of reach for some countries, and we would start to see starvation in some of those countries.

This should have a positive effect on Grain prices here leading into Harvest. Unfortunately, it works like that in Ag a lot. One's pain is another one's gain.

But it's not all pressures coming from overseas. Domestic users of Milling Wheat are worried they won't have enough stock to buy, so this should push the price of Milling grade Wheat well above feed. Similar to Malting Barley, the Maltsters are worried about supply levels and will push that spec higher, I'm told. Once again speculation, that causes a form of volatility. It might, but it might not happen. There still might be plenty of Milling and Malting grade Grain around.

Many Farmers have said to us that it's been the most expensive Crop they have planted. Many say by a fair way too. This is where a bit of trepidation creeps in. It's sorta fine when prices out the other end are strong, and the season predictor was that it was always going to rain. It was just a matter of how much. Well, that turned out...

Those that can plant Summer Crops most likely will. For those that are in more of a traditional Winter Crop cycle, as soon as this year's Crop stops using moisture, they will be protecting that moisture for next year's Crop.

It's one of the great new learnt skills developed over the last 20 or so years is how to retain moisture in a Cropping program. To a point now where everyone is pretty good at it.

Cattle prices have been less volatile. They just went up and stayed up. Some are saying it's the new normal. And they look like they are staying up for a while, at least on the back of dwindling worldwide supply. Out of all the major Cattle producing countries, the Australian herd is the only one growing in numbers.

I think access to so much media creates volatility within markets and anxiety among people. FMD is an example of that. It affected markets and everyone's psyche for a period of time when it was headlines. Once that left, Farmers acknowledged it was there as a threat, but they had to get on with the business of Farming.

Now we look at half a dozen different Weather forecasts and try and determine what the outcome might be and make decisions around that. Hell, I remember the days when the only forecast was actually seeing the showers coming from the South West and busily hunting the Sheep in the shed to keep them dry.

Yes, we are in volatile times in Agriculture, and no, it's not unprecedented. It's all happened before.

And yes, it keeps things interesting......

End of message