RAIN is undoubtedly the best panacea for mood and confidence in agriculture. Widespread falls across much of the eastern Australian cropping belt, in the first 10 days of October, has certainly been gratefully received, after an extremely dry September sapped yield potential from the nation’s winter crop.
However, the crop production picture is still quite varied, particularly across the eastern seaboard. The southern Queensland harvest is underway and the vast majority of crops in that region are far too advanced to derive any benefit from the recent precipitation.
The story is quite similar for north-western New South Wales where the dry September snuffed out any hope for many of the crops in that region. Those that will still harvest are looking at yields well below average in most instances.
Staying in northern New South Wales, but east of the Newell Highway, the production outlook is far better. The dry start to spring certainly took its toll but many of the crops still have slightly below average to average potential. The later sown, less advanced crops will have enjoyed last week’s rain and will profit accordingly.
Across central and southern New South Wales, the production outlook is very mixed. Some areas snagged some good rainfall through the winter months and the recent rain event arrived just in the nick of time to maintain crop potential. Unfortunately, for other areas, the October rain means very little as the crop has struggled all year due to a combination of late sowing and/or poor germination, lack of moisture and frosts. Final production will certainly be less than the late August potential in these areas.
Victoria has been the pick of the eastern states all season. Most areas got off to a cracking start with great sowing rains, good germination and a favourable winter. The production outlook in some areas was better than last year. Nevertheless, big crops need plenty of moisture and the drier-than-average September through much of the Wimmera and Mallee, has decreased production expectations. The crops are now quite parched and require a good drink to maintain above average yield potential.
In South Australia the recovery in the production outlook through August was quite dramatic in many areas. A dry start to winter was replaced by a wet finish and the crops flourished. Nevertheless, like much of eastern Australia, September was disappointing from a rainfall perspective. October has also been below average month-to-date.
After a record 2016/17 season, the current winter crop production outlook from Queensland around to South Australia is more like a box of chocolates. It ranges from very good in some areas, to a write-off in others, and nobody knows exactly what they will get.
The rainfall forecast across the eastern states for this week should be enough to lock in current crop potential in the south, and provide additional soil moisture in the north, to ensure the sorghum plant commences before the spring planting window closes.
We are now getting to a point in the season where production is all but locked in. We basically have a floor in east coast domestic production and that will certainly exceed domestic demand. Australia will have to buy export business out of Victoria and New South Wales.
Port Kembla and Victorian wheat and barley values are above export parity at the moment. They are even too expensive to make their way into the Queensland feed market relative to South Australian values. The market is encouraging a domestic shipping program to meet demand in the northern feed market.
Something must give! The premiums in Port Kembla, and Victoria to a lesser degree, are simply unsustainable based on current domestic supply and demand estimates. Add the substantial carry-in and there is a lot of grain on the east coast without a home at current values.
That is without a sorghum crop! There is no certainty around new crop production, but one more significant rain event through northern New South Wales and southern Queensland, and it is game on. With new crop sorghum values around A$60/t under wheat, it starts to displace a significant amount of white grains in the stockfeed ration. That just means more grain will be searching for an export home.
Source: Nidera Australia Pty Ltd, a member of the COFCO International Group.