Long and wrong! Short and caught! Markets can remain irrational longer than you can remain solvent! The grains industry, like many others, is full of sayings and clichés and in Australia at the moment it is all about September, it is a weather market, we are in the “money month”.
All too often at this time of year the talk is of hot days, strong winds and high evaporation rates draining soil moisture and eroding potential yields across the east and west coast grain belts. This year, however, the pub-talk and twitter traffic is all about rain event after rain event and its localised impact on crop conditions and potential production.
In Western Australia the crop has enjoyed almost perfect growing conditions from the very beginning with excellent rainfall in the months of April and May except for the Geraldton zone, which saw significant rainfall arrive in late May. August was very kind with above average rainfall and below average temperatures across most of the cropping zone leading to an increase in soil moisture reserves leading into September
Another inch of rain across most of South Australia over the past week has put a smile on the dial for most SA growers. This well-timed, early spring moisture top up has certainly added certainty to this year’s production and no doubt added to potential production in many areas.
Two weeks ago the northern parts of Victoria were looking for a drink, now after 25mm across most of the state last week and another 25mm plus early this week there is evidence of nitrogen deficiency due to waterlogging and talk of nutrient leaching and lower yields in the Mallee. That said most of Victoria is looking good and assured of pretty big crops, but more rainfall in areas that are already wet will put pressure on production estimates.
New South Wales is certainly the area of focus at the moment. The entire state has been receiving regular rainfall events for the entire growing season and many growers are struggling to complete crop hygiene tasks without the use of planes – an expensive option. The well drained soils have been lapping it up to date, but the flat regions with poorer draining soils through parts of the Riverina and Central West are beginning to suffer under the weight of moisture. More rainfall this week will certainly add to the issue and potentially impact overall state production.
Southern and Central Queensland have been catching the northern tips of the fronts as they have moved through and the rainfall has been well received in most areas. Parts of Central Queensland had almost record rainfall for July/August and coupled with mild temperatures the wheat and chickpea crops are looking fantastic.
Pulse crops will be the biggest loser from the current situation. Chickpea crops in many regions are looking good but will begin to suffer if they get additional rainfall. However there are crops in NSW that are already suffering and that has certainly been reflected in market activity over the past week. Prices have rallied and many marketers are starting to field washout enquiries. How this will play out over the next few weeks will be very interesting with the marketers, who bought from the grower on hectare contracts potentially turning buyer from the trade on concerns they may have oversold.
No year is ever the same in grain!
Source: Nidera Australia Weekly Market report: Peter McMeekin is Nidera Australia’s Origination Manager.