Planting Season Underway
By Matt Wallis
The Autumn break has been welcomed with open arms from east coast farmers with totals throughout Southern New South Wales ranging from two to six inches on top of a similar break a fortnight earlier where much larger and variable rainfall accumulated in the northern cropping and pastoral zones. Previously absent from these events, areas south of the Murrumbidgee River received upwards of two inches providing much needed relief to the region.
The 20/21 planting season is well underway now with areas generally recording healthy sub soil levels instilling enough confidence to go ahead and plant longer season grazing crops through the Riverina region. With the BOM outlook now predicting average rainfall from April through to June and leading climate drivers wedged in a neutral phase, it appears the stage is set for growers to get a crop sown under more favourable conditions.
Farmer sentiment appears positive with new crop wheat parcels getting booked across NSW, QLD, VIC and WA port zones whilst new crop Victory canola growers have taken advantage of their risk free marketing ability and with the High Oleic premium, been locking in numbers around $650 delivered to Stockinbingal or $720 delivered direct to the Newcastle Crush before the crop has been planted.
On the international front, the spread of COVID-19 continues to plague market activity and force sell offs across the field. World oil prices have now come crashing as OPEC removed production limits triggering a selloff in the commodity which is now priced at similar levels to post GFC in 2008. Maybe creating an opportunity to fill up the diesel tanks on farm as the world oil price has nearly halved since the beginning of 2020.
Wheat futures have come under pressure as optimism grows surrounding the prospects for the US winter crops. After the CBOT DEC20 contract traded just shy of 600USc/bu in late January, the contract has given up nearly 75USc/bu or the equivalent to $40 AUD/t. Local new crop values remain range bound of late around $320-330 PKE and Melbourne zone trading $10-$20 under that. Although our basis has come under pressure domestically, the Aussie Dollar is still trending down trading sub 66c, cushioning the falls in domestic values relative to the global market.
On the local front we are now positioned to entertain something that we haven’t been accustomed to of recent times, the real potential for a crop in the north. Private forecasters have anecdotally suggested plantings of 3.5m hectares of wheat across NSW and QLD on the back of recent precipitation events which could potentially place further pricing pressures on our domestic market.
Although it is still only early days, understanding the crops potential for the upcoming year should remain a priority for those still undecided on commodity rotations. From a production point of view cereals are recognized as the safer option for income generation however contrary to that specialty canola varieties are now priced in excess of 2.2 times that of wheat with the perks of being able to forward sell without taking on unnecessary production risks.
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