Promising outlook gives growers the green light
By James Urquhart
ANZAC day is upon us and with it comes the traditional commencement of the 2020/21 sowing window. However the general and mostly generous rains throughout NSW over the months of March and April have presented conditions simply too good to wait for the green light normally heralded by the 25th of April and many growers are well into their sowing programs.
If the current theme of less barley area is realised, expect wheat and canola acres to be the winners as current pricing relativities and the improved marketability of wheat attracts acres, but also having the moisture profile to sow into is proving enough to entice canola back into the rotation. ABARES are forecasting Australian farmers to sow their largest wheat crop of recent times at 12 million hectares which is up 2 million on each of the previous three years.
It continues to be an interesting time in grain markets, and whilst the initial outbreak of coronavirus saw hoarders and home bakers briefly increase demand for grains it has largely been currency fluctuations that have dictated price activity since the onset of the virus. A dip to 0.55 USD back in mid-March aligned closely with the recent ASX highs of $364.50 and now with the Aussie back up to 0.63 (at the time of writing) ASX has retreated to levels of $328.
The wheat market has also paid close attention to the near-optimal start to the growing season and this is reflected through a significant inverse to new crop which is trading at a $75 discount to old crop - things might look alright for the 20/21 harvest but nobody’s making any more in the meantime.
19th of May is another significant date in the calendar (for this year anyway) – it is the date that the investigation the anti-dumping investigation into Australian barley exports to China is due to be completed. Barley markets have been reluctant to do anything too exciting but trade sideways as they await a verdict as although the market is nearly convinced that China will not impose a tariff on Australian exports to China, the market is still being cautious. If the there is no tariff imposed expect to see a bid in the market as many buyers have been without Australian barley for some time.
On the canola front, domestic pricing has softened somewhat in response to the ideal local conditions and overall weakness felt in the broader oilseeds complex. The demand for biodiesel and edible oils just another victim of coronavirus as all kinds of travel is restricted and restaurants are shuttered. Attention will now turn to Europe where we are entering a crucial two month weather period and ongoing dryness and unseasonal warmth will no doubt provide volatility.
ANZAC Day will be different this year, with no dawn service, Remembrance Day marches or Collingwood vs Essendon clash. But with some moisture in the bank and a somewhat promising outlook from the Bureau at least we are embarking on a growing season that is more optimistic than the last few.
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