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Home//News Hub // SA Market Wrap
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SA Market Wrap

By Nick Davis

2nd February 2022

 

As For the majority of Australia, the dust from harvest has finally settled down. Hopefully, everyone has had a chance to take a break and recharge themselves for season 2022/23. The record harvest in Australia, mainly in the states of Western Australia and New South Wales didn’t come without its challenges. Wet weather wreaked havoc in most areas of the country, particularly in New South Wales and parts of Queensland, South Australia and Victoria. This wet weather made it a challenge for growers to get into the paddock to get the crop off which delayed the harvest and impacted the grain quality.

In the lead up to harvest when Australia was looking at another large crop, there was some expectation amongst the industry that prices would come under significant ‘harvest pressure’ on the back of last year’s monster crop. Further to this, buyers were looking at the size of the crop and the remarkably high prices for the majority of commodities and cashflow was on top of everyone’s mind, particularly during the busy harvest period. Due to delays in the harvest, the so-called pressure took longer to hit than anticipated. The rain helped to support prices for the early period of harvest, prompting quality concerns and a slow harvest pace keeping buyers on their toes to  cover early shipments. However, when harvest pressure finally did hit, it hit hard, which put significant pressure on prices, further to this, farmers were willing to sell on the way down which increased the pressure on prices. This, as well as a heavy forward sales program for a lot of the country led to a fair portion of the crop being sold by the end of December. 

Since the beginning of the new year, farmer selling has been slow until recently as prices have gradually worked their way up again. This is mainly because in Australia and around the globe, certain grades in certain zones are being targeted, presenting buyers with more selling opportunities. Export demand continues to be relatively strong, with China providing much of the interest, buying up big in soybeans, wheat, sorghum, corn and barley. The supply pressure lies on the southern hemisphere as unfavourable weather has deteriorated crop quality in various parts of the northern hemisphere. In addition to this, the Russian political influence, with export quotas and the constantly changing export tax is causing them to lose business globally. And the tensions between Russia and Ukraine have been simmering for a bit now causing market uncertainty.

With the world’s market situation as above coupled with the ever-changing landscape of Covid-19, we expect markets to remain volatile. Markets can expect to remain supported if there are significant hiccups in production in the northern hemisphere or the conflict between Russia and Ukraine escalates. The change can only be expected when the northern hemisphere comes out of dormancy.

With volatility comes a good opportunity to market both old and new seasons grain. As always with forward contracting, assess your current exposure and contract what you feel comfortable with based on the current seasonal conditions. Hopefully, some of those harvest rains plus recent rain events have put some decent subsoil moisture in the ground for the coming season, however the crop isn’t made in January.

       


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