Waiting on some harvest clarity

By Tyson Hosie

21st September, 2022 

 

As harvest inches steadily towards us, the marketing crystal ball remains as cloudy as ever, with technical and fundamental factors all conspiring to fog up the glass.

Domestically, the past week has seen follow up rainfall across much of the East Coast both help and hinder, with heavy falls in Queensland border catchments putting another flow through North-western New South Wales channels, whilst Central and Southern districts remain under siege from a confirmed third La Ninà.

The rainfall will help those earlier crops to realise their full potential, however most would welcome the tap being turned off now for later-sown crops to be given the opportunity to grow out of their waterlogged conditions and achieve an average result.

Interestingly, the past couple of weeks has seen a modest uptick in grower selling interest. A brace of favourable seasons has seen cashflow reserves somewhat replenished, affording growers the luxury of time when it comes to making marketing decisions. And upon reflection, the same period has taught market participants to exercise even more caution when it comes to forward selling – not only from the inherent risk, but, having seen significant rallies in the post-harvest markets, fuelled by geopolitical influence and market sensitivities from multiple angles – sometimes the early bird doesn’t get the worm...

This considered, as moisture profiles are already at saturation point and the bureau’s outlook for a wet spring/summer firming, current pricing for both track and delivered markets have begun to represent value for those approaching harvest undersold.

A reluctance from domestic consumers to engage yet is also capping values and harvest liquidity. Feed grain consumer appetite is being curbed by waning demand across the beef, pork and poultry sectors as domestic and international economic growth slows. A later-than-usual crop here on the East Coast is also seeing a delay in traditional supply, with late October now the consensus for when the headers will get rolling from Queensland through to Victoria, exacerbating the lack of engagement.

Internationally, this past week saw the release of the latest USDA WASDE Report, focussing namely on international corn and soybean production, with the data supportive of the feed grain and oilseed complexes, due to unseasonal hot and dry August conditions for the US’ major growing regions having an impact on production forecasts.

Canadian producers are also having a win, with strong crush margins due to returning Chinese demand, as is the ongoing disruption to Black Sea shipments. A healthy production forecast for both Canada and Australia, both coming online at the same time, may keep a lid on canola values however.

Lingering dry conditions through US Hard Red Winter Wheat growing areas is also worrying for producers there looking to sow currently, supportive of the wheat market.

As usual, with more than a few factors at play at present, most sellers and buyers remain sidelined until a little “harvest clarity” can help guide us all to action in just a few short weeks. Here’s hoping the weather can be kinder than forecast.