A big break for most

By Darcy Ingram

3rd May, 2023 

While crops aren’t made in Autumn it certainly doesn’t hurt to have the start to seeding most Australian growers are enjoying to this point. Given the Bureau of Meteorology’s early forecasts for a drier than average Autumn across much of the country, March and April have brought timely rain particularly for farmers in Western Australia, South Australia, Victoria and Southern NSW with some describing it the best break in recent memory. Northern NSW and Queensland received some beneficial rains in March but April has been relatively dry especially further to the west. Some recent reprieve and moisture at depth has enabled farmers to push on with sowing but more rainfall is required for a strong start up north. Getting out of the blocks early may be crucial to another successful cropping year with El Nino still forecast for the second half of 2023 bringing with it warmer and drier conditions. 

With most farmers firmly focused on getting this year’s crop in the ground, selling and executing the remnants of last year’s production has taken a back seat. Grower offers are limited but so is consumer demand with most of the price action happening in the northern regions where liquidity and new crop confidence sits lower. Demand remains for domestic consumers and exporters with specific market shorts to fill, however, export margins and opportunities have tightened up as we are left to compete with a hefty supply of world stocks making its way into the global market. Russia continues to set the benchmark for wheat export values with a seemingly endless supply they seem intent to move a significant portion of prior to their forecasted 78 million tonne harvest in July. Brazil’s record corn and soybean harvests are also adding pressure to feed markets with cheap sales to major importers.          

Global markets  remain highly reactive to bullish inputs and chatter. Unfortunately any rallies aren’t sustained for long as a market looking for direction but struggling to find one follows the path of least resistance lower. The movement of grain through the Black Sea region continues to dominate grain headlines with Russia remaining aloof in its ongoing commitment to the grain corridor agreement that allows the safe movement of grain through Ukrainian Black Sea ports. Futures rallied as the overland movement of grain out of Ukraine was cast into doubt after a number of neighbouring countries made noise about closing these supply routes, complaining that the influx was harmful to local values. Eventually, like most stories lately, the market shrugged off these concerns on improved US and EU crop conditions and a deal has since been brokered to recommence these trade flows.                 

On paper today, supply is comfortable against demand and without major production problems domestically or abroad it’s difficult to see where significant upside comes from. This market is never far from a few unexpected surprises and if weather conditions remain favourable then farmers will need to stay alert to take advantage of pricing opportunities when they present themselves.