Growers explore planting options for year ahead

By Alistair Murphy

5th April, 2023 

 

Markets have bucked their downward trend this week, with exchanges retracing some of the losses suffered throughout the preceding six weeks. Whilst the British and French cropping prospects are looking excellent, the recent USDA report highlighted tighter-than-expected nearby corn stocks, as well as concern over lower-than-expected soybean stocks and plantings.

Index funds have slowed their selling activity this week as well, with reports of additional buying at current pricing levels. This appears to be due to a combination of perceived value at current levels, funds positioning in response to recent concerns over the longevity of the Black Sea grain corridor agreement and the findings of the most recent USDA report.

Australian weather forecasters are predicting a drier bias for the upcoming East Coast winter cropping window in comparison to last year, which is not surprising after the three significantly wetter years we have experienced. Nevertheless, across NSW we have received significant rainfall in some areas, mainly in the form of storm cell activity which whilst welcomed, hasn’t been widespread enough to benefit all cropping areas and deliver a statewide autumn break.

There is significant amounts of sub soil moisture available after last year’s wet November December period, a widespread two inches would be ideal in the areas which have missed the recent storm activity.

Murmurings around the grounds suggest new crop canola acres were being revised back from last year’s record plantings with the recent slide in values. However, this latest market correction has seen an increase of anywhere between $70-$90 per tonne which will put oilseeds back in the rotation conversation for those that haven’t finalised all their sowing programs.

With the drier bias, barley is being discussed more favorably in the rotation deliberations given its ability to perform in drier seasons. Last year we saw a solid decrease in barley area given the gross margin appeal of other alternatives at sowing time. With less acres and a higher percentage of malting quality produced, the tightness in the barley market has seen the wheat versus barley spread narrow to zero.

Chickpeas are also another cropping option which is currently being looked at more closely. Whilst there is still a large amount of old crop chickpeas on farm in Northern NSW, we have seen values increase to more average deciles and given that chickpeas traditionally make up an important part of the Northern NSW annual rotation it is expected to see acres increase this year. Chickpeas also have a later sowing window which would be beneficial if we do see a later break to the season.

It is interesting to note that in parts of the country domestic road freight rates are starting to ease. After three well-above average crops and attractive freight margins, capacity has increased with a growing number of vehicles in operation. Furthermore, sellers are also holding back marketing a proportion of their farm stock as a new crop sowing hedge in case weather turns dry, which has further reduced freight demand in the short term.