By Darcy Ingram

18th October, 2023 

Harvest has now kicked off in most of the country’s northern cropping regions and as header activity rapidly moves south it won’t be long before we’re well and truly underway across all zones. Queensland growers are now stripping wheat as canola is making its way into receival sites as far south as the NSW Sturt Highway. South Australian farmers have struck a blow in the Western and Central areas while most zones are seeing harvest activity over on the west coast with the exception of Albany. The impact of minimal in-crop rainfall received through Queensland, Northern NSW and Northern WA this year will undoubtably see production well down on recent years with the Australian Bureau of Agricultural and Resource Economics (ABARES) forecasting Australian winter crop to fall by 34% to a potentially ambitious 45.2 million tonnes. 

Whilst there have been some isolated reports of pleasantly surprising wheat yields in Queensland, early indications for most regions have been predictably low and quality typical of a dry year with high protein and screenings a common feature. Expectations are for prospects to significantly improve as harvest moves south with crops in the southern parts of WA, South Australia, Victoria and Southern NSW benefitting from far better moisture availability throughout the year. Crop potential in the south is now close to recognised with recent stabilising rains settling the nerves of farmers following a historically dry September.

Despite headers in the paddocks confirming the production downturn this year, markets have taken this in their stride with bids softening in recent weeks. In the lead up to harvest, strong domestic demand into the northern feed market and declining crop prospects resulted in Australian wheat pricing at a premium to global markets with basis levels in excess of $100 a tonne. The fresh, albeit limited, supply of grain arriving in the north has pressured this market lower with consumers getting a comfortable amount of coverage for at least the short-term. This has coincided with a decline in global values with a seemingly endless supply, most notably from the black sea region, comfortably meeting nearby demand. Even with a significantly reduced national forecast, Australia is coming off the back of three consecutive record harvests and decent production in the south along with carryover stocks. This means we will need to find ongoing export opportunities for local pricing to remain strong. We have long been beneficiaries of our freight advantage and quality preference into South-East Asian and Chinese markets and while that looks to continue it must be balanced against supplies and lower values from alternate origins.  

With harvest yet to hit full flight and markets already coming under pressure, the trade and growers alike are questioning where things go from here. Production uncertainty has left many on the lower-side of forward committed grain sales and as usual during this time of year the selling patterns of farmers will play a massive role in local price direction moving forward.