Market conditions and a drier season outlook contribute to cropping program decisions

By Brad Cullen

12th April, 2023 

 

April means soggy Easter camping trips, excessive chocolate consumption, ANZAC Day observance and of course sowing. The question for large parts of the country is, however “will we also see germination in April this year?”

Those lucky enough to get under some of the recent storm activity have begun their planting with longer-season wheat varieties and grazing paddocks. These early plantings have already added a tinge of green to the landscape; a sign of things to come. For all those who’ve seen storm activity, there are plenty of others who haven’t seen anything significant for the past few months. This has meant the sub-soil moisture that we’re all banking on to grow a crop this year with the drier outlook, sits 200-300mm away from the topsoil and still requires a “joining up” event to become useful.  Large parts of the western side of Victoria and parts of NSW fit into this category.

With the bureau suggesting we’re headed into a drier trending season, growers have certainly made some decisions around the make-up of their cropping programs that differ to the last two years. Less canola, more barley, hay and legumes seems to be the trend so far. Many are suggesting this year might be good opportunity to “rest” some paddocks and hopefully rest themselves at the same time after such a hectic 2022 and early part of 2023.

A drier outlook has seen a change in the psyche of selling. While unsold old crop stocks, both on-farm and in upcountry storage facilities, remain at relatively high levels, growers seem reluctant to let much go at present. Weaker market conditions since harvest have a bearing on this. The change in psyche is also being seen in forward sales. Right now, forward prices for wheat, barley or canola would represent levels higher than the long-term average and present good value for growers. The risk however lies on the production side of the ledger, as it always does at this time of year.

Markets are tracking sideways at present with soybeans, corn and wheat all having come under pressure during April. Fund activity during late March for soybeans saw this market rally, however April saw fund activity stalling and this has driven the market lower since. There’s still plenty of canola unsold throughout Australia which means we’re at somewhat of a stand-off. Will growers carry it or will growers accept current market conditions and sell?

Barley remains somewhat unloved with little export demand at present from customers who source Australian origin. Domestically, barley is seeing demand into the stockfeed ration at a significant spread to wheat. In the malt space, it seems maltsters have covered their requirements in the short term, meaning malt spreads have tightened considerably since harvest.

Wheat is still seeing export demand for lower grades, but the volume of higher protein wheat produced in 2022/2023 means that, with little demand for it, APW1 and above grades has seen spreads tighten.

It’s worth noting a World Agricultural Supply and Demand Estimates (WASDE) report will be released Wednesday Australian time, which markets will certainly be watching closely to set direction.