Northern and Southern areas of NSW face dramatically different seasons ahead

By Angus Groves

1st August, 2023 

 

As we near the mid-point of the grain growing season, the current production outlook for NSW is in stark contrast between northern and southern areas of the state.

Regions north and west of Gulargambone are experiencing infrequent and at times ineffective rainfall events, which has meant the crop is well below average in terms of growth and biomass to this point in the season. Whereas the areas south of Narromine have really benefitted over the last month from back-to-back rain bearing systems, which have dramatically turned the season around.

The areas between Condobolin-Parkes in the South and Gilgandra in the north certainly aren’t out of the woods for the season, but through to the end of July are definitely in the hunt for average yields if the weather in spring is kind.

And herein lies the risk for the 2023 season as the weather starts to warm and the day lengths begin to increase. Throughout the grain industry we hear the constant chatter of an impending El Nino and it’s these headlines that permeate a sense of nervousness throughout all grain growers in the state. Realistically for the regions with crop established and growing we only require timely rainfall events in August and September to ensure we get an average crop.

The trouble with this world view is there are a lot of areas in the north of the state where there wasn’t a crop planted at all, or the crop that was planted hasn’t germinated and we’re now moving into the month of August. So, the juxtaposition between the northern and southern areas of the state couldn’t be more dramatic this season.

The local market has reacted to this change in fortunes with exports largely grinding to a halt to ensure we have adequate feed grain requirements available should the northern season turn particularly dry.

The escalating challenges throughout the Black Sea continue to make headlines and create volatility in the markets. The news a fortnight ago regarding the bombings of the Port of Odesa and further attacks on grain infrastructure along the Danube River, speak to the ever-changing nature of the Black Sea tensions.

Add these tensions on top of the ongoing fluctuations in weather forecasts for the US, Canada and Europe and it’s a clear sign that the volatility is likely to continue.

The bearish factors that could change the prices for our local Australian market include an agreed extension to the Black Sea grain corridor, improved weather forecasts for US and Canada particularly, and the increase in selling from both the US and European farmers as they progress with their respective harvests.

As always with grain markets it’s a fine balance between supply and demand, with each changing independently it makes it difficult to predict with any certainty which way the markets will move. One thing is for certain historical price deciles provide a fantastic guide as to which commodity you should be selling at any point in time. This should be balanced with your own production risk, for which you will be the best judge by simply looking out the kitchen window.