US grain report hits Australian prices
By Georgia Campbell
20th February, 2024
Harvest has finally wrapped up across SA after a long and weather affected last part of what was a pretty decent harvest with excellent quality for the most part. All grower attention is now focused on moisture retention and ground preparation for winter crops. While rainfall models are showing good prospects at present for the winter cropping season, attention is on global markets, with Australian grain prices currently remaining stagnant post-harvest. Northern hemisphere crops are currently dormant, with no major concerns held by the global market towards the yield potential of these crops.
There does remain the threat of winter kill, in the US, where it has been overly warm.
Should a cold snap follow this, it could impact yield potential. Argentina is currently experiencing a hot period, but forecasts indicate this will be short lived, with cooler temperatures to move through soon. Barring any major weather events occurring, it is expected these winter crops will be successful.
The latest US Department of Agriculture report was released early January, with traders describing the report to be bullish for wheat and bearish for corn. The report increased actual corn yield by 2.4 bushels an acre up from the original estimate of 177.3 bushels an acre.
For wheat, the report revised overall area planted down by 2.4 million acres (971,247 hectare) from the original estimate of 34.3 million acres (13,880,740 hectare). Overall, this is 2.3 million acres (930,778 hectares) lower than the 2023/24 total crop area. While overall crop area is down, seasonal conditions in the US are excellent, with the drought having broken on the Southern Plains. This is setting up growers for a strong finish to the season, as warmer weather approaches.
Recent grain prices in Australia have largely been driven by the revisions in the USDA report, with the revision in global corn and wheat markets driving Australian prices lower.
Overall, markets have been in a "sleepy" period for the past six to eight weeks.
From an S&D perspective whilst there is still demand for Australian grain it has tapered off. Aussie wheat being relatively expensive into Asia has meant a more traditional hand to mouth buying program for many exporters.
El Nino weather conditions are receding, and international models are pointing towards prevailing neutral sea surface temps by July, both signs posting another reasonable sized new crop in Australia. All in all, SA croppers will go into next season with reasonably high spirits and gear up to start planting the new crop at the traditional time after Easter which is early this year.
Wishing everyone good luck and a useful opening rain for the season ahead.
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