US grain report hits Australian prices
By Georgia Campbell
7th February, 2024
Harvest has finally wrapped up across the East Coast, with the final headers shutting down in late January. All grower attention is now focused on moisture retention and ground preparation for winter crops, with only 6-8 weeks until the first early winter crops are sown. In Queensland and northern New South Wales, summer crops have been a focus, with largely widespread rainfall benefiting both the current summer crop and the moisture profile for the upcoming winter crop. We will see a longer than normal harvest window for summer crops this year, with sorghum planting having extended into late January, well outside the normal planting window. Some early sorghum is being harvested this week, although the main harvest is not expected to commence until early March. ABARES in the December 2023 crop report, forecasted overall sorghum production for the 2023/2024 crop to fall by up to 45% or 1.5 million tonnes, due to the dry start to the planting window. This is 25% lower than 2022/2023, but only just below the 10-year average sorghum crop.
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 USA, where it has been overly warm. Should a cold snap follow this, it could impact yield potential. In South America, mainly Argentina, is currently experiencing a hot period. Weather forecasts shows this will be short lived, with cooler temperatures to move through soon. Baring any major weather events occurring, it is expected these winter crops will be successful.
The latest USDA 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 from the original estimate of 34.3 million acres. Overall, this is 2.3 million acres lower than the 23/24 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. 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 last 6 to 8 weeks. With the Christmas and New Year holiday period wrapping up, it is hoped we may start to see some movement in global markets. Although with Chinese New Year upon us, we may see limited movement in some markets for the next two weeks.
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