Harvest ends, markets converge

By Craig Ednie

16th January, 2023

 

Harvest  is slowly coming to an end much to the delight of everyone involved as it has been long and drawn out.   A run of good weather has allowed growers to make significant progress since the New Year, and earlier predictions of headers continuing until March have largely been quashed. It has been one of the more challenging harvests in recent memory and there are reports from parts New South Wales and Victoria where conditions were so wet that harvesters were still getting bogged in January.  Some growers are circling back to wet paddocks and areas they could not access during harvest and cleaning up what they can of their remaining crops.

 

2022 will be a Harvest everyone will be glad to see the back of but challenges aside, growers should be quite happy with the way it has panned out.  Back in October/November it was looking all doom and gloom due to quality and access concerns, but growers have harvested much more protein wheat then predicted, and despite a harvest dominated by wet weather, some excellent yields been achieved.  After early concerns with mould in canola, it too has over performed better than what growers predicted. Overall, we will still see the national canola crop this year deliver another record potentially exceeding 7.5 million tonnes.  

 

Looking forward to the 2023 season and once again there is plenty to be excited about. Following on from the record 2022 rains, for the most part farmers will enjoy comfortable sub soil moisture levels providing that added layer of security once the crop has been established. 

 

In terms of market trends, the most obvious feature has been the flattening out of grade spreads. At the bottom end, increased demand for feed grains has seen a strengthening in price. This is largely due to the strengthening corn market with the spread between wheat and corn on Chicago narrowing. This is making wheat far more competitive in feed markets, including in south-east Asia. Australian feed wheat shipped into these markets is very competitive and we are seeing an increase in interest. At the top end of the market, wheat millers are now taking a sigh of relief. Dynamics have changed since the beginning of the season where concerns about quality had supported milling grades. The surprise around the quality of the harvest across Australia has eased concerns there could be any shortage and has contributed to some softness in markets. 

 

Finally, there is little new to report from Ukraine. The conflict shows little sign of easing and ceasefires came to nought. While this issue has dominated markets all last year,  any ongoing disruption to grain markets seems to be largely factored in. In addition, large volumes of grain continue to flow out of Russia keeping markets well supplied.