The seasons in the north and south couldn’t be more different in terms of rainfall and crop progression. While somewhat overshadowed by market movements, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) last week released the September Crop Report, confirming the seasonal divide.
The
difference in the seasons in what we loosely call the northern and southern
cropping zones couldn’t be more marked this year. Good winter rainfall over much of NSW, and in
WA has crops flying, with ABARES forecasting increased area and yields.
By
contrast, in southern areas cropping areas, Victoria and South Australia and dealing
with a very dry winter, and subsequent declining yield potential.
Figure 1
shows ABARES is forecasting strong wheat production this year. A wheat crop of 31.8mmt would traditionally
have been a bumper, and would indeed be the fourth largest on record, only just
behind 2020-21.
The detail
in the report is a little more sobering for grain producers, and consumers, in
the south. NSW wheat production increased
12%, with average yields lifted by 0.2t/ha.
There was also a 4% increase in wheat plantings, likely due to
favourable conditions.
The WA
wheat crop also received a boost, with a massive 22% increase wheat production
to 10.4mmt. Between WA and NSW the
increase in production from the previous estimate is 3.1mmt.
This
increase was partially offset by an 8.7% decline in the Victorian crop and 6.3%
in SA. Victoria and South Australian
average wheat yields are forecast at 2.65 and 2.05t/ha respectively, the lowest
since 2019-20.
ABARES
barley forecasts (figure 2) are similar to wheat, with crops going well in NSW
and WA, and deteriorating in Victoria and SA.
Canola
yields havn’t received the same boost as wheat, and are the only major crop
expected to be lower than last year. Total
canola production was forecast 2% higher than the June estimate, again, thanks
to increases in NSW and WA. Victoria and
SA forecasts were already low, but ABARES stripped a bit more out in the
September report.
What does it mean?
While all grain prices are largely governed by export markets, when conditions vary widely we do get price spreads across the zones. This year will likely see the cheapest cereal in Northern NSW, and stronger values in Southern NSW and Victoria especially, where there is a lot of feed demand.
Key Points
- The ABARES Crop Report is forecasting strong cereal crops and lower canola.
- Compared to June, forecasts are up in NSW and WA, and down in Victoria and SA.
- Cereal prices will likely be stronger in the south this harvest.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: ABARES, Mecardo
