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Insights April 2022

12 April 2022 |Cropping
Crop image

Insights April 2022

12 April 2022 |Cropping
The April update provides an analysis of production and pricing trends for Australian broad acre farmers. It provides producers with a timely overview of current trends and an outlook for the coming months.

Commodity Overview:

  • Global wheat prices have eased since Russia's invasion of Ukraine but remain volatile.
  • Australian cereal and oilseed prices will remain high in coming months on the back of strong export demand.

Planting of the 2022/23 winter crop is in the very early stages in areas with enough soil moisture. Planting conditions are favourable in southern Queensland and northern New South Wales. Very early seeding of grazing crops and canola has started in Victoria and Western Australia. South Australia is yet to receive a proper break, but some dry sowing is occurring. Total area planted to winter crops is forecast to decline on last year. The high cost of inputs will be a major factor in planting intentions, particularly in more marginal areas. Mixed farming operations may dedicate more land to grazing given high cattle prices. Growers are expected to maximise area planted to canola where possible. Canola provides better margins than cereals at current prices but require more inputs. Pulses are also likely to be favoured for their nitrogen restoring abilities following a large cereal plant.

Chicago Board of Trade (CBOT) wheat prices have eased around 20 per cent from highs in early March. Current prices sit around $500 per tonne in Australian dollars. Volatility remains due to conflict in Ukraine but attention is turning to US planting. USDA estimates wheat planted area to be the fifth lowest since 1919. This is supporting CBOT futures wheat contract prices.

Australian wheat prices have been shielded from global volatility by supply chain constraints. Prices have tracked mostly sideways over the past month but remain in the top 10-20 per cent of prices over the past ten years. Barley prices have steadily increased since March. Around half of Ukraine's barley is planted at this time of year. Concerns over their supply in the second half of the year is supporting barley values. Canola prices are again pushing A$1,000 per tonne in Australia. Low global stocks of canola and other oilseeds as well as high crude oil prices are supporting values.

High global grain prices are encouraging strong export demand for Australian grains. Supply chain constraints are limiting Australia's ability to meet export demand. This prevents local prices from gaining full upside benefit of high international values. However, this also makes Australian grain some of the cheapest in the world. This will see both prices and export demand for Australian grains remain elevated in the coming months.

 

Sources: Profarmer Australia

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