Insights April 2023

Commodity overview

• Canola prices have declined in the past month as global supplies are set to improve.
• Wheat and barley markets remain in a sideways trading pattern as strong export demand is met by plentiful supplies.
• Strong demand remains in place for Australian grain with March bulk exports coming in at a record 5.11 million tonnes, surpassing the previous monthly record by 11 per cent.

Canola prices saw steep declines across March with markets dropping around A$100 per tonne at their lowest point. A corrective rally late in the month saw overall declines for March at A$62 per tonne. Values are down approximately A$329 per tonne year-on-year. The decline in canola prices can be largely put down to positive supply side news. Plentiful supplies of soybeans are coming out of Brazil as they harvest what is likely to be a record crop. This has pressured the overall oilseeds market lower. A strong European Union rapeseed crop outlook thanks to decent crop conditions is also adding bearish sentiment to the market.

Wheat and barley prices were flat to slightly lower over the month of March. The Australian APW Wheat Index was A$6 per tonne lower and the barley index was down A$7 per tonne. Export demand for both wheat and barley remains strong. However, plentiful supplies mean that buyers are mostly patient in their accumulation. Meanwhile on the grower side, they continue to sell where it makes sense on profit but are not pressured or in a rush to get rid of any unsold grain. Hence the market remains in a sideways trading pattern. On the domestic side things remain relatively steady. However, Meat and Livestock Australia are projecting lower numbers of cattle on feed in coming months which could see feed prices in eastern states ease.

Shipping stem data shows that Australia exported a record 5.11 million tonnes of bulk grain in March. This surpassed the previous monthly record of 4.59 million tonnes set in December 2022 by 11 per cent. Wheat accounted for 63 per cent of all exports with 3.22 million tonnes shipped. The Asian region continues to account for most of Australia’s wheat exports with China the number one destination by country. Current wheat exports into China for the period October to March have totalled 4.35 million tonnes.

The demand side of the equation for wheat has been more in focus in the past quarter but will soon be taken over by weather drivers as this will dictate new crop outcomes. Supply side issues will start to become more of a concern from the start of April onwards and start to exert more of an influence on pricing and markets. Uncertainty around the new crop outlook often provides potential for price rallies for the period April through to June. Average to above average rainfall has improved soil moisture conditions across Australia’s cropping regions. This has allowed some early planting of dual-purpose crops and some canola. But by and large the full seeding program won’t kick off until around ANZAC Day. Growers will be looking for April to deliver another month of average to above average rainfall to kick off the 2023/24 campaign.

Sources: Profarmer Australia