Insights February 2023
Insights February 2023
- National production estimates of wheat (37.7 million tonnes), barley (13.45 million tonnes) and canola (7.54 million tonnes) are the second highest on record. Once final bulk handling figures come out it could eclipse last year’s record crop.
- Despite strong demand for all commodities and record export pace, ending stocks for the 2022/23 season are projected to finish at record levels.
Harvest has wrapped up for this season after a long and drawn-out affair. Western Australia and South Australia both produced record winter crops. Victoria and Queensland production fell short of the 2016/17 record crops. New South Wales production was down 30 per cent on last season’s record crop. This came as widespread flooding and disease pressure caused crop losses and yield reductions. To the surprise of many, the quality of the harvested crop was better than expected. National wheat production of 37.7 million tonnes is down one per cent on last season’s record crop. Barley production of 13.45 million tonnes is down three per cent from last season. Record canola production of 7.54 million tonnes is a five per cent increase year-on-year.
Strong demand for Australian grain has seen record export pace in the first four months of the marketing year. China remains the number one buyer of Australian wheat. The low protein profile of the crop along with competitive pricing has suited that market. Canola exports remain strong into the European bio-diesel market. Above average canola exports into the Middle East are also lending support to the record export pace. Barley exports started out slow but have now picked up with data showing one million tonnes shipped in December. Despite this strong demand and record export pace ending stocks for 2022/23 are projected to finish at record levels.
Wheat prices were down month-on-month but have found some support in the last week as harvest pressure eases. A weakening Australian dollar has also lent support. Barley prices have continued on from Decembers gains with the Australian index up $8 per tonne over January. Demand is coming from buyers as they continue to accumulate for future vessels. The trade may also be positioning for a positive outcome from the upcoming meeting between the Chinese and Australian trade ministers. Canola prices have found support this month on drought concerns around the Argentinian soybean crop. Prices are exceeding the psychological level of $700 per tonne as growers have begun selling again.
Sources: Profarmer Australia