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Insights June 2020

9 June 2020 |Cropping
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Insights June 2020

9 June 2020 |Cropping
The June 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.


  • The imposition of an 80.5 per cent tariff on Australian barley imports is likely to price Australia out of the Chinese market, which accounts for 70 per cent of Australian barley exports over the past five years.
  • Winter crop prospects are mostly positive as much of eastern Australia has enjoyed the most positive start to the winter cropping season in several years, though parts of Western and South Australia would benefit from more rainfall.

Much of winter cropping areas in eastern states continue to enjoy their best start to the season in several years. Many grain growing areas in New South Wales, Victoria and the eastern regions of South Australia have all come into winter with above average soil moisture, and forecasts point towards above average rainfall in winter. Much of Western Australian and parts of South Australia have had a dry start in comparison to eastern regions, however rainfall in late May has provided a reprieve to flagging prospects, particularly in southern parts of WA.

Queensland and New South Wales are set to see the biggest turnaround in fortunes, with area planted to winter crops forecast to increase by 111 per cent and 53 per cent respectively year-on-year. At a national level winter crop area is set to increase by 13 per cent, with planted area in other states much steadier.

Improved yields are expected to see total winter crop production jump by 35 per cent, year-on-year. Wheat and pulses will be the biggest movers, with forecast production increases of 59 and 45 per cent respectively. This will bring back production back to levels where there is significant exportable surplus, meaning that world prices will have a much larger impact on local prices compared to recent years. Whilst yield estimates contain a degree of uncertainty at this time of year, favourable weather in coming months has the potential to push final production well above current estimates.  

News that China would look to place import and other tariffs, of 80.5 per cent on Australian barley sent shockwaves through the grains industry in May. In the past five years, China has accounted for 70 per cent, or around 4.1 million tonnes of Australian barley exports per year. With winter crop planting already well progressed, and completed in some areas, there was limited scope for grain growers to switch area away from barley, meaning that barley markets will need to work out where to allocate grain which would have previously gone to China.

There may be some scope to increase imports to Saudi Arabia (the world’s largest barley importer), Japan, and other markets, as well as a limited capacity for increased domestic use of barley for stock feed. With the high barley prices seen in recent years having priced Australia out of many exports markets, including Saudi Arabia, lower prices over the coming season is almost certainly an implication of this situation.

Internationally, CBOT (Chicago Board of Trade) wheat futures have been taking their time in deciding whether their next big move will be up or down. Early estimates have world wheat stocks reaching new record highs in the coming season and this continues to place downward price pressure on global wheat prices.

Wheat end stocks among major exporting nations are also set to increase by 3 per cent year-on-year. However, wheat stocks in key Black Sea exporting nations are still going to be some way off levels seen three to four years ago, when downward supply side pressures were particularly strong. An interruption in export pace from this part of the world is quite possibly the best chance of world wheat prices seeing meaningful price support in the back half of this year.


Source: Profarmer Australia

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