Insights October 2021
Insights October 2021
- Australian crop production is above average in all states as harvest gets underway in northern areas.
- Prices are anticipated to come under pressure as harvest progresses but are expected to remain above average into next year.
Harvest is underway in Queensland and Western Australia, but the bulk of the crop is still a few weeks off being ready. There are areas of concern in each state from waterlogging to lack of moisture, frost and mice. Most of the issues are isolated or contained and the majority of crops are in good condition. Yields in eastern states have received a boost with recent widespread rainfall. National wheat production is forecast at 31.5 to 32 million tonnes. Barley production is estimated at around 12 million tonnes, and canola a record 5.2 million tonnes.
ABS data shows combined wheat, barley and canola exports are at record pace. The record for full season exports is 35.8 million tonnes in the 2016/17 season. Current season exports to August sit at 34.1 million tonnes with two to three million tonnes expected in September. Strong export demand will remain through the coming season. Lower production in key exporting nations and high global prices will support sustained export demand for the next year. Wheat and barley will likely see similar amounts to the current season of 23 million and eight million tonnes respectively. Canola exports will be around four million tonnes as Australia captures demand normally supplied by Canada.
Wheat prices continue to gain strength from offshore futures. This is particularly prominent in export focussed Western Australia, South Australia and Victoria. Reduced production in the US and increasing Russian wheat export taxes are fuelling rises. Canola prices continue to break records, fetching over $1,000 per tonne in some states. Short global supply of not only canola but other oilseeds has caused record pricing in local and global markets. High crude oil prices are adding additional demand for biodiesel created with vegetable oils, increasing competition between users of vegetable oil for human versus biodiesel use.
Australian prices are expected to come under downward pressure as harvest selling increases. Despite this, reduced production in competing export nations will hold local prices above average. The only thing that will rectify short global supply is increased production in the northern hemisphere. Northern hemisphere crops aren’t due for harvest until mid-next year. This means demand for Australian grains will remain strong well into the new year. With a large crop on the cards, Australia is well positioned to take advantage of high prices and strong export demand.
Sources: Profarmer Australia