Regardless of rising fertilizer costs or convoluted supply chains, of all the inputs Australian farmers are considering ahead of the next harvest, there is one that trumps the rest: prospects for plenty of rain.
Deterred by high prices for many inputs right now, growers Down Under “are not really holding back in the area,” according to Thomas Elder Markets grain analyst Andrew Whitelaw, who said months of heavy rains had increased soil moisture in the east, while Western Australia also “got a decent amount of rain”. With prospects pointing to another rainy season, it’s raising optimism about production just as planting begins, Whitelaw said.
With the war in Ukraine drastically curtailing exports from the Black Sea, one of the world’s largest growing regions, and wheat prices up about 30% since the Friday before the Russian invasion, the world now needs Australian wheat more than ever.
Australia also has a record harvest. According to the US Department of Agriculture, the country is projected to export 27.5 million tons of wheat in 2021-22. The agency places it behind the European Union at 37.5 million tons and Russia at 32 million tons, although there must be questions about whether Russia will ship anywhere near that amount given the sweeping sanctions.
“The most important input to growing crops is rain,” Whitelaw said. “You don’t have rain, you basically don’t have grain,” he said, adding that farmers were also weighing bullish markets against rising input costs.
Most growers will stick to planned rotation cycles, he said, although some may be tempted to plant more canola to take advantage of strong oilseed prices. The USDA Foreign Agricultural Service forecasts that Australia will harvest its second largest canola crop in history in 2022-23.
Global demand for grain is likely to remain high. The war in Ukraine threatens more than a quarter of the world’s annual wheat and barley exports, about a fifth of its corn shipments and most of its sunflower oil shipments.
More trouble is brewing for wheat. A worsening drought in much of the U.S. growing region is flying largely under the radar, Whitelaw said.
“If you look at the conditions of their crops and the drought they’re facing, we’re talking about conditions that were worse than 2012 — and 2012 was the time when the crops were really in distress,” he said. adding that the corn crop was more affected at the time. “Everyone looks at Ukraine and forgets about the USA”
How the war in Ukraine is tearing apart the global food system
Meanwhile, record input costs are weighing on farmers’ margins around the world. From fertilizers to seeds, freight and diesel, soaring prices have sounded alarm bells about the potential impact on agricultural production at a time when global food costs are already at all-time highs.
Australian growers could reduce fertilizer use – potentially by around 10% – to cope with higher prices, which will impact yields, although it’s difficult to quantify the effect, Whitelaw said. Yet it is a symptom of a much larger problem.
“If you suddenly start cutting global yields by 5%, 10% or whatever it is, even a small percentage spread around the world, it has a pretty significant impact,” Whitelaw said.
https://www.independent.ie/business/farming/tillage/grain-prices/bumper-wheat-crop-looms-again-in-australia-on-ample-rains-41526960.html In Australia, a record wheat harvest is on the cards again with plenty of rain