The latest quarterly Rabobank Rural Confidence Survey – which surveys 1000 primary producers across Australia – found 41 per cent of Queensland grain growers were expecting conditions to improve in the coming 12 months, with 73 per cent attributing their optimistic outlook to seasonal conditions and the remaining 30 per cent to commodity prices.
The positive outlook is also boosting income expectations in the state’s grain sector, with more than half of grain growers surveyed expecting their gross farm income to increase in the 2021/22 financial year.
Favourable Seasonal Conditions
This optimism comes as Queensland winter crop plantings have increased, with Rabobank forecasting planted area to be up 15 per cent on last year, to 1.3 million hectares.
The area planted to wheat is expected to rise by 23 per cent to 920,000 hectares, while barley is likely to be down 10 per cent, to 122,000 hectares.
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Wheat growers are also on track to deliver their second consecutive above-average winter crop this season, with an estimated total wheat harvest of 28.9 million tonnes, barley of 10 million tonnes and canola of 4.1 million tonnes.
Rabobank grains and oilseeds analyst Dennis Voznesenski said with substantial rainfall and good soil moisture profiles across many parts of the country coming into this year’s planting, Australia was overall set up for another very strong winter grain crop.
“And with the Bureau of Meteorology forecasting a 60 to 80 per cent chance of the east coast and South Australia exceeding median rainfall for the next three months, this should set crops up well and have a positive impact on yields in those regions,” he said.
Positive Price Outlook for Australian Exporters
Global prices for most grains and oilseeds is expected to remain elevated over the next 12 months, he said, on the back of strong demand and poor seasonal conditions in many other of the world’s grain-growing regions.
“The USDA estimates that approximately 86 per cent of US spring wheat area is now drought-affected,” he said. “Consequently, wheat prices are gaining additional support and the spread between high-protein Minneapolis wheat and lower protein CBOT wheat is at its fourth-highest level in history.”
When more US and EU spring and winter wheat starts coming online in the coming months, Mr Voznesenski said the global wheat complex might soften, but ultimately balance sheet tightness will keep global prices above average over the year ahead.
“Domestically, Australian wheat track prices are expected to remain close to AUD 300 per tonne over the coming 12 months,” he said, “albeit local stocks and above-average new crop prospects are expected to limit further upside.”
A tight global corn market will also feed into support for barley in the coming year.
“Locally, feed barley prices have remained strong on the back of strong international feed grain demand and continued support from AU feedlots,” he said.
Looking forward, Mr Voznesenski said growers should keep an eye on the dry conditions prevailing in the northern hemisphere, particularly in the US and Canada.
“Continued dryness and record-high temperatures in North America could translate to an opening of the price spreads to higher-protein wheat grades locally,” he said.
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