COMMODITY UPDATE
Market Observations: April

Australia has again excelled in cereal grain production for 2022/23 exceeding the successes of the two previous growing seasons. This success can be put down to many things such as further advancements in farming techniques, technologies in the Ag machinery and seeds space for example, however, for the last three seasons it is well known we have experienced cooler and wetter conditions due to a La Nina weather system.

The Bureau of Meteorology (BOM) has hinted for many months at the likelihood of a switch from this system to an El Nino;  a system commonly associated with warmer temperatures and lower levels of precipitation. Now in Autumn, the likelihood seems more apparent but to what level remains to be seen. We don’t have to look to far into the past to remember the devastation El Nino patterns can deliver, after all, Australia in its very essence is a country “of droughts and flooding rains”.

As farmers begin to make preparations for planting of the new crop, we ask ourselves, as an industry, what have these three good seasons truly produced?

Strong yields is the obvious one, but factors such as what has occurred with residual content of soil nutrients, moisture profiles and how paddock rotations have been affected due to these big yields are a part of the conversation. In order for a crop to thrive it needs to be appropriately fed and watered, not to mention minimized exposure to temperature extremities. When we look back on the 2022 growing season it was a relatively soft year when it came to temperature ranges, but experienced high rainfall levels (to the point of flooding in some areas) yet the crop continued to overcome and produce a fruitful yield on the whole. Each region is different of course to the next but for those areas that experienced heavy downfalls of rain in the lead up to harvest and during harvest may have a substantial soil moisture profile exiting the summer period. A lower than expected moisture profile could result due to the take up of the big crop attempting to finish off absorbing whatever moisture was available to be utilised. Again, this is greatly dependent on the region’s individual circumstances. Big rainfalls over harvest in areas have also left the soil vulnerable to nutrient leaching and creating issues with soil structure. This no doubt will impact yield potential if not properly addressed and the rising cost of inputs certainly don’t help.

While the chatter in the marketplace and over the farm fence may be around the exiting of La Nina making way for El Nino, it is not all bad news and doesn’t necessarily mean we regress into a drought situation. Much of the commentary coming from the BOM has hinted the shift will cross the neutral barometer but not to the punishing levels we have experienced in the past. Naturally, we will learn more of the type of Spring El Nino will deliver as we transition into Winter, but as we now commence sowing we have a good glimpse into how we are set up for the start of the cycle.

With Victoria in mind, we understand there is general confidence in the residual moisture profile of the soil. Long range forecasts (while lower than usual) predict an Autumn top up with the potential for consistent showers providing some confidence in a positive crop emergence and establishing a new crop. Looking beyond Autumn the information becomes more vague and of course we will learn more as we get closer to it.

As La Nina departs and is replaced by El Nino, its ferocity is expected to be tempered compared to years gone by.

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Author

Justin Fay
Commodity Manager