COMMODITY UPDATE
Market Observations: December

With harvest well underway in Victoria and largely completed in other parts of the country, we are reminded how no two seasons are the same. 2022 threw up many challenges for regional communities. Extraordinary weather events have pushed crops to the limit, some crops failing altogether due to the unrelenting punishment from Mother nature.

In addition to the enormous amount of rain encountered in the second half of the year, hailstorms battered crops, particularly Canola which had already suffered setbacks from a constant barrage of rain. In some key growing regions more than half the Canola crop had been decimated due to these hailstorms.

2022/23 harvest had a delayed start. It’s as if every week the forecast would be delivered with the promise of more rain on the horizon and in decent amounts. As we turned the corner into early November, the expectation of seeing early new seasons Barley became very distant. The crops themselves had enjoyed a soft finish in any case and with more rain forecast, crops were devoid of the baking late Spring days often seen in the more marginal regions this time of year that would turn a crop and prepare it for harvest. Even up to the last week of November, areas of the Mallee that would normally be contemplating the thought of tackling their Wheat crop by now were still only in the early stages of dealing with the Barley harvest.

Fast forward to the end of November 2024 we have largely had a smooth lead up to harvest. While the crop is not as large as 2023, it has still looked very promising in Victoria. The crop was coming in early and producing very respectable yields. Some good protein in the traditional growing areas (albeit only a small amount has been harvested at the time of writing) and half of the Barley appears to be making a Malting standard. Un-expectantly we have experienced a significant amount of rain in key growing areas as November draws to a close. Southern Riverina areas reported amounts of 140mm of rain within a 48 hour period. Grain sites such as GrainCorp Deniliquin resembles an inland lake as opposed to a bunker site. Forecast ahead is some clear weather with the promise of an opportunity to get machinery back into the paddocks, this time possibly with the battle against bogs, weeds, fungus issues, field mould, etc.

The harvest is still showing promise, the grain itself however may have some downgrading in areas with hot weather forecasted, I.e., subject to the district, the yields are holding up but with variations of quality. Early Barley moisture levels have been high and the test weight has dropped. Some of it making its way into a Barley 2 category. For Wheat, early signs have been ok with surprisingly more protein in Southern Queensland and Northern NSW than expected. That said, these expectations are still far lower than what was anticipated 3 months ago. For Wheat being harvested further down in the Central West of NSW, M.I.A and northern Riverina regions, test weight has been ok but yields well back from 2022/23. Further South towards the Vic border there is potential for issues with falling number tests, perhaps pulling the quality down to a SFW1 standard, essentially rendering it no good for flour milling. At the time of writing it is still too early to know what impact the rain has had.

There will be obvious field loss and abandonment if the rain continues due to the recent rain events, but yields are still respectable on the whole and are still of a marketable quality. We enviably look to our cousins in the West and note the fortunate and remarkable year they will produce just as they did in 2022. Australia’s biggest exporter CBH will be busy again in 2024.

At the time of writing, the delivered Geelong/Melbourne market for ASW1 Wheat grade $390 per tonne, SFW1 Wheat grade is approximately $385 per tonne if it is offered for January delivery. Canola is around $655 per tonne Geelong Port and early indications of oil content over the base 42% are showing very good prospects. A new grade was introduced last year to classify Canola (Can S) that required the flexibility in the tolerance towards field mould on the seed of which after this rain it may be required again. Bar1 Barley is trading around the $370-5 per tonne level into Geelong/Melbourne for January and it will be interesting to see the variations in quality and just how the market will perceive its value. The early percentages of Malt in the crop is now expected to drop.

As always, we wish our farming partners and communities all the very best for 2023/24 harvest season.

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Author

Justin Fay
Commodity Manager