COMMODITY UPDATE
Market Observations: December

2022 has thrown up many challenges for regional communities over the last couple of months. 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 we’ve had in the second half of the year, we even experienced hailstorms that battered crops, particularly Canola that had already suffered set backs from a constant barrage of rain. In some key growing regions reports of more than half the Canola crop had been decimated due to these hailstorms.

As the anticipation grew for harvest 2022/23, it’s as if every week the forecast would be delivered with the promise of more rain on the horizon. 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 are still only in the early stages of dealing with the Barley harvest.

Forecast ahead is some clear weather with the promise of an opportunity to finally get machinery into the paddocks, albeit tackling the constant battle with bogs, weeds, fungus issues, field mould, etc.

The grain itself however is still showing promise. 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 also been an issue and falling number tests pulling the quality down into a SFW1 quality, essentially rendering it no good for flour milling.

There will be obvious field loss and abandonment of large areas of grains and seeds due to the recent rain events, but yields (even though not as high as expected perhaps) are still respectable on the whole and still of a marketable quality. We enviably look to our cousins in the West and note the fortunate and remarkable year they will produce. Australia’s biggest exporter CBH will be busy again in 2023.

At the time of writing, the delivered Geelong/Melbourne market for SFW1 Wheat grade is approximately $415p/t for January delivery. Canola is around $755 per tonne Geelong Port and early indications of oil content over 42% are showing very good prospects. A new grade to classify Canola (Can S) provides flexibilty in the tolerance towards field mould on the seed. Bar1 Barley is trading around the $370-5 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.

As always, we wish our farming partners and communities all the very best for 2022/23 harvest season.

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Author

Justin Fay
Commodity Manager