Cropping market update

The latest insights and information on the Australian cropping market as of late May 2024.

European crop woes push grain prices higher

Grain markets have run hard the past month as European winter wheat production estimates are ratcheted lower.  Wheat values across international grain markets have risen around $70 per tonne (/t) (or 18 per cent) on European production problems (too wet in the west and too dry in the east – circled below).

Current forecasts have the Russian wheat crop falling below 85 million metric tonnes (mmt), down from 92 mmt last year, due to frost damage and hot and dry growing season conditions. Elsewhere in mainland Europe, parts of UK, French and Germany winter cropping areas are the wettest since 1981.

This map shows the percentage of normal rainfall received in Europe the past 30 days with highlighted areas showing it’s been too wet in western Europe and too dry in eastern Europe. Source: World Ag Weather.
This chart shows wheat production estimates for Black Sea countries.

The sensitivity of prices reflects the increasing importance of European production to the global wheat trade. This year, Europe is expected to supply around 45 per cent of all wheat traded. In the past few years, Russia has been the main global supplier of low-cost milling wheat, driving global prices lower. 

This chart shows European annual wheat exports vs exports from the rest of the world.

It seems that this year, Russian supplies may be less cost competitive. Since our last update Black Sea offer prices have risen around $40/t.

This chart shows that last time exporter wheat stocks were this low, prices were higher.

The latest USDA World Agricultural Supply and Demand Estimate (WASDE) report puts stocks in the hands of major exporters at 32 mmt, the lowest since 2010/11. The last time exporter stocks were so low, global wheat prices were significantly higher.

This chart shows the price of milling wheat in $A/t at Kwinana port in WA.

Local wheat prices have chased Black Sea offers higher and are up around $30 to 40/t. There has been some east coast grower selling into stubborn buying.

International feed values lagging

In contrast to wheat, the global feed grain complex is dominated by supplies out of America, both South and North. While there have been some issues this month, the South American crop is largely in the bin and a big US crop is being planted into good conditions. Reflecting strong corn production prospects, international corn prices were up just $8 to $280/t (an increase of 3 per cent).

The large spread to wheat values will see corn supported as it starts to attract demand away from wheat. This spread is around double the long-term average and should support international feed grain values.

In local markets, feed barley prices rose $20 to 30/t with the strongest performing market delivered Darling Downs (feedlots with a preference for feed barley) priced to start dragging barley north from southern NSW.

Sorghum prices were more subdued as harvest wraps up, rising in line with the lift in global corn values.

European crop issues support canola

Canola values have been supported two-fold the past month from a fall in the area planted in both Europe (too wet and low prices) and Australia (too dry in major southern canola producing areas). The major global canola players include Europe, Australia, Ukraine and Canada and all anticipated to have stable or lower production which is expected to tighten stocks to levels not seen in over a decade. Prices will be sensitive to any major crop wobbles.

Australian canola prices have tracked European values higher to $745 to 785/t, up $85/t for the month, at a slightly higher pace than global values reflecting falling production potential. Elders field staff are expecting a 30 per cent fall in expected plantings across WA.

This table shows the major global producers of canola.
Global canola production (mmt)
 2023/20242024/2025f
Australia64.5
Europe2118
Canada1919
Ukraine54
Total5146.5
This chart shows global canola ending stocks and stocks to use ratios.

Strategie Grains has left its 2024-25 European production forecast unchanged in April at 18.1 mt, down 9 per cent year on year reflecting a sharp decline in planted area. The Ukraine has been battling sub-optimal conditions but are still pegged for an above average crop, while the Canadian crop has been planted into sub-optimal moisture conditions and will be reliant on in-crop rainfall to achieve average yields.


Elders’ market view

The latest rally and increased price volatility associated with the northern hemisphere spring is a good opportunity for east coast growers to advance old crop grain sales ahead of GrainCorp storage charges kicking in 30 June.

This table shows grower trade bids for grain in major Australian grain markets.

Agronomy Update

Qld is only just getting started on the winter plant with less than 10 per cent planted - still in a prime window for winter seed planting.

Mice are appearing in fields at present in sporadic geographic locations across the western downs and northern downs with anticipated outbreaks across the southern Queensland area.

Large plantings of chick-peas are planned. Growers are only just getting into fields, some have been too wet and others too dry. By mid-June we will see a wide-spread plant of wheat, barley and chickpea take place. With the wet winter predicted we anticipate wheat and barley to be up on the back of some missed summer cropping opportunities and chick-peas will be around 230 to 240,000 hectares in Queensland. - Maree Crawford, Elders Technical Services Manager, Qld/NT

Around 15 per cent of crops are still to be planted with no emergence so far. 10 per cent of canola and beans dropped, slight increase in barley or oats (hay). Total planted area will remain the same with no insect or disease issues. - Craig Prior, agronomist, mid north region.

Currently the WA crop is 70 to 80 per cent planted with the aim to be finished by end of first week of June. Emergence has been patchy in most paddocks, with a widespread break of the season needed to encourage a strong emergence.

Thoughts are that canola plantings are back around 30 per cent with Lupins similar, but off a lower base. Wheat plantings will be up, with the cost reductions in generic Sakura make this an appealing option. Oats will be up, much of it will be for on farm purposes while barley will be comparable to other years. Total planted area will be back with higher risk paddocks fallowed, this is an undefined area.

With sheep numbers declining, the thought was that we would see an increase in total plantings, however many haven’t been able to clear this excess stock intime so will need to carry over.

Partially emerged crops have been hammered with early season pests. There has been a range of pest consisting of many of the grubs and mites who come out over summer phase. With a good widespread break, many crops will have the ability to outgrow these infestations. - Bill Moore, Elders Technical Services Manager, WA

The information contained in this article is given for the purpose of providing general information only, and while Elders has exercised reasonable care, skill and diligence in its preparation, many factors (including environmental and seasonal) can impact its accuracy and currency. Accordingly, the information should not be relied upon under any circumstances and Elders assumes no liability for any loss consequently suffered. If you would like to speak to someone for tailored advice relating to any of the matters referred to in this article, please contact Elders.

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