This chart shows US futures prices for major grains. Source: Chicago Board of Trade (CBOT).
During the past month grain markets registered multi-year lows pressured by large North American crops and intense post-harvest selling from Black Sea countries. Since peaking in early to mid-July on European production wobbles, prices have given up 20 to 30 per cent to register 4-year lows in late August.
Over the past few weeks market sentiment has shifted a little allowing a modest rally. Europe has made further downward revisions to grain production and export estimates, demand has seen a modest uptick and there are some concerns about dryness delaying the eastern European winter wheat plant and the Brazilian soybean plant.
Weighing down the grain complex has been the ever-increasing size of US corn and soybean crops which are being harvested.
This chart shows US production of corn and soybeans. Source: United States Department of Agriculture (USDA).
Declining wheat stocks tell a different story
This chart shows global stocks of major grains. Source: USDA.
While a bumper US harvest means comfortable global stocks for corn and soybeans, the wheat situation is a different story. Global wheat stocks have been eroded in the past few years in contrast to the build up in corn and soybeans.
The global milling wheat balance sheet appears to be tighter than what the USDA would like to admit. For example, they are yet to reduce Russian wheat exports and are expecting a large Australian crop to offset European crop losses. While NSW and WA will produce large exportable surpluses, a big chunk of the southern Australian crop is vulnerable to hot, dry spring weather. See comments from Elders representatives in the field below.
Recognising that Europe won’t have plentiful wheat supplies, Asian importers have been upping purchases from other northern hemisphere suppliers. US exporters have been much more active in Asian markets of late than in recent years.
This chart shows US exports to Asian countries over the last few years. Sources: USDA, LSEG Workspace.
This chart shows prices for the ASX (Australian Stock Exchange) eastern Australia wheat futures contract (APW wheat). Sources: ASX wheat futures and LSEG Workspace.
Wheat prices should continue to firm as Russian selling slows and importers are forced to source supplies from higher value suppliers outside of Europe. The spread between wheat and corn will widen as the world prices wheat to keep it out of the feed grain complex. This will potentially have implications for protein spreads as we move closer to harvest.
Feed grain outlook not so rosy
Over the past few weeks, the feed barley and sorghum discount to wheat has widened as feed grains are pulled lower by a growing US corn crop and waning demand from China. Feed grain markets were also affected by rumours that the Chinese Government has unofficially told importers to slow purchases of feed grains to allow its domestic prices to recover. This saw local traders shift interest to other grains not wanting to be caught with stocks if the Chinese moved to formalise trade restrictions.
While feed barley has been friendless in northern markets, southern markets drew strength from ideas that the Victorian and South Australian exportable barley surplus is declining by the day. The discount to wheat in southern markets is around half the northern discount.
This chart shows the difference between local wheat and barley values at Newcastle Port. Source: ProFarmer Australia & LSEG Data-station.
Canola affected by Chinese anti-dumping probe
It has been a rocky month for canola. Earlier in the month, prices drew strength from lower European production estimates, lower than expected Canadian yields and reduced canola production prospects in Victoria and South Australia.
This chart shows Canadian canola and European rapeseed futures prices. Source: LSEG Workspace
However, the announcement that China was conducting an anti-dumping probe on Canadian canola (in retaliation for the 100 per cent tariff Canada put on Chinese Electric Vehicles) threw markets into a tailspin and saw Canadian canola values plummet 12 per cent or around $A85 per tonne since the announcement. Canada is heavily reliant on the Chinese market. Last year China imported around 5.5mt of Canadian canola or around 80 per cent of Canada’s total canola exports.
The impact on trade flows of the Chinese ban is uncertain which has seen the European rapeseed market react with a little more caution. For example, China may divert business to alternative suppliers such as Australia, taking imports away from Europe or alternatively they may just decide to replace canola with soybeans.
Locally, the market is in limbo with dry weather across key Australian canola growing areas most likely knocking yields around. Already ABARES was forecasting lower Australian canola production (down 8 per cent to 5.5mt) due to lower plantings across South Australia, Victoria and Western Australia in response to the lack of sub-soil moisture at planting. Farmer selling has been slow reflecting yield uncertainty. The discount for non-sustainable canola is expected to be around $15 per t.
This chart shows track canola prices in Pt Adelaide and Newcastle port zones. Source: ProFarmer and LSEG Workspace
India extends duty-free pulse imports
India has extended duty free imports of yellow peas for another two months to the end of December, signalling a continued shortage of local supplies to meet demand. India allowed duty-free pea imports back in March and has extended the duty-free period several times during the year.
Indian pulse production increased 50 per cent in the past decade to 24.5mt during 2023 and 2024, but Indian demand has increased at a greater rate to 27mt (as India’s demand for a protein rich diet has increased), creating the need for additional imports.
This table shows grower trade bids for grain in major Australian grain markets. Source: ProFarmer and LSEG Workspace.
Agronomy Update
There is not much to report from an agronomic point of view. Crops in most areas are in winter dormancy with soil moisture profiles gradually building and agronomists busy assessing yield potential and crop disease and formulating treatment plans for a little further down the track.
“The crop conditions across NSW have changed due to several frost events, the severity of which is difficult to assess at this stage. If current conditions persist (dry with frosty mornings) we will continue to see a reduction in the percentage of crops rated good to fair (average to above average) and an increase in crops rated poor (below average). Recent falls in crop conditions came on the back of a week of cold frost mornings below -3 degrees (with some reading as low as -5.5 degrees and below for 8 hours) in the Central Tablelands and Central West. The Northern Tablelands have also seen a reduced outcome due to environmental stress. Most regions require a further rainfall event to assist the crops heading into the important month of October where we are likely to see crop conditions become very dynamic.
“Some crops are already being cut for hay through Canowindra, Young and Cowra due to the uncertainty of grain yields (due to first) and the high price of hay on the back of increased hay demand out of the southern states. These were very heavy crops, but a lack of moisture has seen the season pinch off creating some uncertainty over yield potential.”- Adam Little, Elders State Technical Services Manager, NSW.
Below is a summary of the September crop condition report completed by Elders district agronomists for New South Wales, showing percentage of crop rated either very poor, poor etc and comparing the August rating.
| Very Poor | Poor | Fair | Good | Excellent | ||||||
| Sep | Aug | Sep | Aug | Sep | Aug | Sept | Aug | Sep | Aug | |
| Northern Tablelands | 5 | 0 | 10 | 5 | 5 | 5 | 45 | 50 | 25 | 40 |
| North-West | 5 | 5 | 8 | 8 | 17 | 7 | 45 | 50 | 25 | 30 |
| Central Tablelands | 5 | 5 | 15 | 5 | 15 | 10 | 45 | 50 | 20 | 30 |
| Central West | 5 | 5 | 10 | 5 | 15 | 10 | 50 | 55 | 20 | 25 |
Definitions of crop conditions
Very poor - Extreme degree of loss to yield potential, complete or near crop failure. Pastures provide very little or no feed considering the time of year. Supplemental feeding is required to maintain livestock condition.
Poor - Heavy degree of loss to yield potential which can be caused by excess soil moisture, drought, disease, etc. Pastures are providing only marginal feed for the current time of year. Some supplemental feeding is required to maintain livestock condition.
Fair - Less than normal crop condition. Yield loss is a possibility, but the extent is unknown. Pastures are providing generally adequate feed but still less than normal for the time of year.
Good - Yield prospects are normal. Moisture levels are adequate and disease, insect damage, and weed pressures are minor. Pastures are providing adequate feed supplies for the current time of year.
Excellent - Yield prospects are above normal. Crops are experiencing little or no stress. Disease, insect damage, and weed pressures are insignificant. Pastures are supplying feed above what is normally expected at the current time of year.
“There have been severe and widespread frost events in SA this last week with -4 degrees reported at Cummins and Yorke Peninsula, Mid-North and Riverland. Genetics stress test for drought genes is great to see in an experiment, but the rainfall gods look to be using the whole of SA as a test. The growers who had something to harvest in August may not have anything after these frost events this last few weeks.”- Lyndon May, Elders State Technical Services Manager SA
Below is a summary of the September crop condition report completed by Elders district agronomists for South Australia, showing percentage of crop rated either very poor, poor etc and comparing the August rating.
| Very Poor | Poor | Fair | Good | Excellent | ||||||
| Sep | Aug | Sep | Aug | Sep | Aug | Sep | Aug | Sep | Aug | |
| Adelaide and Fluerieu | 10 | 0 | 30 | 20 | 50 | 60 | 10 | 20 | 0 | 0 |
| South-East | 20 | 15 | 30 | 25 | 55 | 50 | 5 | 10 | 0 | 0 |
| Riverland Mallee | 25 | 0 | 50 | 10 | 25 | 60 | 0 | 0 | 0 | 0 |
| Eyre Peninsula | 10 | 0 | 40 | 20 | 45 | 60 | 5 | 20 | 0 | 0 |
| Yorke Peninsula | 5 | 0 | 55 | 20 | 40 | 50 | 0 | 30 | 0 | 0 |
| Mid-North | 40 | 20 | 55 | 60 | 5 | 20 | 0 | 0 | 0 | 0 |
Northern Wheatbelt – with a very wet late start, crop establishment has been poor. There are estimations that only half the canola went in, some was substituted with wheat.
North-East – similar to the north, with June and July providing good rain. The end of the season has been dramatic with many crops being pushed to a finish.
Avon Midland – this area has had a very good run of conditions which has been favourable for crops. Fungicides have been applied to many crops, with diseases such as Sclerotinia causing many issues. Diamondback moth (DBM) has been a late season pest in many crops which is of concern to many growers.
Eastern – these areas didn’t receive the larger volume of rain earlier, still looking okay but the drying conditions will limit the amount of grain fill in the spring
South-East – this area missed out on much of the rain in the north, while crops were established the yield potential of these is considerably lower than many reports, late season pests have continued with DBM and late season Powdery Mildew in wheat.
Great Southern – many of these areas had a dry start which only caught up in rainfall in late August. While crops are looking okay, they are on limited stored moisture which will play out over the spring as large canopies draw this moisture down.
South Coast – a drier season has served this area well as conditions are commonly too wet. Crops are even, however lacking some of the biomass that has commonly been observed. Spring will need to kind for these crops to finish.
Hay has already begun in many areas as reserves for fodder is replenished. Most crops that are designated for hay will be taken to grain as this is still the preferred marketing opportunity for these growers. We haven’t seen any significant frost events to date, higher temperatures is more of a concern over cold.- Bill Moore, Elders State Technical Services Manager, WA.
“Hay conversations building traction by the day but not quite at that point. Partially also because some crops won’t have high enough hay yield to be worthwhile. Frost events over the last three days look to have cooked a significant chunk of our lentils so it will be an interesting 10 to 14 days from here.”- Pat Conlon, Elders agronomist, Swan Hill.
“Crop ratings have plummeted. Crops have been surviving on sub soil moisture from summer rain and have only received around 90 mm during the growing season. The rain forecast in the next week will determine the fate of many crops. Seems like rain is always 10 days away but never arrives.”- Anton Mannes, Elders senior agronomist, Bendigo.
“We are going to wait to see whether it rains from the system forecast before deciding whether to cut crops for hay. It just hasn’t rained, and crop conditions have deteriorated sharply. We have been as affected by the frost as South Australia.”- Jono Fenwick, Elders senior agronomist, Echuca.
“ The Horsham official forecast predicts 20mm for August, and 5mm for September, and staying cool, with a few more frosts.
“These ratings are on the assumption of ‘average’ spring rainfall which would be occurring at grain fill timing and be extremely valuable. I have seen several crops of wheat which I doubt will be harvested, Willenabrina area particularly. Lentils are short, beans have never got going. Canola has recovered remarkably but won’t exceed average. Most cereals look okay but 4 tonne probably the upside.
“Best area is south of Warracknabeal which won the storm lotto around 15 April, receiving 45 to 70mm, which most of the Wimmera missed out on. All this depends on forecast rain next week – soils are dry.”- Mick Preston, Elders rural products sales manager, Horsham.
“Cereals growth stage range between flag -1 to ear emergence and will commence flowering soon.
“Cereal disease levels are low to moderate. Minor septoria tritici detected in lower canopies from drier winter conditions. Moderate stripe rust levels in wheat (only about 20 per cent of wheat varieties grown are highly susceptible).
“Planet barley is the main variety grown with high levels net blotch net form. Most cereals have received 1 to 2 fungicide treatments. Majority of crops at this stage will go to harvest.
“Pulse crops especially faba beans are very average. Only those sown early to mid April look okay. The western district has missed recent frost events. On Sunday it reached -2 degrees[Equation] in parts. Cereals should be okay, but canola could have some damage. September rainfall month to date was approximately 20 to 30 mm which improved crop ratings.
“Pastures and crops are on knifes edge with no sub soil moisture. Pastures are well behind spring growth rates with additional fertiliser being applied to boost as much hay as possible. Summer forage brassicas have been sown four weeks earlier than normal.”- Mick Walsh, Elders agronomist, Ballarat.
Below is a summary of the September crop condition report completed by Elders district agronomists for the Vic/Riverina region, showing percentage of crop rated either very poor, poor etc and comparing the August rating.
| Very Poor | Poor | Fair | Good | Excellent | ||||||
| Sep | Aug | Sep | Aug | Sep | Aug | Sep | Aug | Sep | Aug | |
| Eastern Riverina/North-East Vic | 0 | 0 | 75 | 0 | 25 | 0 | 0 | 35 | 0 | 65 |
| Wimmera | 5 | 0 | 20 | 20 | 65 | 60 | 10 | 15 | 0 | 5 |
| Mallee | 0 | 0 | 30 | 20 | 60 | 60 | 10 | 20 | 0 | 0 |
| South-west | 0 | 0 | 15 | 25 | 60 | 70 | 25 | 5 | 0 | 0 |
| Goulburn Valley | 0 | 0 | 70 | 0 | 30 | 70 | 0 | 30 | 0 | 0 |
| Central | 0 | 0 | 10 | 0 | 80 | 0 | 10 | 30 | 0 | 70 |
| Riverina | 0 | 0 | 5 | 0 | 45 | 10 | 40 | 70 | 10 | 20 |
| Tasmania | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 30 | 0 | 70 |
* Disclaimer – Important, please read:
The information contained in this article is given for general information purposes only, current at the time of first publication, and does not constitute professional advice. The article has been independently created by a human author using some degree of creativity through consultation with various third-party sources. Third party information has been sourced from means which Elders consider to be reliable. However, Elders has not independently verified the information and cannot guarantee its accuracy. Links or references to third party sources are provided for convenience only and do not constitute endorsement of material by third parties or any associated product or service offering. While Elders has exercised reasonable care, skill and diligence in preparation of this article, many factors including environmental/seasonal factors and market conditions can impact its accuracy and currency. The information should not be relied upon under any circumstances and, to the extent permitted by law, Elders disclaim liability for any loss or damage arising out of any reliance upon the information contained in this article. If you would like to speak to someone for tailored advice specific to your circumstances relating to any of the matters referred to in this article, please contact Elders.