Weather
A much quieter week on the rainfall front this week with some more rain for the far north but not much elsewhere except for some storms on the south-coast of WA. There is up to 50mm forecast for most of the WA wheatbelt and for Tassie next week.
An agent from Blayney in the Central Tablelands of New South Wales (NSW) recently explained how far the dry (well publicised in South Australia, Victoria, southern NSW) had extended into NSW. He said they had good early rain (in February) and planted grazing crops, but it got too hot, and the crops didn’t come away. They are resowing fodder crops again now. The same happened across the Northern Tablelands (NSW) and they had to replant. Fortunately they are good now, with +100mm rain recently and fodder crops now coming away well. They are a couple months behind on lambs with the tough spring and late autumn. Dubbo north is good to excellent, but from there south it’s no good and there is still a sell-off of stock underway now. They have already had a frost or two and ‘it’s going to be a very tough long winter from here’. They are starting to plant canola and faba beans in NSW this week in areas where there is adequate moisture.
In WA, a farmer flew across the state last week and commented that Lake Grace (south-east WA wheatbelt) and south looks good, with canola and oats out of the ground already (very early for them). With the rain forecast for this week they are in a good position. Anywhere north of Corrigin and across to New Norcia (central wheatbelt WA) where they missed the first rain, things are still dry. He is at Yuna in the far northern wheatbelt, and won’t get the seeder out till after Easter. The extent of seeding activity in WA, will depend on how much rain they get out of the system forecast to cross the state this week.
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Australian Dollar
The Australian dolla finished the week about where it started before last week’s volatility at just under 63USc. Probably an admission that no-one really knows what’s happening.
For what it’s worth, it seems the US has inflicted great deal of self-sabotage as a global trading partner. Although world growth will be lower because of a China/US trade war, on ag commodities at least, we could be a winner as Europe and China repositions itself away from the US. An alternate scenario is that China/US do a deal, and everyone lives happily ever after, but I just don’t get the feeling it’s going to pan out this way because the new US leadership has overplayed its hand, and the rest of the world has called its bluff. As China said - we were here without the US 5,000 years ago and we be here in another 5,000yrs with or without them.
Livestock
Livestock markets have been volatile due to supply issues and the upcoming run of short weeks ahead of Easter and Anzac Day. As we suggested in recent correspondence, this has nothing to do with the imposition US tariffs as our beef export prices to the US have jumped by about 10 per cent (amount of tariff) and exporters returns are unaffected leaving it to importers to deal with the tariff (mostly likely passing it onto the US consumer).
Local cattle markets were a bit easier as stock movements across the north started to flow and processors became more comfortable about accessibility of supply. The run of short processing weeks will probably mean saleyard volatility will remain, particularly as the dry across the south is continuing to lead to forced turnoff in some areas. Northern restockers will put a floor in prices. Cattle prices remain roughly around 10 pc higher than before the Queensland rain, but cows gave up about half last week’s gains as producers chased higher prices at saleyards and processors filled kill sheets.
Sheep markets saw action heightened. Prices went ‘ballistic’ last week at Wagga in what was described by a veteran agent st the strongest sheep market seen in 40years. Mutton reached $6/kg cw over the hooks and got up to $7/kg cw. But at this week’s Wagga’s sale there was over 80,000 sheep (30,000 head, up 10,000 head) and lambs (50,000 up 20,000 head). Sheep lost $40-50/head, while the lamb offering held up much better, particularly the heavy end, suggesting the US tariffs were having minimal impact (although this could be due to pent up demand as export buying had slowed due to uncertainty in recent weeks, the next few weeks will be a better indication of the impact of the tariff on heavy lamb). Demand was erratic as processors fill kill schedules ahead of a run of short processing weeks leading up to and around Easter.
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Grain
International grain markets were a touch firmer, mainly because of $US weakness and as Trump delayed the imposition of tariffs on many countries. EU prices were better on the promise of better demand out of China and MENA (Middle East and North Africa) as Black Sea supplies ease, and buyers move away from US corn due to uncertainty. Australia is benefitting from Chinese tariffs on north American goods with all Chinese US sorghum business moving to Australia. There is also talk of China reopening its market to Australian canola (shut since 2020 due to ‘technical’ issues).
Sorghum is up to $375/t Downs (+15/t) and $400/t (+$15/t) delivered Bris/Newc (+20/t better than prime hard wheat). Wheat was $5/t stronger in southern markets ($345/t Riverina, $375/t Melb/Geelong, $385/t Murray Bridge) and up $12-17/t in WA for APW/ASW9 (export market demand?). Canola prices have climbed off the mat, but most growers should be mostly sold by now.
There was better interest in chickpeas and lentils both old crop and new crop up $20-40/t maybe on the back of the lower $A. Most old crop pulse business now is to container packers and goes to smaller subcontinent markets outside India like Pakistan, Bangladesh, UAE because there is not enough left (and not the appetite to take large volumes) to out bulk shipments together. Unlike India, where demand mostly comes in a tight window as they run short of supplies ahead of their local harvest, demand from other subcontinent markets tends to be year-round providing better liquidity for local pulse markets. Despite a dry and hot March, reports are that sub-continent crop yields are better than last few years and that Indian wheat imports are unlikely despite low Govt stockholdings and high domestic prices (they need to keep their farmers happy too so they will grow it again next year). Pulses are an important high value and growing market for Australian grain producers.
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Wool
A good week for wool with broad based gains across all microns that drove the Eastern Market Indicator (EMI) up 13Ac/kg to 1262Ac/kg (the highest since early Apr 2023) with the weakness in the $A helping to offset uncertainty about the trade environment and the impact on global growth.
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Sugar
Sugar prices recovered on Friday but were headed for sharp weekly falls as investors continue to fear a global recession sparked by trumps sweeping trade tariffs. Losing nearly 1USc/lb or 6% to end the week at 18USc/lb.
Japanese sell off of US Government bonds prompts US tariff pause
It was the sharp selldown in US Government bonds that saw yields (interest rates) spike and prompted the pause in the implementation of US non-China global tariffs. The Trump administration was prepared to deal with some inflation, but high inflation and increased mortgage costs would have been politically very unpopular. The chart below shows the yields on US Government 10-year bonds over the past month.Source: LSEG Workstation.
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.