Grain Wrap | Dry March has croppers in holding pattern

Dry March has croppers in holding pattern


The weather premiums built into many grain futures prices have begun to erode.


THERE was finally some rain across the NSW cropping area, but it has left much to be desired. 

Western NSW received less than five millimetres, with the totals increasing as the storm front tracked eastward toward the coast. 

This has left the traditional mixed farming areas set up quite well when compared with the major cropping-only zones. 

Many farms across these mixed areas have their oats and grazing varieties planted and will have received a huge boost from the falls Sunday night.

The remainder of the cropping areas in NSW are in a holding pattern currently, as the set up for this year is almost polar opposite to this time last year. 

If we cast our minds back to March 2017, we had a full profile of moisture, from an extremely wet 2016, and unlike typical March weather we received a lot of rain across the state. 

This year Dubbo, in the heart of the Central West, is set for its driest March on record with only 4mm falling so far this month. 

This is a far cry for most as they ready their planting gear to begin sowing soon. 

On the marketing front we have seen the futures markets for both wheat and soybeans fall heavily into last weekend, following higher than predicted rainfall across the US southern plains and Argentina. 

This has meant that the weather premiums built into many of these prices have begun to erode. 

However, the big talking point remains the US/China trade war that is threatening to erupt, which will particularly affect the American soybean exports to China. 

Currently, China has been coy on placing any tariffs on US soybeans as they are keeping this card up their sleeve. 

Soybean exports into China is America’s largest agricultural export by a longshot, so any tariff enforced by China will have huge implications for the Trump administration. 

Likewise, China like to use American soybeans, so they will have to exhaust all other options if they play this card. 

As such, expect there to be some volatility in the oilseed complex during the next few weeks.

On a different front the world market has eyes on the ongoing drought across the US southern plains, which has been largely dry since October. 

The crop is just emerging from dormancy, so soil moisture at this critical 

stage is essential for development. 

The forecast points to dry weather for some parts of the southern plains over the coming week, so it’s likely that any adverse weather conditions will push the market higher.

For those that do have some confidence in production for this coming wheat crop, please be vigilant in making forward sales at your target levels. 

Basis across the east coast remains traditionally high for this time of year, and if we see another spike in futures it might not be around long if the weather turns favourable.


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