The lowest rainfall from January to August for NSW since 1965, has helped achieve an unwanted statistic for a total winter rainfall 54 per cent below average.
This has resulted in a winter crop forecast of around 3.9 million tonnes, plus severe frosting that arrived in the first week of September and a domestic grain purchase price of $430-plus/t ex-farm has really created a somewhat tiring and character building year for many.
With a huge demand for east coast grain, a basis of $211.30 has formed at time of writing, helping create a $465/t palm kernel expeller track price.
As we know, the longer we go without further rainfall, the more crops will fail resulting in crops being grazed or made into hay thus creating higher grain prices.
The only circuit breaker here will be rain in the north for farmers to plant sorghum.
In all of this we continue to hear the noise coming out of the US about the size of their corn and soybean crops.
Reports indicate corn yields could average 12.19t/ha, while soybean yields could be 3.5t/ha.
Inclusive of these excessive yields, throw in the trade war against their biggest customer, China, and you will have to think the American growers will look to spread their risk and could start to grow more wheat, due to the strong prices even with a world production increase of 3.3m tonnes this year
As we all know, there is always a positive point in difficult situations and today that is wheat futures.
Pricing opportunities that we are currently experiencing have not been around since 2008 and we do not know how long they will last.
By looking at futures, it will allow a plan to be formulated to capture momentum in the market through flexibility while fixing the basis at a later date when production is secure.
Current price of AWB Dec 19/20 futures price is 287/t - this is a great starting point by any means and by acting well in advance better prices could be achieved.
