Haymakers hit crops as temperatures rise

Haymakers hit crops as temperatures rise


This past week has seen plenty of action locally, with the market showing some extremely bullish signs.


This past week has seen plenty of action locally, with the market showing some extremely bullish signs.

Despite the US futures market remaining relatively subdued and the Aussie dollar rallying by more than 100 points, cash markets almost everywhere in Australia have surged higher.

This is without doubt a direct result of most regions struggling to crack that elusive spring rain to finish remarkably good southern crops, as temperatures heat up and crops begin to show signs of moisture stress.

Feels like we've been here before, right?

Crops 12 months prior were in a significantly worse state, barely having enough bulk to make hay in most cases.

However, with the dry bias for spring this year and hardly a lick of rainfall in September so far, it feels like many of our southern crops may fall on their sword as the days get longer and temperatures begin to climb.

We have seen the reaction in the wheat market too, with ASX new crop futures rallying some $30 since August 23, as the Bureau of Meteorology's spring forecast was released.

At the time of writing, January 20 wheat futures traded at $353 Australian dollars, up a mammoth $30 in the space of just two weeks.

The focus will be squarely on domestic production this month, as lacklustre global markets remain burdened by large crops, slow demand and a trade war that doesn't want to end.

However, we have our own problems back home to worry about, with key production areas in southern NSW and Victoria all seemingly hanging in the balance.

Just this past week as temperatures have increased, and the howling winds draw any remaining moisture from crops, we have seen a surge in the number of crops being cut for hay.

Currently, we are seeing quite a lot of canola being knocked down. It was looking good early with some fantastic biomass.

But due to the onset of recent frosts, the dry outlook and the strong demand for hay, farmers in southern NSW are making no hesitation in cutting as much as they possibly can.

This is likely to continue as long as the weather forecast remains dry.

The same can be said for cereal crops as well, if there is enough bulk in the crops they will go as well, as long as the dry stretches on.

If there isn't enough bulk in the crops, they will make the tough decision to let livestock graze crops in a bid to recoup some costs.

Larger than expected crops in the United States, Canada, Argentina and the EU mean global supplies remain plentiful.

And with the Trump-Xi feud unlikely to come to an end any time soon, the US will sit on these stocks and participate when the market encourages them to do so.

Currently, global wheat flows are being dominated by everyone but us and the US.

Both our cash prices are on the rise where everywhere else they are in decline, as they compete to win demand business.


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