East coast growers take advantage of likely short dry spell to set crops up for optimum yields

Dry period ahead helps farmers get back in the tractor

Cropping
Winter grain crops are progressing well across the east coast, but prices continue to feel the pressure of global market factors.

Winter grain crops are progressing well across the east coast, but prices continue to feel the pressure of global market factors.

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Grain prices continue to be pressured by currency moves, end-user demand and growing conditions.

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Most farmers across Australia's East Coast cropping regions won't be too disheartened to hear they are in for a relatively dry fortnight ahead.

After what has been the best start to the winter cropping period in recent memory for many, these grain producers need an opportunity to do a round of spraying before the crop canopies close-over and while competition works its magic to keep problem weeds at bay until harvest.

A dry period will give farmers a chance to get back into their tractors and spray or fertilise crops before the next rainfall, which hopefully isn't too far into July.

On to the markets, and we have seen a relatively lacklustre week - both globally and at home in Australia.

The world market has been driven by the escalating pace of harvest throughout the United States, European Union and Black Sea regions.

Although the European Union has cut its wheat production forecast again (representing a 10 per cent year-on-year decline), there will still be ample wheat stocks globally - mainly driven by an excess of corn production.

This additional corn is a result of ethanol demand plummeting during the coronavirus pandemic.

Since the virus started, corn stockpiles have built-up to surprising levels and - given there is another corn crop due to be harvested in the US soon - there will be a lot more corn that finds its way into the feed ration market than in a 'typical' year.

This extra corn being fed will, of course, come at the expense of wheat.

This prompted a fall in the Chicago December futures price - to a level lower than US500 cents per bushel for the first time since September 2019.

After this level was broken, it has continued to trade lower, which is a disappointing sign for future prices here in Australia.

On home soil, we have followed the US futures markets lower - with crop conditions across the country generally all positioned to achieve above average grain yields. Although, there is still some caution surrounding the Western Australian and Queensland crops.

But with the Bureau of Meteorology forecasting wetter conditions from August to October, it is likely we will see some changing fortunes for croppers this year.

This has meant Australian ASX futures for January finished last week trading at $284 per tonne, mostly driven by lower currency moves, demand from the end-users and increasing confidence in the crop conditions.

Domestic delivered prices have come under pressure this week, with many growers taking the opportunity to clean out silos over the winter months of June to August before the new crop arrives.

The Griffith market traded down to $340 per tonne late last week and trade sources are suggesting comfortable stocks to take that area through until harvest.

The barley market has leveled since the recent China anti-dumping news, and has been trading consistently around the $340-345 per tonne level into Queensland domestic markets.

If you consider this price in comparison to the price for Queensland new crop barley prices at $265 per tonne, it is clear that you should look to wrap-up any barley sales before the new crop harvest arrives.

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