Rain high on industry radar

Variable rainfall in many states has national crop sector talking

Cropping
Much of the New South Wales cropping belt has recorded an average of about 250 millimetres of growing season rainfall in the gauge, but conditions in other states have been inconsistent.

Much of the New South Wales cropping belt has recorded an average of about 250 millimetres of growing season rainfall in the gauge, but conditions in other states have been inconsistent.

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Much of NSW cropping area doing well, but conditions are mixed across the rest of Australia.

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The rainfall theme continues to dominate conversations across the Port Kembla zone, with up to 25 millimetres falling in many parts of the zone's northern half during last weekend.

Data is currently showing that almost 80 per cent of weather stations throughout New South Wales have recorded higher than mean rainfall for the year-to-date.

It is estimated the average growing season rainfall recorded across the state's cropping belt has been more than 250mm.

If we read into the Bureau of Meteorology (BoM) forecasts, the view has not only been maintained - but strengthened - to exceed the median rainfall for the period August to October (to chances of between 70 and 80 per cent).

Looking across other states, and a few trends are beginning to appear.

Starting in Western Australia, where the general consensus has been that - although recent rainfall was okay - without much follow-up rain in the next two or three weeks, that crop is likely to throw a few red flags.

Also, without summer rainfall being received across most of WA's cropping belt, its winter crops are heavily reliant on growing season rainfall.

South Australian crops appear to be a mixed bag.

The Eyre Peninsula and Yorke Peninsula are not only struggling for moisture, but the addition of frosts exceeding negative 5°C in some areas will have baling contractors making inquiries.

South of Adelaide is the opposite, with the majority of this belt remaining unchecked and positive. Again, summer rainfall was largely absent and in-crop rainfall will determine the large bulk of this crop.

Looking into the forecast for this week, multiple frost events loom for the Mallee regions and parts of the mid-north of SA.

The Wimmera, North Central and Mallee regions of Victoria have been in the forefront of conversations of late, with prolonged dryness - coupled with a weaker extended rainfall forecast in the region - starting to cause concern.

Meanwhile, conditions in the southern half of Victoria remain favorable.

To summarise, we have quite the mixed bag across the nation's cropping regions.

WA and parts of SA and Victoria are in need of a drink, while NSW continues to correlate with strong production potential.

Domestic new crop markets continue to represent confidence in production in the Port Kembla zone. The APW1 new crop basis is trading between $15-$20 per tonne above the CBOT harvest contract.

To put this in perspective, for the same time of year in 2019, basis was plus $80/t; for 2018 it was plus $120/t; and for 2017 it was plus $175/t.

Although this makes new crop domestic pricing look 'cheap' - relative to previous seasons - it is important to note we are now without the drought-like conditions, and hence absent of drought-like pricing, in NSW.

With new crop wheat well bid around $300/t Track Port Kembla, and the production prospects remaining very positive, the underlying bid should still represent a reasonable level.

Lastly, global markets remain somewhat exciting - with the CBOT DEC20 contract ranging US59 cents per bushel - or $31/t - month-to-date.

The big price mover has been the repositioning of the trade - showing the funds buying back their short, and hence maybe showing the technical trader to not be as bearish as they were two weeks ago.

Coupled with the rumors of additional Chinese SRW trade, cuts to European Union production and slow Russian selling, it would be an unfair comment to call markets boring.

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