Uncertain outlook expected to provide opportunities

Supply and demand report reveals the bulls and bears

Cropping
As new winter crops come up across the nation, the grain trade digests the latest global supply and demand report that indicates continued volatility.

As new winter crops come up across the nation, the grain trade digests the latest global supply and demand report that indicates continued volatility.

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Major global grains report paints uncertain picture and points to continued volatility.

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As we get close to the end of May, vast tracts of Australia's cropping area are enjoying favourable conditions.

Western Australia, Queensland and New South Wales growers have been the recipients of some very good rain throughout autumn, and are well positioned as they finalise their winter sowing programs.

But it is a different story for Victoria and South Australia, where big parts of those regions are yet to get an autumn break.

It is not too late, but time is running out and crop yields may start to be cut from analysts' production estimates.

WA croppers have had a fantastic start to season 2021, and analysts predict a record canola planting across that state.

On the back of floods in March, Queensland is expecting a significant boost in year-on-year production.

It is difficult to imagine NSW can challenge its 2020-21 production numbers. But, given the start to the 2021-22 season, it feels like that state's growers will give it a good crack.

Despite the dryness in Victoria and SA, the expected carryout of grain still feels healthy enough to continue our strong export program right through 2021-22.

We are, once again, likely to see a solid year for export demand from international grains customers - and little change in domestic consumption.

Farmers marketing their grain will need to assess the global picture to understand where the risk and reward may be.

The most recent World Agricultural Supply and Demand Estimates (WASDE) report from the World Agricultural Outlook Board (WAOB) has been released, and it may pay to keep an eye on global supply and demand.

All the recent noise around supply issues means this could be expected to show where opportunities may lie.

But the latest WASDE report has painted more of a bearish picture than some had anticipated.

The report has forecast a record new crop wheat production for May at 789 million tonnes and Australia's estimate is 27 million tonnes.

Year-on-year increases are predicted for Europe and the Black Sea, but Australian and Canadan production is expected to be down.

While the supply side is mostly bearish for May, it is the demand side where the bulls may lie.

The WASDE report forecast an increase of 7.8 million tonnes in world wheat consumption, and said China would be a big part of that story.

There is an expectation that the strong demand for feed grains we have seen from China during the past 12 months is set to continue, with strong support from the Chinese domestic market and an intent to increase its overall agricultural commodity stocks.

Month-on-month data has shown Brazil's safrinha corn estimate has reduced significantly and, as a result, China is likely to return to the market again for USA old crop and new crop purchases.

Although the WASDE report paints something of an uncertain picture, it is at least clear where the bulls and bears lie in May.

With such a tight supply and demand story, there will still be plenty of volatility to come.

For farmers throughout Australia, keeping one eye on world supply and demand news will keep you in good stead when marketing your grain.

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