As sowing programs across Australia ramp up on what for the most part is a full moisture profile, farmers look primed to capitalise on record prices for their product due to a myriad of economic, geopolitical, and environmental conditions influencing markets.
With the prolonged crisis in Europe, an established La Nina weather system and tightening global stocks dominating the headlines of late, it appears the markets are supported in favor of the Aussie farmer at least in the short to medium term.
The ongoing crisis in the Black Sea continues to severely upend trade flows out of the breadbasket regions with the disruptions to the supply chain casting enormous doubt on whether the required programs can be executed in part or, at all. The updated April USDA World Agricultural Supply and Demand Estimates saw Ukranian corn exports slashed by 4.5 million tonnes with other analysts suggesting this figure to be much higher. It is estimated that in total, about 15MT of agricultural products, which include sunflower seed, wheat and corn, may remain trapped in the Black Sea region as a result of the ongoing crisis.
Not only is product battling to get out, with the window for planting corn, sunflower and spring wheat and barley fast approaching.
The Ukraine is also a major oilseed producer, specifically canola and sunflowers where it accounts for about 20 per cent and 50pc of the respective global trade. In most recent times, Ukrainian sunflower oil has been the release valve for what has been extremely tight global vegetable oil stocks. Adding further support to the global oilseed market, the Indonesian Government recently announced a ban on all palm oil exports effective immediately until further notice. To put this into perspective, palm oil accounts for nearly 60pc of global vegetable oil shipments with Indonesia the largest supplier, almost double that of second placed Malaysia which also faces challenging growing conditions in its own right with the effects of La Nina limiting in crop rainfall.
Adding further support to the oilseeds market is the dry, borderline drought conditions throughout the canola growing regions in Canada. With sowing due to begin shortly and conditions far from optimal, it's a safe bet that this region remains on everyone's radar as with global stocks tightening, the Canadian crop cannot afford to fizzle like last year.
Meanwhile in Australia, the latest update from the BOM concludes that the La Nina weather patterns influence is set to continue into the early winter, resulting in above average rainfall for majority of the country, in particular the NSW cropping belt.
As it stands, providing we don't get too wet (dare I say it), our winter crop looks set to be planted in optimal conditions where the global marketplace is supporting an environment where high commodity pricing is likely to persevere. Hopefully, this is a sign of many good things to come for Australian agriculture.
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