Winter grain planting to come within one per cent of record: Rabobank

By: Anthony Wingard

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Australia remains on track for a second consecutive near-record winter crop planting as good seasonal conditions across most of the country and good prices for farmers result in an overall two per cent rise in planted hectares.

Australia is on track for a second consecutive near-record winter crop planting following good seasonal conditions and favourable prices

The data, released by Rabobank in its 2021-2022 winter crop outlook, suggests a total of 22.93 million hectares of crop will be planted across the winter; a process currently underway throughout the country.

The two per cent increase last year will bring the total area planted within one per cent of the national record for winter crops, set in 2016-2017, while the 2021 figure still represents a figure of eight per cent above the five-year average.

Leading the way in the near-record winter crop this season is wheat, with an estimated harvest of 28.9 million tonnes; followed by barley (10 million expected tonnes) and canola (4.1 million tonnes).

Across most of Australia, consistent seasonal conditions including substantial rainfall and good soil moisture leading into the planting season resulted in a favourable outlook, something the report’s co-author, Rabobank grain and oilseeds analyst, Dennis Voznesenski, says is a welcome segue into the planting season.

 "With the Bureau of Meteorology forecasting a 60 to 75 per cent chance of the east coast and South Australia exceeding median rainfall for the next three months, this should set crops up well and have a positive impact on yields in those regions," he says.

However, not all states and territories were as fortunate with the favourable conditions.

 "While most regions had excellent opening rainfall, particularly in Western Australian and northern New South Wales, not all have been so fortunate. In parts of South Australia and western Victoria, less favourable conditions have meant we will not be able to factor in a year-on-year increase in area planted in those regions, despite prices incentivising many other regions to expand total area," Voznesenski adds.

"So, the forecast of further rainfall will be particularly welcome in South Australia and western Victoria, where the soil moisture profile was far less optimal than hoped for coming into planting."

"For Western Australia, conditions have been very favourable for the opening to the planting season due to the rainfall associated with Cyclone Seroja. So, while WA is only forecast to receive average to below-average rainfall in the next three months, the impact should be softened by the favourable soil moisture at planting," he says.

CHANGING CONDITIONS

Rabobank says the amount of area planted with wheat will increase by 13.3 million hectares this year, up three per cent, while another 2.7 million hectares of canola will be planted - a 14 per cent rise.

Such sizeable growth in canola stems from the grain's near-record high in prices, as well as China’s ongoing tariffs on Australian barley – which decreased by six per cent (4.2 million hectares) – as farmers make the switch to the more profitable grain.

"Come harvest time, however, it may mean that there will be increased harvest pressure on local canola prices," Voznesenski adds.

Oats have too declined this season, down eight per cent to just 0.9 million hectares.

The shift from both barley and oats to canola has also resulted in additional implications for the agricultural sector, with most farmers now opting to plant genetically modified (GM) canola as opposed to non-GM – a move most notable in the growing regions of Western Australia.

A similar trend can be seen with regards to barley, where farmers have opted for feed barley instead of malt barley.

"With the premium for non-GM over GM canola declining considerably, we have seen a greater uptake in GM canola this year, with the biggest rise in WA. With non-GM canola supplies tight around the world, this should support a rising premium for non-GM," Voznesenski says.

"With less malt barley being planted and world malt demand recovering, we see the premium for malt barley over feed barley increasing this season from its lows."

PRICE OUTLOOK

The price of wheat is set to trade at about US650 cents per bushel on the Chicago Board of Trade (CBOT) for most of the first half of 2022 in part due to the low supply of global corn stocks.

With the Chinese tariffs in place, the report also indicates the price of barley will rely on the patronage of Saudi Arabia and Thailand.

Canola stocks around the globe remain low and are expected to remain on a similar theme, ending 2021-2022 at a five-year low. The downward trajectory of canola will mean prices in Australia are likely to remain elevated.

The scope of lentil and chickpea prices may relax as restrictions by the Indian government do likewise, however, any relaxation on access to lentils is expected to come through periods of uptick rather than a sustained lifting in the price.

According to Rabobank’s Cheryl Kalisch Gordon, an export program of "almost 20 million tonnes of wheat, 5.5 million tonnes of barley and 3.1 million tonnes of canola," is expected.

Global prices of most grains and oilseeds are expected to remain elevated across the next year following the strong demand and poor conditions in much of the world’s grain-growing regions.

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