Although seasonal conditions continue to improve, growers are becoming increasingly worried about the low grain prices and how long this may last.
Warmer temperatures were ideal for growing conditions after recent rain. The mercury climbed into the high 20s Celsius through the Darling Downs last week and topping 30C. Crops have responded well to the burst of warm weather but cooler and wetter weather is required through August to build moisture profiles before spring.
Farmers are becoming increasingly concerned about where grain prices will be at harvest time and heading into 2017. Forecasts for low grain prices have been circulating for some time and reasons for higher prices are difficult to find.
Presenters at the Australian Grains Industry Conference in Melbourne this week outlined reasons for the pessimistic outlook in world and Australian wheat prices, of burdensome supplies and the lack of any significant production problems. However consensus is building among grain commentators that most of the bad news is already factored into the current prices and further declines are becoming increasingly unlikely.
Nonetheless, the same commentators are saying reasons for higher prices are few and far between.
One factor that has been supportive in recent weeks has been the wet weather across France and Germany. Excessive rain has already compromised the quality of the European wheat harvest. Attention is now turning to the impact the wet weather will have on yields.
Reputable European analysts are now saying French wheat production will be sharply lower than last year, with some saying it could be as much as 20pc lower.
French wheat futures jumped by 10pc last week amid the building European crop worries. US wheat futures largely ignored the bounce in the European markets, ending the week modestly higher.
Domestic grain prices continued to fall last week. Stockfeed wheat delivered into the Darling Downs slid by a further $3 to $248 last week, now down $20 in past four weeks. Sorghum bids into the Downs ended the week $2 lower at $215 while feed barley was down $5 at $231 delivered.
While lows for world grain markets might be in sight, farmers are worried about the outlook for chickpeas with the increased plantings this year. Most farmers have already started marketing new crop chickpeas at levels close to $1000 Brisbane which is still an attractive price. But farmers are worried how long these values will last.
Sharp increases in chickpea plantings has many traders saying this year’s harvest will be comfortably larger than last year’s crop of one million tonnes, but opinions on how much larger remain varied.
Larger plantings in Canada and improved seasonal conditions in India are also likely to influence world pulse prices in the coming months. It’s been a relatively good start to the Indian monsoon this year, which has allowed good progress on oilseed and pulse plantings but they will need the favourable start to continue to ensure a good crop.
