Australian grain prices have continued to strengthen in the past week as the reverberations off smaller than expected harvests in Western Australia and South Australia are felt on the east coast.
Three years of drought in Queensland and northern NSW has left the east coast grain supplies at bare-bones levels and in need of a good crops in the other states to keep the grain supplies up to the demand intensive east coast. Early harvest results indicated that WA and SA farmers may have escaped a tough season with near average yields, but the final harvest deliveries came in well short of expectations.
Harvest is almost complete with grain deliveries grinding to a halt. South Australia's grain deliveries in the first week of January were 3.9 million tonnes, Viterra said in its latest update. South Australia's PIRSA's wheat production estimate of 3.4mt looks optimistic with traders saying that wheat deliveries are little more than 2mt.
Western Australia's grain deliveries have also fallen well short of the mark. CBH has received 9.8mt of grain, or less than 60 per cent of last year's final, as of early January.
Grain prices have continued to rally in early January as traders step up efforts to secure supplies. Wheat prices have jumped a further $15 to $20/tonne since the start of January. Barley prices are up $20 to $30 in the same period.
Poor southern Queensland and NSW harvests had made it difficult for grain users in these parts to secure enough grain to keep the wheels turning.
The absence of summer rains in the north has made matters worse. Hopes of a sorghum harvest have evaporated as farmers turn their focus to rain for the 2020/21 winter crop.
Northern Australia has already seen two cyclones in the first two weeks of 2020, which have developed into tropical lows, dumping torrential rains in the Northern Territory and WA's Kimberly and Eastern Pilbara.
There is also an increased chance of rain for drought-stricken farmers in New South Wales and Queensland.
Any rain comes too late to benefit the 2019 winter crop which is almost complete, apart from the southern most areas in Victoria. Summer crop plantings are also unlikely. The planting window for sorghum is almost shut and farmers are reluctant to incur planting expenses with no soil moisture.
Even so, farmers are anxious to see the rain in the hope it may signal the start of an end to three years of drought for many. Any reasonable rain will help settle the constant dust storms as well as allow summer pastures to grow and help ease the high feed cost burden.
