Widespread, soaking northern rains in recent weeks have significantly eased drought concerns as previously arid landscapes are transformed into a sea of green.
Upwards of 200mm of rain has fallen across central and southern Queensland cropping areas in January and February. The rain has resulted in moderate flooding along creeks and rivers as well as saturating farming land that had mostly sat bare for the past two years.
Similar rainfall has been received across northern NSW cropping areas including Mungindi, Collarenebri, Moree and Narrabri. Drought stricken farmers in Walgett, Coonamble, Nyngan, Dubbo and Condobolin also received upwards of 100mm of rain in February.
It's premature to say the good start to 2020 in the north will bring an end to the drought, but it's the best chance since 2017.
Grain market dynamics have changed. Pasture-starved farmers across NSW have stopped buying in grain to keep livestock alive, which has put the brakes on barley prices. Commercial grain buyers have become more reluctant while southern farmers have become more anxious to sell more of last year's harvest.
Old crop grain prices have tumbled since the rain. Stockfeed wheat prices into the Darling Downs have plummeted $30 to $440 a tonne while barley is down $25 to $380.
Weakness in global wheat markets has also pressured Australian wheat prices in recent weeks. Export quotes for Russian wheat have fallen by around $16 a tonne in the past two weeks as farmers step up efforts to sell old crop supplies before the new crop harvest in July. Western Australian wheat prices have following global markets lower.
ABARES' February crop report revealed the 2019 wheat harvest was the smallest in 12 years. National wheat production was cut to 15.2 million tonnes, down from 15.85 million in December following worse than expected yields in most states. Victoria was the only state that bucked the drought yields.
Summer crop production was also lowered. Australia's sorghum crop was lowered to 290,000 tonnes, which makes it the smallest crop on record.
Replenished soil moisture reserves in Queensland and northern NSW bolsters the chances for vastly improved grain production in the north in 2020.
Northern grain supplies will remain tight through to the new crop harvest as the rain comes too late for both the 2019 winter and summer crops.
Grain demand across southern Queensland remains robust, as seen in last week's October to December cattle on feed survey results. Cattle on feed finished 2019 at a record high of 1,239,563 head for the final quarter, according to the ALFA and MLA survey.
Dramatic rises in the cattle prices following rain will put pressure on feedlot margins. Some categories of feeder cattle have lifted by 20-25 pc since the start of the year.