Cheap diesel offers cost relief for grain farmers

Global energy values have collapsed in the past six weeks with half the world's population in lockdown. Oil prices have slumped as oil producing countries struggled to cut back output quickly enough. The International Energy Agency has told the market to brace for the lowest oil demand in a quarter of a century.

Benefits are already flowing through in cheaper fuel prices. Capital city terminal gate diesel prices have fallen by around 30 per cent since the start of February. Capital city diesel prices have fallen below $1 a litre in some areas for the first time since 2016, with analysts saying further declines are on the cards.

Regional transport businesses have reported they have been able to lock in diesel prices at sub $1.10/litre. Businesses are saying this represents a massive saving compared to the prices they were paying last year.

Farmers have also been taking advantage of the cheaper diesel prices to refill on-farm fuel tanks.

Vastly improved seasonal conditions and rocketing cattle prices have seen cattle on feed numbers tumble in the first quarter of 2020. Although Australian Lot Feeders' Association is yet to release the results of the January to March feedlot survey, it's expected to reveal a sharp downturn from the record high of 1,239,563 at the end of 2019.

Anecdotally, some feedlots are already saying numbers in some of the largest feedlots in southern Queensland and northern NSW have declined by 10-25pc in recent months. It may be some time before feedlot numbers return to the record levels of 2019 with the cattle industry now in a stock building phase after years of drought.

Queensland farmers are becoming more anxious for planting rain in the coming weeks to progress winter crop planting programs. Rain is forecast for most of NSW this week while Queensland remains dry.

Tight old crop grain supplies are keeping grain prices across Australia remain well supported. Stock feed wheat into the Darling Downs for a May delivery is still demanding $470 a tonne and $395 for barley. Old crop sorghum remains tight and well supported.

New crop prices wheat and barley prices into Brisbane and the Darling Downs edged higher last week on news that Russia is expected to ban grain exports.