The latest ‘Wheatcast’ forecast, run on November 1, has narrowed the range and decreased the expected wheat yield. It will be interesting to see how Wheatcast numbers line up with eventual production, but the final numbers look to be well below official forecasts.
The two weeks leading up to the 1st of November Wheatcast run were relatively dry for much of NSW and WA, and hence some of the potential was stripped out of these zones.
With harvest underway across much of NSW and WA, the potential for changes in yields due to rainfall is all but non-existent. As a result, the Wheatcast report has largely locked in its final wheat yields.
Figure 1 shows the Wheatcast are pegging national yield at 2.42 t/ha, which is well above the long-term average but below the September ABARES forecast of 2.66 t/ha.
All states have had drier than optimal finishes to the growing season, which stripped some potential out of crops, and in parts of the south saw crops cut for hay. Cereal hay prices across the east coast dived $70/t a fortnight ago (Figure 2).
This was when there was plenty of media covering crops being cut for hay, but prices generally fall at this time of year. We can see in Figure 2 that as of the end of October, cereal hay prices remained around $70/t above the same time last year. This suggests that supply is still yet to overwhelm demand.
Harvest picked up pace in NSW and WA last week (Figure 3) with over 1 mmt delivered into NSW GrainCorp sites. East coast receivals were around 1.6 mmt below the same week last year, which could suggest yields are lower. Harvest could also just be running a week behind due to the weather. We’ll know in the coming weeks.
Wheat prices haven’t responded to rising values in the US, just as they didn’t really fall when US prices were weakening in October. This is not unusual at harvest, with growers busy on headers not keeping track of international values and cashing at the site. It’s worth having international prices on your smartphone, or warehousing and selling later.
International markets are still working on a nearly 34 mmt wheat crop. Wheatcast suggests it could be closer to 28.5 mmt. Even in the grand scheme of global wheat markets, stripping 5 mmt out of major exporter supplies will move the market to the upside.
Wheatcast has yields close to finalised at levels lower than ABARES September Crop Report
Hay prices continue to ease, but remain above last year’s levels.
Harvest receivals are behind the same week last year.
Angus Brown brings over 20 years of expertise analysing Australian agricultural markets, and also runs a mixed farming operation in Hamilton, Victoria.