Positive outlook for feed grain production

Feed grain is a significant input cost for any lot feeding operation and production yields are critical to price movements. Improved seasonal conditions across eastern Australia are set to support winter crops, with grain prices starting to soften recently. However, cropping areas in central Queensland and pockets of South Australia and Western Australia will be hoping for good rainfall in the coming week to preserve crop yields.

Wheat delivered Darling Downs prices have averaged $380/tonne so far in July, back 5% from the same period last year, while barley has declined 20% to $330/tonne and Sorghum has eased 4% to $325/tonne (Profarmer).

ABARES winter crop update for 2019–20 – a quarterly report that assesses crop condition and forecasts area, yield and production for Australia’s major field crops – provides some encouragement to cropping regions compared to previous years.

The beginning of the 2020-21 winter crop season varied across the country. Cropping regions in southeast Queensland and NSW had a significantly better start to the winter season compared to the last two years on the back of greatly improved soil moisture. On the other hand, cropping regions in central Queensland and Western Australia did not receive sufficient rainfall in May to fully realise planting intentions. Nationally, June rainfall totals were the third-lowest on record, hence improved rainfall for the rest of the season will be critical for crop development.

The latest three-month outlook from the Bureau of Meteorology forecasts that from August to October above-average rainfall will be seen across most of the eastern states and parts of Western Australia. Southeast regions of South Australia, as well as Victoria, western and central Tasmania and southwest Western Australia have an equal chance of wetter or drier conditions. Days from August to October are likely to be warmer-than-average across the country.

The total area planted to winter crops is forecast to be 23% higher overall this year, to 22.5 million hectares – driven by increases in NSW. The area planted to wheat is forecast to increase 27% year-on-year to 13 million hectares, while the area to barley is predicted to lift by 8% to 4.4 million hectares. Should winter rainfall be favourable in key cropping regions, total winter crop production is expected to increase by 53% to 44.5 million tonnes. Wheat production is forecast to lift 76% to 26.7 million tonnes and barley is forecast to increase by 17% to 10.6 million tonnes.

Looking to international production, the United States Department of Agriculture recently revised the 2020/21 US wheat crop 53 million bushels lower to 1,824 million bushels or 49.6 million tonnes.

© Meat & Livestock Australia Limited, 2020