Your Friday farmgate (3 weeks ending 29 July)
Updated: Jul 30
Apologies to regular readers of the Farmgate for the break in reporting for a couple of weeks due to leave and unforeseen circumstances.
There's an old saying, a rising tide lifts all boats, and so too winter rainfall lifts all farmers' confidence - except those producing fodder, as this week's Friday Farmgate report demonstrates.
The Australian dollar has remained relatively stable against the US dollar in recent weeks, and continued that trend in the last week. ABARES projects that in this financial year the Australian dollar will pick up 3 US cents across the year to 78 cents.
On Thursday afternoon one Australian dollar continued falls on previous weeks:
73.95 US cents, down 0.45 on three weeks ago (our last Friday Farmgate report)
81.20 Japanese yen (down 0.56)
62.31 Euro cents (down 0.68)
53.01 British pence (down 1 pence)
105.89 NZ cents (down 0.8)
Water - Rainfall
Healthy winter rains continue to fall across the Flow family area as the Indian Ocean dipole remains negative. On the drought indicators, there are still deficiencies in the northwest of Victoria and South Australian Mallee, but across the peninsula and south coast of SA and Victoria, soil moisture is building up beautifully.
This week's big inflows naturally in NSW and Victoria are the alpine regions, as the storage capacities of the Hume and Dartmouth dams confirm, Perisher receiving 113mm the most in NSW followed by Burrinjuck Dam with 90mm. Victoria's Falls Creek had the most in the last reporting week with 120mm, while South Australia's typical leaders in the Adelaide Hills were Uraidla (106mm), Lenswood (104mm) and Ashton / Piccadilly (94mm).
The week ahead is looking much the same with rain projected to concentrate in the peninsulas and Victorian alpine regions.
Water - Irrigation
Murray Darling Basin water prices have jumped for the start of the new water trading year on 1 July.
Water trade in the southern Murray Darling Basin spiked on 12 July but fell back in the latest reporting week, nonetheless higher than our last Farmgate report, up $35 a megalitre to $125.
In the South Australian Murray water is trading at $190 per megalitre, well down on the $275 spike encountered last week - but still more than double the $80 per megalitre price trading at the end of the last water year. South Australian high reliability water allocations are at 100 per cent.
New South Wales Murray prices remain fairly constant, up just $3 from our last Farmgate report 3 weeks ago to $93 per megalitre. High security allocations are at 97 per cent, general security at just 10 per cent.
After a price spike of $172 two weeks ago, Victorian Murray prices have calmed slightly, sitting at $143.5. This compares with a fairly constant price of $100 per megalitre for most of the 2021 calendar year until the new water trading year began with a spike in demand for water the first trading week. High reliability water allocations are only at 21 per cent, low reliability at 0 per cent.
Murrumbidgee water trade had a huge volume unseen since a similar time last year, 450 gigalitres traded that week but after ending last financial year on $158 per megalitre, continue to fall this week, down to $85.
Hume Dam is filling rapidly, rising from 67 per cent several weeks ago to now hold 77 per cent of capacity. In 2020 it reached that level in late October then started to draw down. These levels have not been seen since 2017 when the dam peaked at 91 per cent, and it filled to near 100 per cent the year before. In fact, the Hume has not been this full, this early in the season, since 2012 when it reached full capacity.
Dartmouth Dam storage continues to climb, up to 69 per cent (was 67 percent three weeks ago) - a level not reached since it was tracking downward during the summer of 2019, where it had peaked at 90 per cent at the end of the preceding winter.
The Menindee Lakes currently hold 1,088 gigalitres of water (66 per cent of capacity), a near-peak this season and still rising. At the same time last year the lakes were at 27 per cent. The last time the Lakes were this full was in 2016, when they peaked around mid-December at 1,583 gigalitres.
The signs are also positive for the Darling River system with upstream catchments of the Gwyder and NSW/Queensland border rivers at the highest possible soil saturation, especially in a triangle comprising Glen Innes, Inverell and Texas. Further winter rains in this district are sure to find their way downstream into the Darling and Menindee Lakes.
The livestock markets are in a rude state of health when it comes to prices for farmers, with high volumes of sheep on the market coming earlier than expected and still not seeming to dent prices.
Over recent weeks, ABARES released their latest projections for this year, showing almost every indicator on the up other than prices at the saleyards. Herd numbers are expected to rise 1.3 per cent to 24.2 million, matched by a 9.7 per cent increase in slaughter. Production is expected to keep climbing, up 12.7 percent, and exports expected to rise worldwide by 16.3 per cent. Saleyard prices among this increased supply situation naturally are predicted to slip 6.6 per cent.
On Thursday Meat and Livestock Australia reported that Australian cattle producers could expect the best spring in recent memory, due to a favourable three-month weather outlook.
Carcase weights are rising and production revised upwards, despite declining slaughter numbers.
All this augurs for a fast rebuild of herd numbers to 26 million head this year, 5 per cent above 2020 levels.
However, there was sobering news for anyone giddy with the Eastern Young Cattle Indicator's recent surge, popping through the $10 per kilogram (1,000c) milestone. Market Information Manager Stephen Bignell said:
“The industry EYCI price predictor has the EYCI sitting at 874c/kg at the end of 2021,” Mr Bignell said.
“In line with the astronomical lift in young cattle prices seen last week, the National Medium Cow Indicator has risen 40c year-on-year, or 13%, to sit at 308c, with the National Heavy Steer Indicator up 100c, or 16%, to sit at 412c/kg lwt.”
On the latest national indicators out on Thursday night, cattle prices were up for processor yearling steers up 9.2 per cent to 514.6c, medium steers up 7.5 per cent to 446.7c and feeder steers up 4.7 per cent to 494.5c. Restocker yearling steers fell 7.9 per cent to 594.6c.
Cattle - New South Wales
NSW prices are strongest for feeder steers (506c, unchanged this week) and heavy steers (438.5c, up 4.7c). Restocker yearling steers fell here 29.1c to 571.8c, and medium steers down 20.6c to 442.1c.
Southern NSW restocker yearling steer prices however were stronger than other districts at 597.8c, as were prices for heavy steers (469.3c), medium steers (495c) and feeder steers (517.1c).
A fortnight ago, NSW slaughter numbers got close to 2020 levels compared with the same time that year, but are now sitting at 27,760 for the week, 3,800 less than the same week in 2020.
On Monday Wagga yardings were slightly up 40 head to 1,800 with strong feedlot supply but trade cattle, heavy steers and bullocks in short supply. The seasonal shortage supported much stronger price outcomes for sellers. Weeks ago the yarding was around the 2,000 mark. NSW DPI noted on Monday the recent EYCI spike was due in part to high average prices at Wagga, Dubbo and Roma in Queensland.
Cattle - South Australia
South Australian prices for vealer steers were an incredible 610c (up 54c), the nation's best, this week, as were processor yearling steers at 538.9c (up 31.4c).
Wednesday's Mount Gambier yarding was 523 head, up a healthy 163 head with improved quality selling to firm to dearer rates.
Also on Wednesday, what would have been a healthy yarding at SA Livestock Exchange was just 60 head as 300 advertised pastoral bred weaner cattle from Glendambo were held over to next week's sale. The yarding that was handled were nonetheless generally good quality, attracting good prices in a tight week of supply.
At Naracoorte on Tuesday, 434 head were yarded, with both quality and prices mixed.
Cattle - Victoria
Victorian slaughter numbers remain substantially lower than previous years, 12,470 for this week.
Victorian prices were generally inferior to other states, however medium steers were the nation's best quantifiable price at 511.5c (little wonder, rising 94.5c this week), while medium cows were well out in front at 342.5c (up 3.4c) compared to prices from all other states (NSW the next best on 321.3c).
Western Victorian prices generally lagged prices on offer in the Gippsland and central west of the state.
Thursday's cattle yarding at Swan Hill was slightly up on the fortnight earlier, rising 67 head to 345. The higher standard compared to recent winter sales of outstanding vealers and grain assisted yearlings was noted.
On Wednesday 90 more head were penned than a week earlier at Warrnambool, with quality ranging from plain to excellent. The 621 head yarding is similar to what it was several weeks ago.
The latest ABARES projections for the coming year show world prices continuing to be strong, with skim milk powder expected to rise 15.8 per cent, whole milk 10.3 per cent up, with butter and cheese around 2.6 per cent better.
Australian production is expected to pick up 1.3 per cent to almost 9 gigalitres, but butter production is expected to fall 5 per cent. The farmgate milk price is expected to pick up a further 2.4 per cent to 50.7c per litre, still short of 2019/20's 54.9c.
Global Dairy Trend data for the last trading event on 20 July showed the GDT index down 2.9 per cent on the previous reporting fortnight. The index has been falling since one fortnight's steep climb in early March. The milk powders fell hardest, skim down 5.2 per cent and whole milk down 3.8 per cent. Cheddar was the only indicator to rise, up 1.3 per cent.
The ABARES projections released this last few weeks signals that slaughter and production will both be up 3-10 per cent and 6.6 per cent respectively, the matching price falls - they say - will be 2 per cent down for lambs and 5 per cent down for sheep. Total sheep numbers are projected to continue rising in the herd rebuild to 68.2 million. On Thursday Meat and Livestock Australia indicated that trade lamb prices would likely keep rising thanks to new lambs coming on to the market, further projecting:
This analysis suggests the highest prices paid in the winter peak of 2021 are at least six weeks later than 2020, with time still to run prior to the spring flush. To put that into perspective, this would be an increase in $35.50/head, assuming the lambs average 25kg cwt. The heavier carcase weight assumed is due to the seasonal conditions, which has seen turnoff weights for lambs lift while still being purchased by the processors for the domestic trade.
On Monday NSW DPI indicated that lamb prices had been rallying following a new monthly record of lamb exports to the USA, reaching 7,842 tonnes in June.
Matt Dalgleish at Thomas Elder Markets recently put some analysis into the sudden run on sheep trade here while Angus Brown at Mecardo tried on Tuesday to make some sense of the earlier than expected surge in numbers sent to the saleyards.
Restocker lambs led the charge this week, up 102c to a stunning 935c nationwide price, light lambs up 44c to 858c and heavy lambs up 43c to a solid 954c. Trade lambs were up 29c on the week to 914c, up 50c on when we last checked in on the price three weeks ago.
Sheep - New South Wales
New South Wales prices were strongest in the nation for trade lambs (932c, up 19c this week) and heavy lambs (961c, up 44c). The state's big pace-setter however are restocker lambs, breaking through the 1,000c barrier to 1,020c (up 98c, the biggest increase in any NSW category this week), ahead of second-best Queensland on 968c.
The restocker lamb price is even stronger in southern NSW, at 1,183c, blitzing northern and central west regions - but mutton prices are weaker here than elsewhere in the state, at 682c. On Thursday, MLA reported a record yarding of 57,950 head at Wagga, up 7,500 on the week before:
Agents mustered significantly more lambs culminating in a winter record for the centre. A large portion of the offering were grain assisted. Trade lambs were in bigger numbers, with some pen lots requiring more finish.
Due to the 'extremely large yarding', MLA market reporter Leann Dax indicated prices at times were quite erratic.
Corowa yarded 13,173 head on Monday, up 3,373 despite the wet conditions in the district. Prices were well up across all categories, up to $30 per head for heavy lines according to market reported Caroline Ronald.
Sheep - South Australia
South Australian prices are generally among the poorest in the nation this week, though mutton is almost the best at 690c (up 85c this week). Heavy lambs rose 50c to 872c, while restocker lambs fell 67c to 812c.
On Tuesday the SA Livestock Exchange yarded 4,200 head, down 300 with extremely mixed quality.
Also on Tuesday, Naracoorte yarded 557 fewer head to 3,373 with little restocker interest. Healthy competition among the 2,182 lambs yarded saw prices up $10 to $20 per head.
Sheep - Victoria
Victorian prices are generally mid-pack compared with other states, although Merino Lambs are offering the best price nationwide at 846c.
Horsham yardings on Wednesday increased 9 per cent on the previous week, up 469 head to 5,277 with mixed quality reported. Compared with three weeks ago, stock numbers seem to be floating around that low-5,000s levels for the time being.
The last available sale report before the three-week break from Elders indicated, as one would expect, strong buyer interest before the supply shut off:
The national offering remained large, with higher prices in the previous series combined with this final selling opportunity, bolstering quantity.
Nationally, there were 49,003 bales available to the trade. With two large offerings to start the season, compared to the previous season there has been 34,180 more bales offered, an increase of 51.7%.
As this is the final auction buying opportunity for nearly a month, there was strong buyer sentiment from the outset, as wool for any orders requiring shipment over the recess, needed to be purchased this week.
Although toward the end of the series there was a noticeable softening, overall the market recorded general increases.
The southern index closed slightly down on the week, but up 14 over the three weeks, at 1428c per kilogram. This represented, from the start of the year, a 23.4 per cent appreciation according to Australian Wool Innovation.
AWI noted that the high supply didn't dampen prices due to even stronger demand.
The three-week recess until 9 August gives us an opportunity to reflect on what the market might do this year, thanks to the latest ABARES projections.
In 2021/22 the number of sheep shorn are expected to get back close to 2019/20 levels, 68 million head, up 3.8 per cent on last year. All indicators are expected to rise, including export volumes, with prices expected to improve as much as 20 per cent and the Eastern Market Indicator likely to rise 9.7 per cent.
Grains and Oilseeds
Too much rain could be a bad thing, but not according to AWB in their market outlook released on Wednesday:
With the recent rain events over Australia’s cropping regions, it would be fair to say that conditions are too wet in some places. While this may cause concerns for the impacted regions, at a high level national level, the consensus is we are better off wetter as we approach the final stretch of crop growth.
AWB surveyed the cropping landscape, noting South Australia have been slow out of the blocks but the crop is responding well to above-average winter rainfall.
Victoria, they say, is in a similar state with soil moisture building heading into spring. They note canola has been slow to cabbage but cereal crops are looking promising.
AWB notes that NSW crops are 'flying along and farmer confidence is high'.
Andrew Whitelaw at Thomas Elder Markets noted on Thursday that China has bought as much wheat, barley and corn in six months of 2021 as they did for all of 2020, which he describes as a 'kick in the guts' for Aussie barley farmers hit with punitive tariffs.
This buying activity gives further credence to the belief China is heavily stockpiling food - for what purpose?
GrainCentral reported on Thursday that CSIRO mice control expert Steve Henry is 'edgy' about mice numbers, despite reports their numbers had plummeted during this wet winter, saying:
“We are concerned about what might happen in spring, given that we are looking at better-than-average crops. That would mean conditions will be favourable for mice in the spring.
“Before all that food becomes available to sustain breeding populations of mice, farmers need to be walking through their crops looking for signs of damage and being prepared to bait as soon as they see signs of mice.”
GrainCentral also reports that crop damage is coming in at roughly expected levels in the USA:
The second day on the road for the US spring wheat crop tour – continued to report plenty of damaged/stressed crops as expected, though noted a few better than expected areas. No real conclusion yet, but markets are watching how they finish up with the last travel day tomorrow.
In their updated projections for the 2021-22 year, ABARES projects that global production for barley and corn will rise 4.1 per cent with corn up 5.4 per cent, barley down 1.5 per cent.
ABARES projects that global wheat production will pick up 1.9 per cent this reporting year, with the European Union the big improver (up 6.4 per cent). The Black Sea is projected to be the only region in production decline, down 1.8 per cent. ABARES believes Argentina (26 per cent) and Ukraine (13.1) will be the big improvers in their export numbers, with Canada (-9.4) and Russia (-5.5) falling hardest.
GrainCentral reported on Thursday the Ukraine harvest is averaging 3.31 tonnes per hectare from 30 per cent of the forecast wheat area harvested so far:
Expectations are high for record production this season, but adverse weather conditions in the first half of July threaten to take the gloss off crop quality and final yields
ABARES projects that Australian production this 2021-22 year reduce 16.6 per cent, and exports fall 14.7 per cent. Domestic prices are thus expected to slide 7.4 per cent to around $315 per tonne.
The NSW DPI reports that wheat prices rose a further 2.3 per cent this week as difficult crop conditions in North America and Europe sparked a rally on global wheat futures.
Wednesday's data shows the wheat indicator down 3 per cent to US$298 per tonne on the world market, while domestically wheat was down 1 per cent for milling and feed wheat at Port Adelaide, both at $387. At last Farmgate the prices was a poorer US$279.
Andrew Whitelaw at Thomas Elder Markets has sought to make sense of the recent disconnect between the world and domestic grain prices here.
On Thursday's prices, our Grong Grong NSW AWB indicator for last season's APH2 is at $286 and for this season at $269.25. These are improvements of about $8-9 on the prices on offer 3 weeks ago. Our Victorian Charlton AWB indicator is at $293 for last season H2 and $289 for next season, recovering better from a slump to $260 in early July. The Port Lincoln SA indicator is $307 and at Pinnaroo $286.83.
ABARES expectations for the coming year are for a 1.5 per cent fall in global production, and a 20.8 per cent fall in Australia. Feed barley prices are expected to fall 3.7 per cent to $222 per tonne, malting barley less hit at 1.3 per cent down to $232 per tonne.
Monday's report from NSW DPI indicated that barley didn't keep up with wheat's rally, only up 0.8 per cent due to Ukraine product entering the market and competing in the Middle East.
On Wednesday the feed barley indicator at Port Adelaide was down just $2 to $319, depreciation on the last Farmgate report 3 weeks ago of $326.
Across the Flow Family, BAR1 prices for this season at Grong Grong NSW are $196.25, $220 at Charlton Vic and $217.83 at Pinnaroo SA. These are all about $6-7 better than when we checked in 3 weeks ago.
The ABARES projections for this year indicate a 25 per cent increase in the area planted, but just 3.9 per cent increased production. Exports are expected to rise 8.3 per cent off of those numbers, and prices to be up 4.9 per cent to $644 per tonne.
On Thursday Mecardo's Adrian Ladaniwskj helpfully explained the linkage between biodiesel demand (and government mandates) and canola prices. He points out that palm oil falling out of favour politically due to environmental concerns is taking that out of the biodiesel supply chain, particularly in the EU. The biodiesel market is thus leaning heavier into canola to make up the shortfall.
NSW DPI indicated on Monday that canola picked up 0.8 per cent in part due to a Saskatchewan, Canada report that only 18 per cent of their crop is rated good or excellent.
The Kwinana canola indicator was up 2 per cent this week to $773, a $33 improvement on three weeks ago, while the international Vancouver indicator was up 1 per cent to US$690 per tonne, $41 better than three weeks ago.
Across the Flow family, prices for last season and this season are $750.25, $771.25 at Grong Grong NSW, $768 and $789 at Charlton, Vic and $812 at Port Adelaide SA. These are around 12 per cent higher than when we last checked in three weeks ago.
The ABARES measure on fodder prices at Shepparton shows for cereal, pasture and lucerne hay, all remain below the previous two years' levels, particularly lucerne at just under $300 per tonne.
Dairy Australia reports south-western Victorian prices down since May at $190, noting that farmers have been taking advantage of low prices to store fodder. They say most of the good quality hay has been sold in the Wimmera and Mallee.
South East SA prices are higher at $205, down on $235 from before May. Prices remain higher as farmers continue to feed out beef and sheep stock until pastures develop due to the late opening to the winter rainfall season.
In central SA, Dairy Australia claims growers have significantly reduced cereal hay plantings due to concerns over limited export opportunities as exporters prefer premium hay in the backlog from last season. DA claims growers have shifted to legume plantings.
FeedCentral indicates they do not expect 'any significant kick in demand for fodder in 2021', with recent rains likely to put further downward pressure on the industry.
The latest available price report from Reputex shows the Australian spot carbon price continues to break new ground each week. The Australian Carbon Credit Unit (ACCU) spot price rose 5.5 per cent to $21.10 per tonne over the past fortnight. Reputex is projecting further price upside in future years, as has been seen in the European Union and USA.