Wool was the big price lifter this week, helped by an across-the-board fall in the Australian dollar against major currencies. The wool industry will also be heartened by recent ABARES projections that global wool demand will outstrip supply. Healthy rains also pushed the Eastern Young Cattle Indicator to new record highs, but could this be the end of the bull run?
This week brought ABARES' big June quarter update in a host of agricultural commodity indicators.
ABARES projected better terms of trade in 2020/21 and 2021/22 for all livestock other than pigs, with sheep expected to be up highest in prices received, followed by live cattle for export and domestic cattle sales.
All grains prices are expected to be down this year and next, but canola prices are projected to be higher for 2021/22. Wine grape prices will be substantially down, but other horticulture looms as having slightly better pricing compared to recent years.
On inputs, ABARES projects higher fertilisers costs into next year but lower chemical costs. Electricity and water costs are projected to fall slightly.
The ABARES data shows the herculean task expected of agriculture to reach the National Farmers Federation's uplift to $100 billion in production by 2030. Projections for 2021/22 show this year's $66 billion slip to $64 billion, but the history shows a one-third increase is possible. In the requisite 8 year time frame, production rose from 09/10 to 16/17 by 54 per cent. However, production reached $61bn at that point and has hovered just above $60bn ever since.
Currency
As is noted further below on wool, the Australian dollar has fallen across exchange rates, helping with some commodity prices.
On Thursday night the available data for one Australian dollar is buying:
75.77 US cents, falling from 75.40 cents on Wednesday and down half a cent on a week ago
84.04 Japanese yen, from 82.71 yen, (down 25 yen from a week ago)
63.49 Euro cents, from 63.33 cents yesterday (down 21c from a week ago)
54.28 British pence, from 54.03 pence on Wednesday (down 19p from a week ago)
107.35 NZ cents, from 107.48 cents (down 31c from a week ago)
Water - Rainfall
The rainfall recorded for this week was a little patchier and clung more to the coastlines than forecast by the Bureau of Meteorology last week, but stronger falls occurred through western New South Wales than expected.
Uraidla in the Adelaide Hills had the most rain in South Australia this week, with 98mm followed by Lenswood with 85mm. Mount William in the Grampians was best for Victoria, with 57mm.
For the month of May, rainfall was above the May average across the cropping regions of Western Australia, Victoria's Colac-Otway region and in south-eastern NSW and eastern Victoria. In all other regions, rainfall was well below average.
Looking at the forecast week ahead, last week was the better of the coming weeks according to Elders Weather, and the Bureau confirms this next week looks modest for our Eyre Peninsula, Mallee and Riverina broadcast regions:
Water - Irrigation
Murray Darling Basin prices slipped slightly on the latest data, down $5 across the Basin to $95. Murrumbidgee prices plummeted on the lowest trade since October 2020, down from $83 to just $20 per megalitre. This may be in part due to Murrumbidgee High and General Security allocations rising 5 per cent to full allocation, second only to the recent confirmation South Australian irrigators will receive 100 per cent allocation, equivalent to a 23 per cent increase.
Even so, South Australian - and Victorian - Murray prices continue to hold at $100 per megalitre, while NSW Murray prices held at $90.
The Dartmouth Dam is at 65 per cent capacity (2,526GL), the Hume at 53 per cent (1,595 GL), Lake Victoria at 55 per cent (373GL) while the Menindee Lakes have almost 1,100 GL, which rose from 300GL from April - a strong indication of the weight of floodwaters from northern NSW that entered ths system, triggering the Vic/SA Murray entitlement and thereby releases.
This week's ABARES June quarter data indicates that wine grape yield volumes were the highest in 2020/21 than they had been since 2016-17's 14.4t, reaching 13.4 tonnes per hectare. ABARES estimate a strong year for 2021/22 at 13.3.
Livestock
ABARES projects that livestock and livestock product production in Australia will rise by 7.1 per cent in 2021/22, the most it has grown by as far back as records go, 17 years. The projections put it above the 6.7 per cent growth seen in 2016/17, by far the best season in a generation.
Cattle
Meat and Livestock Australia reported on Thursday that the Eastern Young Cattle Indicator (EYCI) had reached a new record high of 932.38c per kg cwt, saying 'several indicators across the supply chain broke records this week'. At last check, it had slipped slightly to $929.71.
Thomas Elder Markets' Matt Dalgleish was a little self-congratulatory in saying he called that the 900c level was not a ceiling, and had believed the 930c level was the real ceiling test. He claims the EYCI is running out of upside momentum.
MLA observed that rainfall was the key driver for demand outpacing supply, in part due to the Wagga Wagga market returning after taking a break last Monday due to the Queen's Birthday long weekend.
The differential between restocker and feeder weights has also stretched over the last 11 years, with a 103kg differential at the moment, 60kg more than 2010. MLA say the prevalence of store cattle at saleyards as opposed to the finished product and increased backgrounding operations are pushing weight gain outward.
Cattle slaughter numbers for 2020/21 are the lowest in their 16-year record, ABARES indicates, and even next year's uplift by over 700,000 head still will be lower than any in that same record. 2011/12 is the only year that came close to such low cattle slaughter numbers. Mecardo estimates that grain fed cattle make up nearly half the total March slaughter numbers - the highest percentage on record.
Across the categories, most rose across the week, in the heavy volume category of heavy steers prices rose the most by 20c to 410c, medium cows rose 14c to 300c while yearling steer prices kept inching up to 488c, up 7c among low volumes. On Thursday night, Vealer steer prices were down 3.5c across the week to 528c.
Cattle - New South Wales
NSW has the strongest prices across the vealer, feeder, processor yearling and restocker yearling steer categories, but trails Victoria and SA on medium steers, and just Victoria on heavy steers and medium cows. Restocker yearling steers (563.9c, +61.7c) clearly recovered from last week's slump while processor yearling seers continued their strong run, up from 483.5c to 493.9c.
Feeder steers were up 13.2c to 479.1c, while southern NSW prices were best in the state for vealer steers (543.3c), feeder steers (492.1c), processor yearling steers (501.9c) and medium steers (465c).
Unlike Corowa's sheep yards (see below), Wagga Wagga's cattleyards picked up after a fortnight off due to the Queen's Birthday holiday the previous Monday. 450 more cattle came through, lifting volume to 2,700 with producers enjoying good prices as feedlots and domestic buyers scrambled for supplies.
Cattle - South Australia
South Australia has the nation's second strongest medium steer price (417c, +15.6c, continuing last week's strong 56.7c improvement), sitting behind Victoria (428.4c) but otherwise lags other states in the remaining categories.
Processor yearling steers nonetheless recovered strongly from last week's 95c slump, up by 70.3c to 490.3c and feeder steers built on last week's 34.2c up 13.4c to 467.3c.
On Wednesday, Mount Gambier numbers yarded rose another week, this time by 92 head to 419. Quality was reported to be mixed however the buying field still competed strongly for supply in a dearer market.
On Tuesday at the SA Livestock Exchange, numbers lifted after a slight offering last week, up to 300 head. As with the last month or so at Dublin, quality was reported as extremely mixed, this week cattle generally fresh and lacking in condition.
Also on Tuesday, the Naracoorte saleyards stumbled back 140 head to 556, with mixed quality and a 'wintry feel over the pens'.
Cattle - Victoria
Victoria has the best medium steer (428.4c), heavy steer (415.2c) and medium cow (315.4c) prices in the nation - a great improvement on the lagging prices last week. Restocker yearling steers are still struggling at 428.7c at the worst price in the nation, after last week's heavy slump - despite recovering 108.7c on last week.
Processor yearling steers were down 26.1c to 462.3c, vealer steers up 20.7c after last week's 14c losses, now at 473c.
Western Victoria vealer and feed steer prices leag the central west but are best in medium steers at 450c, with Gippsland prices inferior other than in medium cows, 325.2 in Gippsland, 314c in the central west and just 264 in western Victoria
Wednesday's yarding at Warrnambool lifted 150 head to 933, with greater export competition with pricing improving due to the 'number of top end quality'.
Dairy
Global Dairy Trade prices slipped further this week in the powders, dropping 2 per cent to US$3,997 for whole milk powder. Skim milk remains 33 per cent getter globally than the same time last year, whole milk powder 23 per cent better. ABARES projects skim milk powder could go a further 15 per cent higher in 2021/22.
Anhydrous milk fat was up again, this week 1 per cent to US$5,687 per tonne.
ABARES projects that milk prices will rise 2.4 per cent next year, better than the estimated 9.8 per cent fall this week but far short of the 8.5-11.5 per cent increases seen in the three prior consecutive years. Butter and cheese prices ABARES believes will rise to US $4606 and $4354 per tonne respectively in 2021/22.
The projected milk output will lift for the 2nd straight year, ABARES projects, but at 8,959 megalitres is still well below the average across recent decades. The last time milk production was this low in Australia was in 1987-88, during an upward movement to the long-term trend. However, the milk yielded per cow continues to increase, rising every year since 2016-17 to an estimated 6,492L.
Sheep
MLA reports that all categories other than trade lambs rose this week, with almost 60,000 head of heavy lambs yarded, up 11c to 808c nationwide. Just shy of 15,000 trade lambs were sold, down 11c to 826c. Volumes were close to 10,000 apiece for light lambs (814c, +22c), Merino lambs (758c, +34c) and mutton (685c, +29c - the only category higher now than the same time last year). Restocker lambs were 849c (+13c) with 6,670 head traded.
Sheep - New South Wales
Restocker lambs improved sharply after last week's strong gains, up 33c to now stand at the second best in the nation at 914c. Queensland prices shade the nation this week, so aside from their northern rivals, NSW has the best trade lamb price at 833c
Mutton improved for a second week, this time by 23c to 689c and Merino Lambs were up 28c to 748c. Southern NSW prices are stronger than the rest in light lambs (829c), heavy lambs (816c) restocker lambs (1,034c) and mutton (699c).
Wagga Wagga's volume wobbles continued on Thursday, falling back 6,050 head to 40,700 after jumping a third the week before. MLA reported Leann Dax attributed the falls to the wet weather. Quality continues to improve, reported as excellent. MLA said:
"Trade lambs ignited the bidding with companies concerned supplies may decline due to weather predictions."
The Corowa saleyards returned to action on Monday after taking last week off due to a public holiday, but there was no backlog surge in numbers. Volumes fell 1,600 head from a fortnight earlier to 13,200 and quality was reported to be mixed.
Sheep - South Australia
After dropping to the back of the price herd last week, SA restocker lamb prices bolted 95c forward to 964c to take national top billing. In all other categories, SA prices remain in the lowest to mid-range compared with the other states. Merino Lambs lifted 45c to 767c, light lambs up 24c to 806c.
Naracoorte volumes increased again on Tuesday, up 866 head to 6,541. As with last week, MLA reporter Peter Kerr said a wide range of quality, type and weight were available seeing dearer rates for sellers this week.
On Tuesday SA Livestock Exchange recovered the precise volume lost the week before, up 2,000 head to 7,000. Competition was reported to be erratic from the usual trade and processor buyers, specialty butchers and restockers.
Sheep - Victoria
Victoria now has the nation's second best light lamb price (818c), nonetheless dwarfed by an incredible 988c price in Queensland. Heavy lamb prices have been running strong in Victoria, up just 5c to 826c but still taking national top billing. Merino Lambs continued to climb, up 24c to now be the nation's best price at 782c. Trade lambs could not keep up the 53c rise last week, down 20c to 824c, while restocker lambs were down 17c to 788c.
There was little price differential between the central west and western Victorian yardings this week.
Horsham yardings on Wednesday fell substantially by 2,249 head after last week's 1,000 head gain, standing this week at 5,350. quality was reported to again be good.
On Thursday, Swan Hill yarded a small 4,000 head, up just 40, with mixed quality lacking suitable supply of export and trade weight lambs.
Wool
The latest available Eastern Market Indicator shows the wool market running hot, up 12 per cent to 1,468c per kg clean.
Last Friday's market outlook from Elders reported a strong rebound that week in the Merino market since last September, taking prices back to 2019, pre-pandemic levels. Elders points to a larger supply of wool holding back prices notwithstanding the purchasing interest in the supply chain. Elders predicted last Friday that the market is looking over-heated and a correction in the near term may be likely.
AWI's late report for last Friday noted that week's considerable gains in the auctions and, at that stage, saw no pullback apparent by Friday's close of selling. At that stage AWI said a weakening AUD against the USD was helping.
ABARES' June quarter projections indicate that wool production fell 18.6 per cent in the current year, but in 2021/22 will rise 5.3 per cent. They project that while prices were subdued by 18 per cent this year, next year they will rise 9.7 per cent to 1,300c / kg. This may be due in part to projections that unlike almost every other commodities, global production is expected to fall short of consumption that year.
Mecardo believes the 15 and 16 micron merino prices have room to increase in relation to cashmere before reaching tir upper limits from previous cycles.
Grains and Oilseeds
Mecardo described the adjustment in agricultural markets as a 'car crash' as US weather forecasts indicated a wetter season for the mid-west states. Iowa, Illinois and Indiana are expected to have above trend corn crops, dampening price expectations as much as their topsoils later in the year. Reports are coming in that Russia and the Ukraine are enjoying good rains, lifting their corn and wheat crop estimates. Thomas Elder Markets belive the Ukraine corn crop estimate could go even further beyond already record-high projections.
AWB asked a salient point on Tuesday - where will Australia store all the grain from current bumper seasons? They estimate 25 to 30 per cent of the east coast crop is still in on-farm storages. With recent marketing indications suggesting lower wheat and canola trends, AWB speculates that prices could head downwards with so much supply on hand.
In a surprise knockback for NSW grain farmers ravaged by the mouse plague, Grain Central reported on Thursday that the APVMA would reject the much-publicised attempt to use deadly bromadiolone to contain the plague. The NSW government had put much stock in what it called 'napalm' for the mice, but Grain Central reports that Grain Producers Australia welcomed the rejection. It is reported that the NSW government is already pivoting its $100 million support package towards the use of doubled zinc phosphide baits.
Wheat
Last Friday the NSW Department of Primary Industries (DPI) observed that soaking rains had provided favourable starts to the NSW and WA cropping seasons, driving an easing of domestic prices.
International wheat prices fell for another week, down 5 per cent to US$277 per tonne (US No.2 hard red winter wheat, fob Gulf), whereas domestic prices held steady for feed wheat at $373 per tonne. Milling wheat fell 1 per cent for the second week in a row, to $378.
ABARES data for the June quarter shows that wheat yields at 2.6 tonnes to the hectare were a repeat of the 2016-17 year, otherwise unseen in 40 years. Next year's tonnes per hectare are a healthy projected 2.1.
Tracking 2021/22 prices on offer across the Flow Family, wheat offers fell for a second week in most areas shedding $1-3 per tonne:
NSW - Brocklesby down to $268.25 ($270.25 1 week ago, $271.50 2 weeks ago), Grong Grong up to $259.25 ($257.25, $262.25), Henty West down to $272.50 ($276.50, $279.50), Narrandera down to $258 ($261, $264)
Vic - all down $2, Charlton $281 ($283, $286), Donald $278 ($280, $283), Murrayville $273.75 ($275.75, $278.25), Rainbow $273.25 ($275.75), Ouyen $270.25 ($272.25, $272.25)
SA - steady at Port Lincoln and Adelaide $294 ($294, $300), down $4 at both Mallala $293.30 ($297.30, $302.30) and Pinnaroo $274.83 ($278.83, $282.83)
Barley
NSW DPI attributed the resilience in barley prices to the logistical issues across the country, with old crop NSW barley in domand in domestic feedgrain markets.
Feed Barley prices at Port Adelaide climbed a further 1 per cent, on top of 2 per cent last week, now standing at $332 per tonne. Tracking 2021/22 BAR1 prices on offer across the Flow Family, barley offers fell heavier at AWB's Grong Grong, Charlton, Donald and Temora sites than at Graincorp's Lockhart and Murrayville depots. Prices even rose, slightly, at Graincorp receival sites at Port Lincoln and Adelaide:
NSW - Grong Grong $197.25 ($208.25, $212), Lockhart $212.50 ($213.50, $214.50), Temora $206.75 ($219.50, $220.50)
Vic - Charlton $221 ($226, $230.50), Donald $220 ($231, $232), Murrayville $218.50 ($219.50, $226.50), Ouyen $205.25 ($218.50, $219.50)
SA - Adelaide and Port Lincoln $248 ($247, $250), Pinnaroo $219.83 ($226.83), Crystal Brook $230.39 ($237.39), Warramboo $226.61 ($233.61)
Canola
Last Friday NSW DPI attributed the slips in canola prices to the commodity following slides in soybean prices, with US soybeans down 14 per cent in the spot market that week.
The canola roller coast continues its downhill run, shedding a further 2 per cent (fob Vancouver) to US$665 per tonne, after dropping 5 per cent the previous week. Unlike last week's resilience, the drop was this time felt at Kwinana, falling last week's international margin of 5 per cent to $744 per tonne.
June's ABARES quarterly data shows canola yields in tonnes per hectare were the highest since the early 1990s, at 1.7t. They estimate the 2021/22 yield will be down a little to 1.4t.
Tracking 2021/22 prices on offer across the Flow Family, canola offers generally fell $3 across the network:
NSW - Temora $683.75 Graincorp (GC) ($683.75, $701.75)
Vic -
Charlton AWB $692 ($695, $739), GC $695 ($693 GC),
Wycheproof AWB $686.75 ($675.75, $736.75), GC $670.75 ($690.75),
Rainbow AWB $685.25 ($672.25, $733), GC $687.25 ($687.25)
SA - Port Adelaide AWB $716 ($719, $764), Keith AWB $687.50 ($690.50, $725), Cummins AWB $708.01
Hay
The most recent available data for the week ending 18 June indicates that all hay prices were steady across the nation, with only slight falls in central west NSW.
In southeast SA, Dairy Australia reports:
Local trade continues for beef and sheep farmers who will continue to feed out until grass returns in the spring. Trade has been steady, but huge demand is yet to be seen as many farmers utilise fodder on hand.
The story is a little different for south west Victoria, despite healthy rains recorded in the region:
Grazing feed is beginning to slow down with cooler conditions, with most demand originating from cattle farmers look for feed to carry stock through the winter months.
Most enquiries seem to be for pasture hay.
There are reports of a steady amount of cereal hay coming into the region for dairy farmers capitalising on the low feed prices.