Crop production hit by unfavourable seasonal conditions

In its Australia crop report – February 2020, ABARES says production prospects for summer crops in Queensland and northern New South Wales remain well below average.

Peter Gooday, acting executive director of ABARES, said that this is an extremely trying time for many crop growers, especially those in New South Wales and Queensland.

“Summer crop prospects were adversely affected by unfavourable seasonal conditions in December that further depleted soil moisture levels to well below average in most summer cropping regions and to record lows in some others”, Gooday said.

“With the planting of summer crops in Queensland and northern New South Wales now largely complete, we expect planted area and production to be lower than our forecasts of December 2019.

“This largely reflects seasonal conditions in December that were more unfavourable than expected.

“Rainfall in late January and in February was largely too late to plant more grain sorghum in southern Queensland and northern New South Wales.

“The Bureau of Meteorology’s latest three-month rainfall outlook indicates that for most summer cropping regions in Queensland and northern New South Wales rainfall is more likely to be below average than above average from March to May.

“We are likely to see a 66 per cent decrease in summer crop production down to 878,000 tonnes.

“Cotton production is forecast to fall by 72 per cent to around 135,000 tonnes of lint and 191,000 tonnes of seed.

“Grain sorghum production is expected to be down by 77 per cent to around 292,000 tonnes.

“Rice production will remain low at around 54,000 tonnes due to low water allocations and high water prices.

“ABARES’ winter crop production estimate for 2019-20 will remain largely unchanged from our forecast of December 2019 at around 29 million tonnes.

“Higher than expected barley and canola production is estimated to have largely offset lower than expected wheat production.”

Winter crop yields down – Rabobank

Australia is staring down the barrel of another lower-than-average winter crop, as ongoing dry weather hinders planting across much of the nation, according to Rabobank’s newly-released Australian 2019 Winter Crop Outlook.

With many major cropping regions in the eastern states – as well as South and Western Australia – having begun the season with below-average rainfall, record-low soil moisture and a less than favourable rainfall outlook, the agribusiness banking specialist says it will be “against all odds” for Australia to return to average grain and oilseed production in 2019/20, and is forecasting a total planted area of 18.4 million hectares. This is up one per cent on last year’s planting, but still down almost 13 per cent on the five-year average.
Last year’s overall Australian grain crop came in down 20 per cent to 30 million tonnes, (according to official ABARES figures) – due to severe drought in the country’s east, although WA recorded a 21 per cent increase in production to 17.1 million tonnes, its second-largest harvest ever. Overall wheat production came in at 17.3 million tonnes, the lowest in a decade.

Rabobank forecasts wheat production to again be below 20 million tonnes in 2019/20, with the current rainfall outlook supporting a projection of around 18 million tonnes.

With Australian grain stocks diminished and the estimated stocks-to-use ratio at more than 15-year lows, this will see the nation heading for another year of below-average grain and oilseed exports, the report says. For wheat, Rabobank projects exports to be in the vicinity of just 11 to 12 million tonnes, up 18 per cent year on year (YOY), but still down more than 30 per cent on the (five-year) average.

Report co-author, Rabobank senior grains and oilseeds analyst Cheryl Kalisch Gordon says the dry start to the 2019/20 season represents the third consecutive “sub-optimal planting window” for some of the most important cropping regions in Australia’s eastern states.
“The hottest summer on record and below-average rainfall – on top of two years of below average rainfall – means large areas are experiencing well-below to the-lowest-on-record root-zone soil moisture and there has been no widespread autumn break in most areas,” she said.

And the poor planting conditions are not confined to the east of the country, with parts of South Australia having their driest start to the cropping season in 150 years and almost the entire Western Australian cropping belt still waiting for a repeat of last year’s late seasonal break to “turn dust into dollars”, the report says.

Best prospects
However, it is not all bad news on the weather front, Kalisch Gordon says. Victoria and parts of southern New South Wales are, by contrast, looking at the best start to a winter crop since 2016/17.

“A major cold front that lashed parts of the eastern states at the beginning of May brought critical moisture to these regions, many of which had been heavily impacted by drought last season,” she said. “Follow-up rain has continued to replenish soil moisture levels and enabled farmers to progress towards completing their planned programs.”
And these areas offer the best prospects for helping Australia get back on track towards an average production season, she says.

East and west rebalancing
Kalisch Gordon says this year’s plantings represent a “rebalancing between east and west”, after the 2018/19 season where Western Australia did “most of the heavy lifting” with the country’s grain production.

“Any increases we are seeing in planted areas in the other states are expected to be almost netted out by the exception of Western Australia where we expect a five per cent year-on-year decline in area planted,” she said.

“In the wake of WA’s most valuable harvest in history – due to high yields and elevated prices – we expect Western Australian farmers to take a conservative approach to winter planting, given the dry conditions and uncertain outlook there.”

Dry sowing and expected yields
With the largely moisture-depleted start to this year’s Australia’s cropping season, Rabobank says a high rate of dry sowing has been undertaken by growers across the country.

“And this, together with opportunistic use of storm rainfall, as well as the good rains in some areas, is what is set to see a one per cent year-on-year increase in planted area,” Dr Kalisch Gordon said. But yields are not expected to be high

“Despite this marginal recovery in planted area, currently forecast seasonal conditions support below-average yields for most areas,” she said.

Big swings
There will be big swings in crops planted, the Rabobank report says, away from canola and pulses to cereals.

“The pivot towards more wheat and barley that we saw last season is expected to be followed again this year, due to the higher local prices we have in cereals and their less risky production dynamics when there are uncertain seasonal conditions,” Dr Kalisch Gordon said.

Rabobank expects cereal crops to make up 81 per cent of Australia’s planted area – up on the five-year average of 79 per cent.

The bank forecasts Australian grain prices to remain in higher ranges over the coming year. Lower forecast local production, depleted local stocks and some support for global cereal pricing will keep Australian prices above five-year averages.

“East coast Australia wheat prices will continue to trade at above-average basis levels while stocks rebuild and another below-average harvest volume is on the cards,” Dr Kalisch Gordon said.

“For barley, while increased planting will help moderate prices this year, the prospects for low production and our expectation that China may need to return to the Australian market for barley for malting in the second half of this year are likely to see prices gain again from current levels.”

The fallout from increased protectionism will continue to weigh on canola and pulse price prospects, the report says.

“China’s 25 per cent tariff on US soybeans and the Chinese ban on Canadian canola are more than enough to weigh on oilseed markets, but when Brazil is expecting its second-largest soybean harvest on record and China will have reduced demand for soybeans as a consequence of African Swine Fever, the weight is magnified,” Dr Kalisch Gordon said. “Meanwhile, reduced expectations that India will relax its import barriers will also limit pulse price increases.”

Kalisch Gordon says low crop production and strong local prices will once again curtail Australia’s export competitiveness in 2019/20, as they had last season.

“And the increased use of Black Sea and Argentinian-origin wheat in our export markets in South East Asia is expected to present a disruption to Australia’s market positioning when our exportable surpluses do return to average,” she said.

Fight against fruit fly strengthened with technology

Australian fruit and vegetable growers will be given a new edge in the fight against fruit fly, with new high-tech systems giving early warnings of fly movements.

Minister for agriculture David Littleproud said a $16.9-million-dollar package would assure trading partners when produce came from a fruit-fly free area.

“Fruit fly outbreaks cost the horticultural industry millions every year,” said Littleproud.

“If we take control of fruit fly we’ll get access to more premium markets and boost farm gate prices.

READ: Fruit fly study challenges theories of high carb diets

“We’ve started a trial of smart-traps that’ll send farmers instant alerts if fruit fly is detected,” he said.

Sensors detect fruit flies in the trap by the way they move and send mobile alerts to growers.

“This can provide farmers the best possible information so they can respond to an outbreak quicker.

“We’re also investing in a national mapping program, to track the movement of QFly in summer,” said Littleproud.

“The flies make their way south as it warms up and this will let growers know where they are and help us target where to release our sterile fruit flies.

“We’re putting extension officers on the ground to help growers use the latest science,” he said.

The officers help farmers work through the latest research and development that they can then put to work in their orchards.

“This package will help protect our $12 billion horticultural industry and reassure our trading partners of the systems we have in place,” said Littleproud.

Australia’s horticultural production employs more than 50,000 people.

The program will go the management of fruit flies such as the Mediterranean fruit fly in areas including in Western Australia and the Northern Territory, and the native Queensland fruit fly on the East Coast.

For the year ending June 2017, Australia exported $2.23 billion worth of horticultural products.

The program will go the management of fruit flies such as the Mediterranean fruit fly in areas including in Western Australia and the Northern Territory, and the native Queensland fruit fly on the East Coast.


Australia facing smallest winter crop in 10 years

A combination of extreme dry weather and damaging frost will deliver Australia its smallest winter crop in 10 years, according to Rabobank’s 2018/19 winter crop production outlook.

The agribusiness bank forecasts a national harvest of just 29.3 million tonnes, down 23 per cent on last year.

Were it not for the better harvest prospects in Western Australia – the only state where grain production is forecast to increase – the country would be facing its lowest winter crop in the past 20 years, the bank explains.

The reduced 2018/19 harvest will see WA, for the first time in 20 years, contributing more than half of the national winter crop at 52 per cent.

READ: Dry weather in Australia significantly impacting crops

Reduced national production – along with continuing strong demand for feed grain in the drought-afflicted eastern states – is, however, expected to see record Australian grain prices hold well into 2019.

The reduced harvest – combined with strong local demand and prices – also has significant implications for Australia’s export markets, with grains exports to be severely curtailed in 2018/19,” the report indicates.

The bank forecasts total Australian grain exports to be down approximately 50 per cent on last year, at 13.9m tonnes.

Wheat exports are predicted to decline almost 50 per cent on last year, to 8.6m tonnes – the lowest export volume since 2007.

Barley exports are set to be down 48 per cent on last year at 3m tonnes, while Australia looks set to export just 1.5m tonnes of canola – 41 per cent lower than 2017/18.

Report co- author, Rabobank agricultural analyst Wes Lefroy, said the hit to Australia’s export capacity is certainly one of the big concerns emanating from the reduced harvest outlook.

“This will severely pressure our market share in crucial markets in South East Asia, certainly in 2018/19, but also placing our competitors, such as the Black Sea and Argentina, in the box seat to get a greater stronghold on these markets into the future,” said Lefroy.

At a projected 29.3m tonnes (31 per cent below the five-year average), the total national winter crop in 2018/19 would be Australia’s fourth lowest in the past 20 seasons – with lows exceeded only in previous years of severe drought – 2002/03, 2006/07 and 2007/08.

Pulse production has been hardest hit in this year’s winter crop downgrade as it is down 43 per cent on last season and 41 per cent below the five-year average at 1.6m tonnes.

Lefroy said this was the result of a combination of lower planted areas – due to pulse prices coming down from record highs seen in 2016 and 2017 – and poorer seasonal conditions.

“Queensland and northern New South Wales, which are home to Australia’s chickpea production, have also been the worst-affected drought regions, so yields will also be well down,” he said.

Canola production is also significantly impacted, expected to be down 32 per cent on last year and also 32 per cent lower than the five-year average, at 2.5m tonnes.

Australian grain prices are forecast to remain high well into 2019, according to the report.

Mr Lefroy said an increasingly tight east coast feed balance had taken wheat and barley prices progressively higher nationally in 2018.

“Wheat basis is at decade highs across the east coast and SA, while ‘domestic’ exports of grain to the east have taken WA basis to seven-year highs. And grain and train shipments from SA and WA are expected to continue well into 2019,” he said.




New sugarcane nutrition manual provides the A to Z of growing a healthy crop

A new sugarcane nutrition manual provides sugarcane growers, millers, and advisors with a complete insight into running a healthy crop.

On the 1st of August, Sugar Research Australia released the new manual, which contains an extensive run-down on the latest research and information for growing healthy sugarcanes.

The Australian Sugarcane Nutrition Manual is available free to sugarcane manufacturers and stakeholders through Sugar Research Australia in hardcopy and electronic formats.

Sugar Research Australia CEO Neil Fisher said good crop nutrition was fundamental to the industry’s productivity, profitability, and sustainability.

READ: New research ideas sought to benefit Australian sugarcane industry

“This new manual arms the Australian sugarcane industry with valuable information to gain a better understanding of their crop’s nutrition, which is underpinned by the Six Easy Steps nutrient management program for fertiliser guidelines,” said Fisher.

“Six Easy Steps is a science-based nutrient management tool that enables the adoption of best practice nutrient management on-farm. It is acknowledged as industry best-practice for nutrient management to optimise productivity and profitability without adversely influencing soil fertility or causing off-farm impacts,” he said.

The Australian sugarcane industry had already made huge improvements to its nutrient management, which was delivering positive environmental outcomes and improved profitability, said Fisher.

“The nutrition manual is another valuable tool in the toolbox to help growers and advisors access this information,” he said.

Sugar Research Australia had exciting research projects underway that looked at important topics such as the nitrogen use efficiency of sugarcane varieties and the viability of enhanced efficiency fertilisers, said Fisher.

“Growers, millers, and industry will hear more about these projects as results are gathered in the months and years ahead,” he said.

Herbert region grower Chris Bosworth said marrying profitability and sustainability was crucial.

“The Great Barrier Reef is right off our coast. We want to protect the reef as we have already been doing. If we are losing nutrients from our farm to the reef, it’s not growing any cane out there and it is costing us money,” he said.

“I don’t want nutrients leaving my paddock, and this manual is a tool that can help with that. The least amount of nutrient that I can put on to grow a good crop, the better,” said Bosworth.

Dry weather in Australia significantly impacting crops

Australia has experienced one of the driest autumns since records began, more than 100 years ago, leading to poor crop growth.

It’s not unusual to experience dry conditions in early autumn, with a normal winter crop possible if a rain break arrives by mid-June.

But, continued dry conditions in July are contributing to one of the driest seasons on record for many crop regions.

Nufarm is concerned that the Australian crop protection market is down substantially as a result.

READ: Dry weather ahead cries out for ‘aggressive’ NSW dairy management

The extended dry weather conditions have impacted ANZ business, with the 2018 financial year EBIT contribution from ANZ now anticipated to be between $5million to $10m (LY$51.6m).

These seasonal conditions have also impacted the mix of products sold, with growers buying lower margin functional products over higher margin differentiated products.

The limited demand for crop protection products across Australia has led to increased competition and high inventory levels – resulting in significant margin pressure.

By the 20th of July, following feedback from Nufarm teams, it was determined that the market had reached a turning point.

It is now considered unlikely that a viable crop season will occur in many parts of the country and the expected demand for post emergent products will not eventuate.

Given poor demand in the 2018 financial year, there will be an overhand of inventory. Grower demand will depend on a return to normal summer conditions in the 2019 financial year, but the Australian Bureau of Meteorology is forecasting a dry spring.

Anticipated low levels of demand, coupled with the current over-supply, is expected to constrain sales and margin into 2019.

Despite the drought conditions, Nufarm remains confident it has retained market share in Australia, in line with the long term strategic objective.

Nufarm expects Net Working Capital for the group, at the 31st of July, to be $200m-$300m higher than last year.

This reflects the high inventories in the Australian business due to the difficult seasonal conditions and the higher receivables in the Northern Hemisphere countries resulting from the delayed seasons in those markets.