CHEAPER FERTILISER A RELIEF FOR FARMERS

Reports of easing fertiliser prices are great news for Aussie farmers, but they warn more will need to be done in order to combat food infation.

According to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), fertiliser costs increased from $64 to $82 per hectare from 2019 to 2021, while the cost of chemicals increased from $30 to $63 per hectare.

The war in Ukraine and COVID-induced supply chain disruption had pushed prices for the critical farm input to record levels in recent years, placing increased cost pressure on Australian farmers as they also faced high fuel prices and worker shortages. But easing fertiliser prices meant farmers would fnd it easier to balance their books, NSW Farmers Grains Committee chair Justin Everitt said.

“Farmers have been concerned about the rising cost of producing food and fbre, the rising cost of power, the rising cost of fuel and fertiliser,” Mr Everitt said.

“We have very little ability to pass on price rises to our customers, and shrinking proft margins have discouraged a lot of future farmers from joining the industry.

“Thankfully we’re seeing some light on the

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horizon with fertiliser prices, and if we can get the right policy settings in place from all levels of government we’ll be able to feed the future.”

While easing prices were welcome, Mr Everitt said more would need to be done in order to combat food infation, such as increasing research and development to help farmers adopt new productivity-boosting technologies.

“Producing more with less inputs are a fundamental way to tackle infation and relieve the stress of rising input costs, so greater investment in into things like precision agriculture technologies would be a great help,” Mr Everitt said.

“If we can reduce the amount of fertiliser and chemical applications then we’ll be able to produce more food and fbre at a lower cost and get it to consumers at a lower cost, which will reduce cost-of-living pressures.

“Farmers and families are in this together –albeit on different ends of the supply chain – and farmers really appreciate the support of Aussie families.”

The nation is on track to plant an impressive 23.48 million hectare winter crop this year – up slightly on last year’s crop area –Rabobank says in its newly-released 2023/24 Australian Winter Crop Outlook

But while area under crop remains high – projected at approximately 0.3 per cent above last year and fve per cent above the fve-year average – overall harvest totals are forecast to be lower than last season, with expectations of drier growing conditions due to the likely transition to an El Nino climate cycle, the specialist agribusiness bank says.

“Australia’s harvest potential for the upcoming season is expected to be below the recent consecutive bumper harvests,” the report says. However, it could still be “a decent total”, keeping Australia “well positioned to support global wheat needs in 2023/24”.

Report co-author, Rabobank associate analyst Edward McGeoch said after three years of high rainfall and positive growing conditions in many cropping regions across Australia – which had resulted in a “streak of strong or recordbreaking grains and oilseed production”

– it was clear Australia was looking to lower harvest volumes in the year ahead with the move to drier seasonal conditions.

“On a national level, the season did not begin as well as in recent years, however April saw improved rainfall totals in several growing regions across New South Wales, Victoria and South Australia,” he said.

Plantings and production

Rabobank’s Australian Winter Crop Outlook forecasts planted area for wheat, barley and pulses to all be up for the season, but with canola planting down.

Wheat area is projected to increase 2.9 per cent on the previous year to 13.44 million hectares (11.5 per cent above the fve-year average) with barley up 1.3 per cent to 4.27 million hectares (though still down 10.4 per cent on its fveyear average). Area planted to pulses is also expected to increase on the previous year to 1.77 million hectares (though still down 8.4 per cent on the fve-year average).

Canola planting is forecast to be down 8.4 per cent on last season to 3.32 million hectares. However, this would still be 21.2 per cent above the fve-year average, Mr McGeoch said.

“Canola plantings have suffered as all other crops have benefted,” he said. “The trend in most states – including Western Australia, New South Wales and Victoria – is that canola planting is down on last year due to the pull back in prices and the drier start to the season which has seen farmers returning to cereal crops within their rotations.”

Assuming normal seasonal rainfall, Rabobank says, wheat production for 2023/24 could be expected to reach 29.9 million tonnes (down 24 per cent on the previous year), barley 10.8 million tonnes (down 24 per cent) and canola 5.4 million tonnes (a decline of 35 per cent).

However, Mr McGeoch said, with climate models indicating a transition to weak El Nino conditions, “we could see production drop lower, potentially to the lowest total crop in four years (at 41.2 million tonnes)”.

States

By state, crop plantings are expected to be up this year in Queensland, New South Wales and South Australia (by 3.5 per cent, 3.4 per cent and 0.3 per cent respectively). Western

Australian planting is projected to be down 2.1 per cent and Victoria marginally by 0.2 per cent.

“For several areas across Queensland, early-season rainfall started relatively well, notably in the Fitzroy region, with aboveaverage rainfall totals from January to April contributing to an expected jump in wheat planting,” Mr McGeoch said, “while in New South Wales, farmers are on track to plant a very large crop for the fourth consecutive year. Year-to-date rainfall in New South Wales has provided a full soilmoisture profle across the southern parts of the state.”

For South Australia, total plantings across the state are expected to remain relatively stable compared with last year, the report says, up just slightly to 3.8 million hectares.

Planted hectares in Western Australia, while down, remain slightly above the fve-year average. Wheat plantings have also bucked the trend in the state, rising marginally.

“Lower soil-moisture profles, due to lack of opening rainfall this year, have led to reduced plantings across the state, with little assistance provided for strong early crop establishment,” Mr McGeoch said. “The risk of a dry outlook is also a consideration given the autumn break was not as widespread as in recent strong seasons.”

For Victoria, overall crop plantings are expected to fall slightly from last year to 3.5 million hectares, Rabobank says, although various regions in the state are “showing increased area”.

Exports

Export opportunities for the upcoming winter crop remain positive for Australia’s key market in South-East Asia, the report says, with freight charges declining back to 2020 levels and with Australia’s position as a “favourable origin market”.

Assuming the development of “weak El Nino” in 2023, Rabobank’s base case forecast would have 15.7 million tonnes of wheat from the 2023/24 crop (not including carryover stock from the 2022/23 season) heading to export markets, with continued strong global demand for wheat. Australia’s exportable barley and canola surpluses from 2023/24 production would be expected to reach 3.3 million tonnes and 3.4 million tonnes respectively.

Market prices

In terms of global grain markets, Rabobank says recent price declines may refect an only “temporary oversupply of crops in a complacent global market that is assuming nothing goes wrong later in the year”.

“Current global prices may be too complacent, given the political and seasonal risks around the world,” Mr McGeoch said. “In the short term, there is enough grain available on global markets. However, if we look even a little bit further, a myriad of potential issues are bubbling away. The obvious is the Black Sea grain corridor collapsing during Ukraine’s export season, but also Canada is becoming hot and dry, Argentina and the US remain dry and we now see Australia also becoming drier.”

Global wheat prices have collapsed 58 per cent from record levels seen in March 2022, the report says. However, Australian wheat prices have held up comparatively well, dropping just 20 per cent in the period, albeit from lower levels.

“Whether the local wheat prices continue to hold up well despite the global price decline depends on the outcome of local production,” Mr McGeoch said.

“If Australian wheat production is more favourable than expected, basis could decline to negative levels.”

Globally, the bank forecasts Chicago Board of Trade (CBOT) wheat to trade on average between USc 624 and USc 683 a bushel over the next 12 months, but upside above this range could be possible.

Locally, Australian Premium White (APW1)