Outlook worsens with dry July

Minimal July rain means August rainfall is critical for those farmers fortunate enough to get winter crops planted. The reality is that many farmers haven’t received enough rain to plant winter crops which has left most of the state’s fertile cropping expanses barren.  

Dalby only registered 2mm in July with less than 5mm in Roma and Surat. Some farmers in the southern Darling Downs and areas north of Goondiwindi were lucky enough to strike some heavier isolated storms which has kept crops that have been established on storm rains looking surprisingly fresh, considering the season.Conditions are even worse in NSW with limited expected to be harvested in the northern half of the state. Farmers in some of the state’s blue ribbon cropping areas are saying it’s the first time they won’t plant a winter crop in 50 years.

The 2017/2018 drought is now shaping as one of the worst on record. Widespread drought conditions through the eastern half of Australian are now capturing broad media attention as the plight of the farmers worsens and the impacts gravitate into the broader economy. Grain prices continued to surge last week as traders move to cover in what they thought were high priced sales made in early winter. End users also stepped in to secure new crop grain supplies rather than risk prices moving even higher. New crop ASX APW wheat futures soared $20 higher to $370 a tonne, now up $45/t in the past two weeks. Traders’ bids for APW wheat for a harvest delivery into Port Kembla were as high as $385.

Northern grain markets followed the south higher. Stockfeed wheat for December and January delivery into the Darling Downs traded at $420. This is sharply higher than the prices being reflected a couple of weeks earlier and recognition that tight northern grain supplies are likely to worsen. Global grain markets are heating up as world production estimates slide on the back droughts in Europe, the Black Sea and Australia. European wheat futures have rallied by 7 per cent in the past four weeks.