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MLA Meat & Livestock Australia : Second largest harvest on record sees grain prices fall

12/03/2020 | 12:03am EST
Second largest harvest on record sees grain prices fall

03 December 2020

Key points:

  • Australia's 2020-21 winter harvest to be the second biggest on record
  • Harvest to total 51.5 million tonnes (Record was 56.7 m million tonnes in 2016-17)
  • East coast feed grain prices down between 7.7% and 25.3% on year-ago prices

This week Australian Bureau of Agricultural and Resource Economics (ABARES) revised its estimate for the current 2020-21 winter harvest up 7.4% from its September forecast, with their new estimate that the Australian 2020-21 harvest will total 51.5 million tonnes, the second biggest on record.

The 2020-21 harvest follows a historically low harvest in 2019-20 where drought meant production dipped to 29.3 million tonnes nationally, representing a 76% jump in production year-on-year.

The record harvest this year has been underpinned by favourable growing conditions across most of the eastern states' grain growing regions. In contrast, WA has experienced slightly below average grain growing conditions this year. As a result, this year is the first time since 2010-11 that NSW's harvest production has exceeded WA's.

Eastern Australia

Given the size of the harvest there is excess supply of grain on the domestic market. The improved seasonal condition has also increased pasture growth, reducing the number of livestock relying on supplementary feed. These market dynamics have caused feed grain prices to ease from year-ago levels.

For the September quarter, feed wheat delivered to Sydney was A$371/tonne (A$/t), a 7.7% reduction on year-ago prices. Prices for domestic feed barley, sorghum and oats delivered to Sydney all fell on year-ago prices, easing 25.3%, 13% and 22.9%, respectively. The fall in feed barley can also be partly attributed to lower barley exports stemming from the imposition of high tariffs on Australian barley by China.

Lower feed grain prices in 2020-21 are in stark contrast to 2019-20 when feed prices were high on the back of limited supply.

WA

The market dynamics in play in WA are different to those in eastern Australia. This year's harvest in WA is projected to total 14.4 million tonnes, 500,000 tonnes less the 10-year average of 14.9 million tonnes, therefore WA is experiencing reduced supply of feed grain. At the same time there is increased demand for feed grain in WA due to seasonal conditions.

The above factors are putting upwards pressures on WA feed prices, especially lupins, which are a common stockfeed in WA.

Since the September quarter last year prices for lupins delivered to Kwinana have increased 25.5% to A$497/t, increasing feed input costs for producers.

Feedlots

The feedlot sector has benefited from lower grain prices on the east coast, with lower grain prices helping offset high feeder prices.

© Meat & Livestock Australia Limited, 2020

To build your own custom report with MLA's market information tool click here.
To view the specification of the indicators reported by MLA's National Livestock Reporting Service click here.

Disclaimer

MLA - Meat & Livestock Australia Limited published this content on 03 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 December 2020 05:02:08 UTC


© Publicnow 2020
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