Gripped by drought, Australian grains prices are swinging wildly as farmers delay planting winter crops while they wait for rain. The canola oilseeds crop, which is planted first, is already being downgraded, and although wheat still has some time to be planted, prospects of a bumper crop are fading fast.
"The trend of the market is like a yo-yo," grains trader Andrew Walker of Fox Commodities said on Friday. "A weather forecast gets updated and says its going to rain and buyers retreat, and then the Bureau of Meteorology changes its mind and buyers come back." Prices fell on Friday. On Thursday, they rose in trade but fell in the afternoon.
Overall, milling wheat futures prices on the Australian Stock Exchange have jumped by over 6 percent in recent weeks, while feed wheat futures are up by almost 14 percent. January 2007 milling wheat futures settled at A$215.30 ($159.5) a tonne on Friday, down from A$231 a tonne last week because of forecasts of rain.
Canola futures prices have gained around 15 percent since the beginning of May, with the January 2007 contract settling at A$423.00 a tonne on Friday. Cash prices for summer feed-grain sorghum were above export values, but below import values at A$187 a tonne on Friday and down from the mid-A$190s last week.
"We're in no-man's land to find a floor or a ceiling," Walker said. Rain deluged Sydney on Australia's East Coast for much of this week, but did not reach wheat-growing areas a couple of hundred kilometres inland.
It is forecast to reach eastern grains growing areas this weekend and farmers are praying it do. But even if it does rain, Walker believes many farmers have abandoned a winter wheat or barley crop this year to skip a season and plant a summer grain sorghum crop instead.
"For southern Queensland growers to plant (winter crops) they'd want to get a bucket-load of rain," Walker said. Leading rural services group programmer has a similar view. "The late season in large wheat-growing states and cool weather means it won't be a bumper crop," programmer said in its latest newsletter on Friday.
Other farmers are betting on rain by planting crops into the dry ground. One such is Chris Groves of Cowr006 will be similar to 2005 for many growers," programmer said. Last year rain did not arrive until mid-June, delaying planting of the wheat crop by many farmers until July.
This did not stop Australia eventually producing its second-biggest wheat harvest on record, at 24.5 million tonnes, but only after crop prospects were pushed to the brink. The canola crop was constrained by the dry weather to 1.4 million tonnes, only slightly less than the drought-affected year before, but well down on 2 million tonnes or more in other years.
"East Coast old- and new-crop cash markets are extremely jittery. Mid-week you could not get a bid in the Melbourne-delivered market as buyers pulled out in anticipation of rain," programmer said. "There are some very big bets being placed by growers, traders and end-users on the rain forecast in eastern Australia.
"Jitters will continue until crops poke out of the ground."
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