In a previous life I spent some time as State Manager for the Australian Government owned Australian Wheat Board - which then had a legislated monopoly on the marketing rights for Australia’s export wheat crop. This arrangement was deregulated long ago and I returned to banking before that happened. Back then - and still now - I regularly download the monthly USDA World Food Outlook - the so called WASDE. In the light of a report in the FT outlining the dire situation emerging for food security in many countries right now as a result of the #ukrainerussianwar -the data from the most recent WASDE on 9th March is interesting . In a nutshell - the USDA estimates that in 2022 total traded wheat this year will be 203.1 million tonnes - assuming Russia and Ukraine can export their usual crops due from the spring planning season in a few weeks. USDA estimates that Australia will export 23.85 million tonnes of wheat this year - so 11.74%. This won’t fill the gap left by the absence of Ukraine and Russian grain - which usually supplies between 20 and 30% of globally traded wheat. The pressure will be on the US, Canada and Latin America to fill the gap. They haven’t had a good season so far due to drought across a lot of the Americas - so it’s a difficult time for world grain supply. It’s going to be a volatile food security environment over the next few months for many governments who are net grain importers. With wheat futures enabling some Australian wheat growers to lock in a price of A $ 500 tonne or more right now - according to Malcolm Bartholomaeus - there’s lots of head scratching and discussions with farm advisors and consultants about the plan for the coming Australian winter crop grain planting season which usually starts in late April with the arrival of the winter rains. This is an amazing price compared to recent history. The problem is - as reported by Liv Casben - cropping input costs have also risen - due to the #ukrainerussianwar some fertilisers are now 3 times the price of last year - and diesel is double the price So what to do if you are a farmer? It comes down to a hard nosed assessment of return on costs. Wayne Pluske has some good models to look at in this report from the Australian Farm Weekly. Some farmers I know will stick to their cost budget - and therefore reduce the size of their planting. Others will dramatically cut back on fertiliser application and hope the yield penalty won’t be too harsh. And some may well decide to sit out this year - especially if they don’t have a large farm debt to service. Who’d be a farmer? David L Thomas 22 March 2022 An earlier version was posted on LinkedIn on 21 March 2022:
0 Comments
Your comment will be posted after it is approved.
Leave a Reply. |
Occasional updates and papers from Chartwell Consulting Pty LtdCharwell Consulting has a wide range of interests and activities across the areas of health, food, energy, water and metal - and the supply chains and investment channels for these sectors. Sometimes we post information we would like to share. Archives
June 2023
Categories |