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Grain Comment, 10 October

Timely rainfall in Victoria and New South Wales will be bringing growers relief, following Australia’s driest September on record.

Yield forecasts, revised downwards during the dry spring, will be much improved in parts.

Sheep prices have risen sharply as a result of this rainfall. Mutton rose 65 cents, its largest ever weekly increase. Producers will hope this represents a floor in the market.

The mainland harvest is ramping up, with Viterra and CBH reporting first deliveries in SA and WA, respectively.

BOM researchers have proposed changing the ENSO thresholds used in declaring an El Nino or La Nina event. BOM’s current ENSO system requires both oceanic and atmospheric components to be satisfied. They argue rising global temperatures mean the current oceanic component overestimates El Nino and underestimates La Nina events. Despite this, BOM was the last major climate reporter to declare El Nino, months after their American, European, and Japanese counterparts.

Israel has formally declared war on Hamas. As with the Russia-Ukraine war, geopolitical instability can amplify food security concerns and lead to trade restrictions, pushing prices higher. Brent crude oil rose 6% in response to the conflict. Should neighbouring oil-producing countries like Iran and Saudi Arabia become involved, expect oil prices to rise further. Agricultural futures have a strong positive correlation with energy prices, especially crude oil.

Local prices seem well-supported at the moment.


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