Photo Credit Ben McQueen
The weather is now becoming the major driver of global agricultural prices.
The US corn and soybean crops are now mostly planted, but the weather so far has been very hot and dry. Grain merchants are watching each weather update intently waiting for a change in the ridging pattern bringing hot and dry conditions to most of the corn belt. The onset of the El Nino should bring above average precipitation for the US corn and soybean areas, but the risk is that the change comes too late.
On the other side of the world, the onset of the El Nino has already shown up, with May rainfall across the east coast of Australia being one of the driest, while there remains plenty of subsoil moisture to support the early development of crops. Rainfall is going to be a very important for determining prices come August/September.
Locally, the dry Autumn has been beneficial to most cropping areas, with farmers able to get crops in on time. The rainfall so far has been adequate for crop development.
Tasmanian grain prices remain stable and are reflecting the better quality produced this year, they are trading at a slight premium to the mainland equivalent.
Demand from the dairy sector remains robust. Given the dry start, we are expecting to see an increase in demand from sheep and cattle producers as they look to maintain stock condition through winter.