USDA tips ‘brighter’ future for Aussie barley, as farmers pull back programs due to ‘cloud of uncertainty’

Australian farmers are expected to pull back their seeding programs as they grapple with how best to plan their winter crop against a backdrop of high grain and input prices, and the war in Ukraine. The United States Department of Agriculture’s (USDA) April reports, the World Agricultural Supply and Demand Estimates and its accompanying Grain: World Markets and Trade report contained several forecasts for the Australian grains industry as farmers launched into seeding. This included a “brighter future” for barley due to a global deficit in feed grains, an increase in feed wheat heading into South Korea to replace wheat from Ukraine, and a near-record canola crop. The USDA’s forecasts come as war rages in Ukraine, sending grain prices and the cost of critical farm inputs soaring. As of April 5, 11 countries had implemented export bans, including Russia, Belarus, Hungary, Serbia, Turkey, North Macedonia, and Egypt, for products including wheat, barley, rye, corn, oilseeds, lentils, fava beans and pasta. The report noted the near-complete cessation of Ukraine grain exports — due to the Russian invasion — had created a “sudden shift of demand” to other suppliers and a “remarkable increase” in prices. It said that while Ukrainian quotes were no longer available — as the company scrambled to begin shipping via rail instead of sea — Russian wheat quotes and exports had resumed. The USDA has cut its forecast for Ukraine’s wheat exports by 1Mt, to 19Mt, while Russian farmers looked set to capitalise with a predicted 1Mt rise in Russian wheat exports, to 33Mt. The report revealed that while global wheat prices settled in the past month, Australian quotes had bucked the trend and risen $36/t on strong international demand — particularly from Africa and South East Asia. On April 6, International Daily FOB (Free on Board) bids for wheat sat at $481 for the US, $452 for Canada, $431 for Australia, $415 for the European Union, $396 for Russia, and $396 for Argentina. With seeding under way across Australia, the report noted that good soil moisture and high prices had farmers’ feeling somewhat buoyant but “escalating” fertiliser, chemical and diesel costs were a major concern. “It is forecast that there will be some reduction in planted area and growers will be more frugal with inputs — resulting in above-average yields lower than last year,” the report said. Wheat plantings up For wheat, Australian farmers were expected to plant 13 million hectares this year — up on the 12.9m hectares planted last year and the 9.86 million hectares in 2020. Wheat yields were predicted to average 2.79t/ha, to equal last year’s 36.30Mt total production. The forecast for the global wheat trade was down 3Mt from the USDA’s March estimate, to 200Mt — with increased exports from Russia, Brazil and Argentina unable to offset lower shipments from the EU, Ukraine, the US and Kazakhstan. Global wheat stocks are projected at a five-year low, down to 278Mt, pushing grain prices higher in the near term. Barley down Australian barley hectares are expected to decrease slightly, to 4.35m hectares — down from last year’s 4.40m hectares — with a predicted yield of 3.15 tonnes per hectare, to total 13.70Mt. The nation is expected to produce 13.7Mt of barley, smashing the previous 13.5Mt record set in 2016-17. A total 8Mt of that would be exported. “Australian barley is currently the least expensive among major exporters,” the report said, revealing farmers from Down Under had experienced the “least dramatic” barley price increase of any international market this year. China’s anti-dumping tariffs on Australian barley — imposed in June 2020 — decimated the long-standing relationship and effectively ended the trade overnight. The report revealed a strengthened barley trade with Saudi Arabia grew to 3.3Mt last year, up from the 66,000t in each of the two years prior, while trade to the Philippines, Thailand and Vietnam also increased. There was more proof grain exporters were finding new markets, which accounted for nine per cent of barley exports in 2020-21, including Mexico, Iran, Oman, Peru, Iraq, Ecuador, India, Fiji and Nepal. The report also revealed China had sourced most of its grain from Ukraine (33 per cent), Canada (30 per cent) and France (29 per cent) since ditching its imports from Australia. Canola near-record Australian canola production is expected to remain high this year, with farmers on track to produce their second-biggest crop (4.6Mt) after harvesting their biggest crop (4.7Mt) last year. A total 3.6Mt of canola would be exported in 2022-23. Canola yields are expected to decline after the record high last year — in part due to the high price and tight supply of fertilisers, as well as high diesel prices. The area of land put to canola is set to decline 10 per cent to 2.7m hectares, down from last year’s record plantings of 3.05m hectares. But this year’s planting figure is still 110,000ha above the previous 10-year average of 2.59m hectares. Canola yields are expected to drop back to 1.74t/ha this year, down from last year’s record 2.08t/ha, but still well above the 10 year average of 1.36t — with a national harvest of 6.35Mt. The report noted soil moisture conditions in WA were not as favourable compared to eastern Australia, and WA on average accounts for nearly half of Australia’s total production. But WA grain farmers were feeling somewhat encouraged by the forecast of an average chance of exceeding median rainfall during the April to June period, during planting and early growth stages. Canola prices have risen about 60 per cent since January last year, and while prices started to decline in mid-October, they rallied again in mid-February after Russia’s invasion of Ukraine. Futures prices for late 2022 are strong, relative to historical prices. Despite the positive factors, canola plantings are still expected to decline with the crop requiring high nitrogen inputs relative to other major winter grains, wheat and barley. During the past five years, WA has produced nearly half of the national canola crop but accounted for two-thirds of exports — with 97 per cent of the WA crop exported each year and 77 per cent of that destined for the EU.