Winter crops to grow as wheat price growth slows
Tuesday, 6 August 2019
South Australia’s winter crops will see significant growth in 2019/20, with wheat, barley and canola production all expected to increase, according to the latest BankSA Rural Price Index.
The ABARES June Crop Report predicts wheat production to grow by 46 per cent, barley to increase by 37 per cent and canola to see a 12 per cent rise, while a fall in world grain prices will see South Australian grain price growth slow.
While grain prices surged in the past year on the back of a weaker Australian dollar, the index has decreased steadily since January and is expected to continue as a result of downward pressure from more bountiful winter yields.
BankSA Regional Executive Manager Peter Panas said the outlook for winter crops was particularly positive given the significant production falls of 2017-18.
“Less favourable weather conditions in South Australia contributed to a significant fall in crop production last winter, but the signs are looking good for a strong recovery performance from all our winter crops this year,” Mr Panas said.
“Despite grain prices easing in 2019, they’ve done so at much slower rates than other components across that time.
“The overall grains index is still sitting only just below its historical peak which occurred in 2008 when a surge in demand met drought-ravaged supply.”
Performance across the other major index categories within the broader South Australian agricultural industry varied, with most remaining stable – or in the case of horticulture products, marginally weaker.
A softer Australian dollar continued to help domestic producers by decreasing the relative cost of Australian exports for foreign buyers, particularly in Indonesia, China and Japan where the Australian dollar has depreciated against the rupiah, yuan and yen.
The recent drought has not had a significant immediate impact on the Rural Price Index, with livestock and livestock product prices remaining at the higher end of their historical spectrum.
Meanwhile, production in these areas only changed minimally in the last year and a half, moving marginally higher since the start of last year but edging down in 2019.
“Whether or not the effects of the drought flow through later this year and cause prices to increase more rapidly will depend on seasonal conditions, with a return to average conditions likely to result in cattle herd rebuilding and lower female slaughter,” Mr Panas said.
“Conversely, if conditions don’t improve it’s likely that higher than average female slaughter will continue resulting in a flow on effect to the Index.”
The Index also shows the gap between urban and rural South Australia narrowing as agriculture becomes involved in different sectors of the economy. New local research into the potential uses of agricultural waste in a variety of products from pharmaceuticals to cosmetics will likely close the gap even further.
The BankSA Rural Price Index has been tracking farm prices for South Australian farmers since 2000 and is a measure of prices received for grains, livestock and horticulture. It aggregates price movements across 17 products, which make up more than 80 per cent of the state’s farm output, and informs South Australian farmers and farm industries how local farm product prices are faring.