Australia enters the sowing period under dry conditions
Chris Nikolaou, 15 May 2025
Producers across the wheat belt of Australia are currently sowing their crops for the coming season. However, much of the country is suffering from dry conditions as a strong high-pressure system sits over much of the southern half of the country. Globally, weather conditions have improved in Russia and the United States. However, Europe is undergoing a dry spell. The USDA has updated their first version of the coming season supply and demand tables with corn coming out better than expected.
Dry start to the Australian campaign
The southeast of the country and much of the northern growing belt of WA have been under dry conditions since the start of 2025. The BOM is now categorising much of South Australia under serious drought conditions. These conditions have led to a big uptick in drought feeding for sheep in SA, VIC and parts of Southern NSW helping to drive barley prices higher. Also, the Grain Industry of Western Australia recently made a statement that new crop wheat plantings could be down by as much as 13% this year on account of poor conditions in the state’s north. This week’s WASDE estimated the new crop Australian wheat production at 31MMT which, at this stage, feels optimistic.
However, none of the longer-term weather models have called for a protracted period of dryness. The BOM’s long range forecast released May 8th called for a dry May with improvement from June forward. Let’s hope this eventuates for our colleagues in SA who are doing it tough presently.
Global weather update
Big northern hemisphere wheat producers. Russia and the United States, have experienced improved fortunes over May after both regions experienced severe dryness earlier in the year. It is now unlikely we will experience a production issue in North America. However, weather can still be a factor in Russia through July. In the meantime, France and Germany have turned over drier. This may impact Australian canola prices as the EU is a key buyer for canola seed. Further afield, both India and China have experienced drier conditions on their respective wheat crops. There have been rumors over the last weeks that China could be coming back into the market for wheat re-stocking. This would be logical as their crop is currently in the grain fill stage. Also, the first port of call for Chinese wheat restocking would likely be Australia so would be a good outcome for local producers.
Global grain prices looking for their next driver
The USDA released their May 2025 World Agricultural Supply and Demand update this week. With improved fortunes for the Kansas grower, US wheat supplies are set to increase year over year. Futures have been in the process of responding to this domestic outlook for much of May. So, what drives markets next? According to the USDA, corn and soybean supplies for the coming season are forecast below pre-report expectations. With a tighter than expected balance sheet, there is no room to absorb the losses from a weather issue this US summer. Also, the global carry out for corn was estimated some 20MMT lower than the current year. Any crop issues in corn would lead to a rally in global wheat prices. It is worth noting that with the current close pricing between wheat and corn – there will be a large global increase in wheat feeding. Although it may take three to six months to be felt in the market, any demand is good demand! Overall, May has been kind to some northern hemisphere wheat producers but China and India are likely to experience production decreases. Also, the EU was expected to have a banner production which is likely now shrinking as well.
While we all hope for an improvement in Australian weather, the global market continues to be volatile and, in some instances, decreasing. With many growers so focused on their farming operation it is important to have someone in the market for you every day. The Advantage Grain sales programs provides this so that you can focus on your farming while we focus on the grain marketing.
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