The 2021 grain harvest season saw Australia’s wheat production in particular achieve record highs, with 33.7 million metric tonnes harvested according to a report from leading Australian Crop Forecasters. Whilst this is an incredible result for the season, the key question on the tip of everyone associated with the agricultural industry is asking is, will this be the case for the 2022 season?
With high fuel and in particular high diesel prices a prominent discussion topic not only in Australia but across the globe, in addition to consistent and ever-increasing tensions between Ukraine and Russia, grain prices in 2022 could be a little hit and miss in 2022. With many factors having a significant influence on an already volatile market, it is of course impossible to accurately predict the future, however the forecast looks promising.
After the record highs of 2021-2022, these results will certainly be hard to top in the 2022-2023 harvest seasons and grain prices are predicted to ease despite both global production and consumption remaining high.
We take a look at some of the factors that are set to influence forecasted grain prices in Australia for 2022 and how you can keep up to date with Australia’s grain prices using Grainwise’s daily live price graph.
Reductions in plated area
Whilst grain prices themselves are predicted to remain high across the 2022-23 seasons, the amount of grain produced and harvested in Australia, is not set to remain as high as in 2021.
According to ABARES, Australian grain producers are not expected to plant as great of an area for the 2022 harvest. The area planted in the 2021-22 season consisted of approximately 13.039 million hectares, with estimates for the 2022 season suggesting that farmers will only plant 12.4 million hectares, a 5% reduction.
Naturally, with a reduced land size, comes a reduction in crop available to harvest. Whilst this could impact upon the supply and demand principles that affect grain prices, with reduced demand leading to higher grain prices, the fact that there is such a minimal reduction is likely not to impact upon this too significantly.
High Output costs
The cost of diesel and Urea are also predicted to have an impact upon the grain prices expected for 2022, again having an impact in terms of supply and demand.
Urea prices are forecast to be high for the 2022 planting season, which subsequently impacts upon the types of grain crops farmers will select to plant for the 2022 season, with some farmers planting alternate crops where the use of Urea is not essential to optimal crop fertilisation.
High diesel costs will also potentially have an impact upon grain prices, from a transport and shipping perspective. As a sizeable portion of Australian grain is exported to countries such as Asia and the Middle East by sea, shipping costs are rapidly becoming more expensive that the actual cost of goods, which has implications in terms of demand.
Inferior quality soils
After multiple years of high quality and high yielding grain production in Australia particularly of cereal grain crops, ABRES suggests that grain producers will be increasingly sceptical regarding soil quality, with soils predicted to be more reliant this season on nutrient input. Again, this will impact upon the types of crops planted, and can be a driving factor in terms of price.
Grain prices in 2022 are also going to impacted by the labour shortages that are sweeping across the nation in all industries, with a reduction is skilled workers available to assist with both planting and harvesting of crops.
Exporting of crops is also heavily impacted by the labour shortage. With so much of Australia’s grain set for the export market. The challenge of getting the grain to these markets is only increased with the critical labour shortages in both Australian and foreign ports, as well as the Russian shut down of the Black Sea, which limits access to regions such as Turkey, Africa, and the Middle East.
Ultimately grain prices and grain production are forecast to remain high for the 2022 season. Despite the challenges of the Russian and Ukraine situation in terms of shipping and increase output costs, these tensions are also increasing demand for grain on a global scale.
The value of Australian grains, across most crop variations is not expected to reach the record highs of the 2021 season but is predicted to remain close and somewhat comparable to these levels, with prices set to ease slightly.
Grainwise – Live Price Guide
The Grainwise team are proud to prove a live daily grain price graph, a valuable tool used in the grain marketing process, providing knowledge and analytical data to assist grain growers to make sound grain marketing decisions, successfully creating solid grain marketing plans for their crops.
With grain marketing and preparing clear and concise grain marketing strategies our forte, if you are looking for some assistance with your grain marketing plans or strategies, give the team at Grainwise a call today, and enlist the help of industry experts.