Frost Impact

By Laura Smith

23^rd September, 2024

Widespread frost events are dominating conversations in the last few weeks in the Riverina, with temperatures dropping down to -3 to -5 degrees in some areas. Unfortunately, this has resulted in significant yield reductions across the board, with very severe and widespread damage received. There is a significant portion of growers and agronomists are all in the same boat assessing the damages, and re estimating yield potentials. 

While we are still in the early days of being able to assess to actual losses on a tonnage basis, early reports are coming through anywhere from 20-90% losses in production. Canola crops have been largely susceptible to the frost events, with growers looking to wash out contracts or cut for hay. Wheat and barley have been affected in some way, with varying reports of yield losses across different areas, with more growers looking to cut for hay if they can do so. The devastating frost has come on the back of disappointing rainfall which has been scarce over the last five weeks with growers missing out on much needed rainfall crucial to finishing crops. Let’s hope that the forecast rain event this week brings some decent falls so that crops can finish as well as they possibly can. 

In global market news US Fed Reserve last week dropped interest rates as widely anticipated by 50 basis points, pointing pressure towards the RBA to follow suit. As a result, demand for AUD has increased seeing it track upwards up above 0.68 cents. That is well and good for those planning an overseas holiday but for our agricultural exports it is not welcome news as it is also reducing competitiveness of Aussie wheat in the global market. At current prices today Aussie wheat is around $266/mt FOB vs Russian FOB $220/mt USD. These current prices appear to be unsustainable in the long term with Russian wheat $20/mt cheaper than Aussie wheat into some of our top exporting homes of Asia and China.  It seems something in the market needs to give. It seems tensions in the Middle East and Ukraine are increasing each day; however, markets are remaining subdued. Events that would have moved markets some years ago don’t seem to have the same affect these days.