Owing to the poor season, coarse grain production fell from already low levels to the smallest crop on record in 2019-20.ac The impact on production was mostly felt in the summer crop coarse grains, with winter crop coarse grains benefitting from marginal improvement in rainfall in some key regions and seasonal timing. As a result, the combined coarse grain output was estimated at $127 million, down 35% year on year.
Coarse grain prices tapered off from the previous season highs, although remained at historically very high levels, led by maize as livestock producers continued to look for the best value on a nutritional basis. Towards the end of the 2019-20 financial year prices began to be weighed down by the prospects of a large looming harvest on the East Coast. Global coarse grain production was also at elevated levels in 2019-20 however, demand was expected to be stable as the African Swine Fever impacts peaked and livestock herd numbers were expected to be maintained.
The Tamworth Agricultural Institute is hosting three PhD scholarship candidates as part of the Grains Agronomy Pathology Partnership’s (GAPP) capacity building and skills development program in 2020. The GAPP is a long-term partnership between DPI and the Grains Research Development Corporation (GRDC), focused on building research capacity in projects of importance to northern region growers. DPI proudly invests in young researchers to develop skills to support innovative research which can drive transformational changes to the industry.
Combined production across coarse grains fell to the lowest level in recent history in 2019-20, as the drought once again intensified. When looking at specific grains, triticale and oat production increased by 75% and 35% year on year respectively, albeit this was off a very low base. This was offset by summer crop coarse grains of sorghum and maize, where production fell by 84% and 39% year on year respectively. Winter coarse grain (triticale and oats) production was somewhat supported by the relatively improved conditions in the southern region compared to northern NSW where sorghum is predominantly grown 10.
The ongoing decline in sorghum production was attributed to seasonal conditions rather than a fundamental shift in crop rotations. Similar, but less pronounced trends were evident in other summer crops which typically utilize irrigation to mitigate production volatility. As sorghum is typically less reliant on irrigation for a portion of its production, producers were more reliant on subsoil moisture which was in severe deficit over the summer months.
As coarse grain supply continued to shrink in NSW, prices have progressively increased, accelerating since 2017-18 as feed grains came into short supply. Maize, oats and sorghum hovered near record prices in excess of $400/tonne at times through 2019-20, eclipsed only by prices the year prior 72. Low supplies resulted in limited exportable surplus, particularly for sorghum and demand for feed grain in the livestock sector maintained upward support to prices.
The strongest price rises since the beginning of the drought in 2017-18, were for maize and oats which increased by approximately 47% and 58% over this period respectively 9. Key drivers behind this were that prices came off lower pre drought levels, strong demand from both the milling and feed sector for oats, and the livestock sector seeking the highest value energy content feed supplies.
Strong demand from the feedlot sector was demonstrated with the number of cattle on feed reaching record levels despite grain prices rising sharply and also indicating that cattle price was a stronger driver of feedlot holdings 115,10.
Prices ended 2019-20 with a modest price drop to most grain prices, as market participants began factoring in a large crop in 2020-21.
NSW coarse grain exports fell 49% year on year to $5.2 million. Exports are typically dominated by sorghum exports to China, however the past year saw China fall from the largest to the fifth largest export market, owing to a limited exportable surplus of sorghum. Year on year exports of the other coarse grains remained relatively stable, albeit in very small quantities 94.
While coarse grain imports into China increased by 107% to 11.1 million tonnes, they were well off-peak levels seen in 2014-15, owing to African Swine Fever which has decimated the countries pork herd and reduced feed grain import requirementsac. Maize and barley were the largest Chinese coarse grain imports however, sorghum imports recorded the largest expansion with the United States the major global supplier 138.
Global coarse grain production (including barley) was estimated to have increased marginally to 1.41 billion tonnes, second only to 2016-17 when production hit 1.42 billion tonnes 138. This was driven by very high levels of maize production in North America and record barley production in the European Union 8.
Demand for coarse grains was expected to have increased in line with, and slightly exceed production, meaning global stocks fell slightly in 2019-20 138. The majority of coarse grain production was used for livestock feed purposes, and while COVID-19 impacted demand for meat products, livestock herds are expected to be maintained in anticipation of recovery. In addition, the African Swine Fever outbreak in China is expected to have reached its peak, meaning feed grain demand from China is likely to now stabilize in 2020-21 8.
Beneficial rainfall across the majority of the NSW cropping belt led to increased winter crop plantings, with 530 thousand tonnes and a 53% increase on the 5-year moving average production of oats and triticale forecast 10. Increased summer coarse grain plantings are also expected to be beneficial in 2020-21 with significantly improved soil moisture and some modest increases in irrigation allocations in the Southern Murray Darling Basin. Sorghum and maize production are forecast to reach 657 thousand tonnes in 2020-21, a 421% increase year on year 10.
Prices are likely to continue to face pressure by the prospect of increased grain supply generally. Demand from the livestock sector for grain has eased, with most producers now in the situation of having too much pasture for their current stocking rates in 2020-21.
Looking further afield, global coarse grain (including barley) production is expected to rise 3.8% to a record 1.46 billion tonnes in 2020-21 138. This increase is largely driven by a large jump in maize production in the United States and modest increase in Brazil, Mexico and Ukraine. The impact on the Australian market is likely to be on price, as domestic coarse grains prices adjust back to export parity. Sorghum is likely to be the most exposed to the international grain complex, as competition to trade grain into the Chinese market increases.
The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) will help support the expansion of feed grain trade into Indonesia. However, with the agreement allowing for 500 thousand tonnes of duty free exports to Indonesia initially, realistically it represents only a small proportion of the 6.7 million tonnes of coarse grain exports (including barley) projected for Australia in 2020-21 8.