La Niña has been a challenge for the harvest in parts of eastern Australia, but the summer rainfall count should keep soil moisture levels high enough for a good start to the 2022-23 season, according to the February NAB Rural Commodities Wrap.
NAB agribusiness economist Phin Ziebell said rising farm input prices will continue to present a challenge this year, although strong commodity prices have offset the impact for many. producers to date.
“Rising oil and gas prices continue to affect agricultural inputs, especially fertilizers,” Ziebell said.
“While DAP (diammonium phosphate) and urea prices denominated in US dollars (USD) fell slightly in January, they have increased by 273% and 311% respectively since the start of the pandemic in January 2020. .
“This is clearly a global challenge and could have wider implications for crop production and profitability in 2022.”
Mr. Ziebell said that when it comes to commodity prices, the outlook for wheat and cotton was particularly positive.
“High global fertilizer prices, geopolitical uncertainty in Ukraine and uneven global growing conditions have kept wheat high – a trend that is expected to continue into the first half of 2022.
“Cotton prices continue to rise, with the Cotlook-denominated Australian dollar (AUD) approaching $1,000/bale, the best result in 11 years. Seasonal conditions are excellent, reflecting replenished storages and good dryland performance.
“Canola has now pulled back significantly from its previous rally, which saw prices close to the $1,000/tonne range. It seems unlikely at this point that we will see a similar spike in 2022.
“Barley prices remain quite low compared to other winter crops, reflecting the hangover from China’s trade ban and ample domestic supply.”
Mr. Ziebell said that while the Eastern Young Cattle Indicator remained at near record highs above 1100¢/kg, due to strong seasonal conditions and herd rebuilding, prices would not were not viable in the long term.
“Demand from processors has been strong, although domestic prices are now so far removed from global fundamentals that export viability could become a growing issue.
“The wet summer prolonged the peak, but we see the EYCI breaking the 1000¢/kg level on its way down towards the middle of the year, with further declines in the second half of 2022.
“Lamb has now softened after spring, hovering around 850¢/kg since November, but prices around those levels still represent excellent returns for producers.
“Wool prices have been mixed to slightly higher recently, with the AWEX Eastern Market Indicator at 1,407¢/kg last week.
“All three global dairy auctions this year have been positive, the last two in particular.
“Our export price index is now well above any time in the last decade, which is very good news for producers.”