- Back-to-back above-average winter crops are underpinning optimistic sentiment in the broadacre cropping sector.
- Having started mid-September in Queensland, harvest continues its way down south with the harvest of the canola crop starting to pick up.
- High yields and commodity prices are driving forecast above-average grower income creating opportunities for businesses to invest in their operations and explore opportunities for expansion.
- Broadacre cropping businesses in the loan portfolio have been broadly positive about the winter cropping season.
Harvest is often one of the most important events on the calendar for broadacre cropping enterprises, and the winter crop harvest is predicted to be a whopper this year. ABARES has forecast a 54.8 million tonne crop (32% above the 10-year average).
After overcoming a mice plague earlier in the year and COVID-19 restrictions, sentiment is positive and harvest by all accounts is progressing well. Harvesters hit wheat crops in mid-September in Central Queensland, marking the start of Australia’s winter crop harvest. As harvest works its way down south, the cropping sector now stands in anticipation of the canola crop harvest in the southern states.
Well-timed rainfall and price signals incentivised a 25% year-on-year increase in canola plantings in 2021, according to ABARES. Currently, canola prices are amongst the highest the industry has seen by a significant margin. Breaking records, the price for canola has reached new heights to just over $1,000 per tonne in some places. The value of canola has risen primarily due to a reduced crop in Canada, the major global exporter of canola, due to drought.
On a sector-wise basis, good yields in most regions in Australia and strong grain and oilseed market dynamics mean opportunities for above-average grower income are very real. Back-to-back above-average cropping seasons will put growers in good stead to approach 2022 with the incentive to explore opportunities for investment in their current operations and expansion potential.
The Partners Fund and Agriculture Credit Fund has financed several cropping operations across Australia. The combination of high expected crop yields and strong commodity prices is driving the sentiment for many that this should be the best season in a decade. The increasing value of investments reduces risk to the funds. We continue to explore investment opportunities in this sector with new and existing borrowers.
