Summary

Estimates of total Australian winter crop production for 2018/19 are 30 ±2 million tonnes at mid-October, a decrease of around
30 per cent compared to the previous season and the smallest crop in a decade.
In the eastern states dry conditions have affected winter crops. Rainfall has been very much below average in 2018, with September 2018
being the driest September on record for Australia. Consecutive dry years have led to root zone soil moisture in 2018 falling to some of the
lowest levels on record in major east coast cropping regions, with obvious consequences for crop performance. In the space of two seasons,
the east coast has gone from producing its largest crop on record to its smallest in 10 years.

Growing season rainfall, 2017 Growing season rainfall, 2018

Rainfall Decile Rainfall Decile

Ranges Ranges

Highest Highest
on record on record

10 Very much above 10 Very much above

average average
8-9 Above average 8-9 Above average

4-7 Average 4-7 Average

2-3 Below average 2-3 Below average

Very much Very much

1 1
below average below average
lowest on lowest on
record record

Source: Bureau of Meteorology, 2018 Source: Bureau of Meteorology, 2018

Root zone soil moisture, 2018 Rainfall outlook, November to January 2018

Root zone
soil moisture
80

75
Highest 1%
Very much above 70
Chance of exceeding median rainfall (%)

average
65
Above average
60

Average 55

Below average 50

Very much 45
below average
40
Lowest 1%
35

30

25

20

Source: Bureau of Meteorology, 2018 Source: Bureau of Meteorology, 2018

2
 The outlook for the remainder of 2018 is for drier and warmer
conditions to persist, particularly for parts of eastern and southern
Australia. Early October rainfall in southern Queensland and New
South Wales has raised hopes for a sorghum crop this summer,
however further rainfall is needed to give growers confidence to
plant. Looking further ahead, growers around Australia will be hoping
for late summer rain to restore soil moisture and confidence for the
2019/20 season.
Nationally, less area was sown to crops in the 2018/19 season,
especially wheat (-13 per cent), canola (-27 per cent) and chickpeas
5 Australian wheat barley production surplus/deficit
4
1
million tonnes
-1
-2
-3
-4
-5
Queensland New South Wales Victoria
2017/18
Winter crop production will be lower year-on-year in Queensland
(-61 per cent), New South Wales (-55 per cent) Victoria (-23
per cent) and South Australia (-18 per cent), while increasing in
Western Australia (+11 per cent). At the time of writing, there is very
little scope for upside in production in winter crops this late in the
season. There is still potential for downside risk as frost, rain, wind
and storms could all impact final crop development and harvest.
In Queensland there are some pockets around the Darling Downs
that may achieve an average yield having been among the fortunate
few to catch some timely storm rainfall. For the most part, the winter
cropping season is a failure. For these growers, decent rain within
the next month is required to restore soil moisture and confidence to
a point that they invest in a summer crop.
New South Wales has had a very poor season. A fortunate few
caught isolated rainfall from storms, but on the whole, it has been
extremely dry. Early October rain has brought short term relief,
particularly around Dubbo and Orange, however rainfall at this stage
(-63 per cent). As the season has progressed, production estimates
have been cut and cut again as dry and drought conditions have
affected expected yields and caused some growers to abandon
crops or cut crops for hay, especially in the eastern states. On the
other hand, growers in Western Australia have been fortunate with
the timing of rain this season and expect state crop production to
be at or above average. Despite the dry conditions, Australia will
produce enough grain this year and combined with stocks will satisfy
domestic demand. However, there is a marked difference between
where the crop is produced (Western Australia) and where it is
needed (east coast).
East Coast South Australia Western Australia National
2018/19 Data: Australian Crop Forecasters
is too late to make a difference to winter crop production and some
crops will be cut for hay.
In Victoria, crops in the Mallee and northern Wimmera are generally
in poor condition and further rainfall will make little difference to
the performance of these crops. Frost has also caused some crop
damage in parts of the Wimmera. With reports of a lot of crop being
cut for hay, rainfall from this point will impact hay quality. That said, at
the time of writing there are pockets of good crops and these would
certainly benefit from further rainfall especially to boost grain quality.
South of Horsham, crops are in better condition and rainfall would
be a welcome boost.
In South Australia crops on the Eyre Peninsula south of Cummins,
as well as much of the Yorke Peninsula, are in good condition but
are running out of moisture so rain is needed. Similarly, crops in the
Upper South East and around Naracoorte have plenty of potential
if they receive further rain. Elsewhere in South Australia crops are
fairly poor.
3
Despite a drier than normal season in Western Australia, timely rainfall has set up crops that will yield close to average for most cropping
regions. The widely publicised frost events in mid-September were very damaging to some at the local level, however the impact on Western
Australian production potential does not appear to have been as widespread as was thought at the time. To maintain yield potential in
Western Australia, more rain to finish the crop would be ideal, and then transitioning to drier weather for an uninterrupted harvest.

Australian winter crop production falls to the lowest level in a decade

60

50

40
million tonnes

30

20

10

0
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 F

Western Australia New South Wales Victoria Queensland South Australia Data: Australian Crop Forecasters, ABARES

The impact of below average production this season has been the
overwhelming driver behind the strong growth in domestic crop
prices so far in 2018. Over the coming month, finishing conditions
will be a key determinant of just how much grain makes it in the
bin and therefore the direction prices take from here. Without a
significant turn in seasonal conditions, an average or better summer
sorghum crop, pasture rejuvenation, and significant easing of
domestic demand for stock feed, it is difficult to see a reason for
price pressure to ease ahead of the 2019/20 crop.

Wheat price
500
AUD/tonne APW1 del. Port Adelaide

450
400
350
300
250
200
150
100
50
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Spot APW1 Decile 2 Decile 8 Data: Profarmer Australia

4
 Wheat

Australian wheat production for the 2018/19 season is expected to Overseas, global wheat production is expected to be three per cent
be the lowest for 11 years. Estimates of national production range lower in 2018/19 compared to the previous season. This will be
from 16 to 19 million tonnes, a decrease of 25 per cent compared to the first year in five that global wheat production will not increase
the previous season. and moreover, not increase to a new record high. Even so, at an
estimated 730 million tonnes produced in 2018/19, global wheat
The drop in production is due in part to year-on-year reductions in
production is still historically high and three percent above the
the area planted to wheat, and to lower yields due to ongoing dry and
10 year average. Smaller wheat crops in the European Union, Russia,
drought conditions in the eastern states. Dry conditions and a failed
Ukraine and Australia are driving global wheat production lower.
autumn break saw partial or entire planting intentions abandoned
Chinese production is expected to be unchanged year-on-year while
across parts of Queensland and New South Wales, while a late
a small increase in wheat production is expected in North America
break saw this trend continue to a lesser extent in Victoria and South
(USDA, 2018).
Australia. Dry conditions across large swathes of Queensland and
New South Wales, Northern Victoria and parts of South Australia have
reduced national average yield expectations to less than 1.5 tonnes
per hectare.
In Queensland and New South Wales there are some pockets that
may achieve an average yield having been among the fortunate few
to catch some timely storm rainfall during the growing season, for
example around the Darling Downs. However, for the most part winter
crop production will be very poor due to the combined impact of
abandoned planting programs, failed crops and some cutting of crops
for hay. For growers in that situation, decent rain during October and
November is required to restore soil moisture and confidence to a
point that they invest in a summer crop.
Early October rain is largely too late to change the fortunes of crops,
although in southern regions it may have helped to finish some crops.

Wheat production estimates 2018/19

QLD NSW VIC SA WA National

MMT 0.3-0.5 1.6-2.5 2.1-2.9 2.5-3.6 9.4-9.6 16-19
% change (-68%/-23%) (-69%/-44%) (-39%/-23%) (-39%/-10%) (-24%/-21%) (-25%/-10%)
Data: Australian Crop Forecasters, ABARES, USDA, PIRSA

Global wheat supply to drop in 2018/19 for the first time in 5 years
800 300
million tonnes ending stocks

250
750
million tonnes produced

200
700
150
650
100

600 50

550 0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

China wheat ending stocks (RHS) World wheat ending stocks (RHS) World wheat production (LHS) Data: Australian Crop Forecasters

5
Globally, there has been no shortage of wheat in recent years. Global market. Excluding China’s stocks, world wheat ending stocks are
wheat ending stocks had increased each year for the past five years expected to be the lowest in five years, dropping to 125 million tonnes.
to a high of 274 million tonnes in 2017/18. That trend will also be
Global wheat consumption is trending higher at a rate of 1.5 per cent
checked this season as wheat ending stocks are expected to drop by
per year, mirroring population growth. Global consumption is expected
five per cent to 261 million tonnes. However, ending stocks should be
to reach 743 million tonnes in 2018/19, eclipsing wheat production in
considered tighter still as China holds approximately half of the world’s
the same year for the first time in six years.
wheat stocks, which are considered largely unavailable to the global

60 Global wheat production/consumption balance

50

40

30
million tonnes

20

10
0
-10
-20
-30
-40

2018/19
2014/15

2015/16

2016/17

2017/18
2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14
2001/02

Data USDA

Total domestic use is expected to be approximately 7.6 million tonnes
in 2018/19, leaving a maximum of 10 million tonnes of wheat for
export, which will be a 10 year low in volume terms.
High domestic prices and an east coast supply deficiency have raised
the prospect of importing wheat this season. While there is anecdotal
evidence that some industry participants have begun discussions with
AQIS about import permits, the biosecurity requirements to import
wheat will be largely prohibitive. Therefore, Western Australia and
South Australia remain the most likely, and reliable, supplier of wheat
to the east coast of Australia this season.
Australian wheat prices have been increasing strongly since April
2018 when it became apparent that it was likely that production would
be below average in 2018/19. At the time of writing wheat prices had
risen by 85 per cent from the beginning of the year to over 430 AUD/
tonne (APW1 delivered Port Adelaide), putting the current market in
the 10th decile.

Australian wheat prices

600

500

400
AUD/tonne

300

200

100

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct

Kwinanna Port Adelaide Geelong Port Kembla Newcastle Brisbane Dec 18 CBOT Wheat Data: Profarmer

6
 The domestic market is currently dominating local price trends. The
small element of price support from international markets over the
past 12 months has come in equal measure from a small increase in
CBOT wheat and from a weakening Australian dollar, which has seen
offshore values firm in Australian dollar terms.

Wheat - components of price movement

450 September 2017 to September 2018
400
350
300
$ / tonne

250
200
150
100
50

0
Sep’ 17 CBOT FX Domestic Sep’ 18
APW @ APW @
Pt. Adel Pt. Adel

Data: Profarmer, Barchart, Reserve Bank of Australia

Our expectations for domestic wheat prices based on an
autoregressive model*, in this case illustrated by the price for APW1
delivered to Port Adelaide, are for the wheat price to drift toward the
upper boundary of the forecast range** and very likely break above
it. The rationale behind this view is that at this stage of the season
further downside production risk is much greater than the potential for
upside in Australia, the Australian Dollar appears to be in a weakening
trend, and international wheat prices may be on the upswing in
most major exporting countries driven by consumption closing in on
production and lower ending stocks. In short, it is unlikely that we will
see a significant softening trend until the market gets early estimates
of the 2019/20 crop.
*The autoregressive model uses trends, volatility, seasonality and cyclical patterns observed in the historic
data to project a likely range of future values.
**This forecast is not a recommendation. The chart projects forward based only on historical price
movements. The projected field takes no account of current or likely near or medium-term conditions.

Wheat price projection based on historical price movement**

500 (wheat APW1 - delivered Port Adelaide)

400
AUD/tonne

300

200

100 95% confidence interval

68% confidence interval
0
Jan -10

Jun -10

Nov -10

Apr -11

Sep -11

Feb -12

Jul -12

Dec -12

May -13

Oct -13

Mar -14

Aug -14

Jan -15

Jun -15

Nov -15

Apr -16

Sep -16

Feb -17

Jul -17

Dec -17

May -18

Oct -18

Mar -18

Aug -19

Data: Rural Bank, Profarmer

7
Coarse grain

Australian barley production for the 2018/19 season is expected to

be the lowest in six years. Estimates of national barley production
range from 7.8 to 8.3 million tonnes, a decrease of 18 per cent
compared to the previous season.
The national area planted to barley is similar to last season. At a state
level, less area planted in New South Wales and Queensland is offset
by more area planted in Victoria and Western Australia. The drop in
barley production is largely due to lower yields expected in 2018/19
particularly on the east coast.

Coarse grain production estimates 2018/19

QLD NSW VIC SA WA National

Barley MMT 0.05-0.10 0.3-0.5 1.1-1.6 1.2-1.9 3.6-3.8 6.2-8.3
% change -50% -75% -43% -42% -4% -30%
Oats MMT 0.01-0.02 0.14-0.30 0.19-0.22 0.09-0.12 0.57-0.95 1.05-1.57
% change -6% -17% -4% 25% 43% 18%
Sorghum MMT 0.99-1.07 0.47-0.49 1.46-1.95
% change -7% -8% -7%
Data: Australian Crop Forecasters, ABARES, USDA, PIRSA

Australian sorghum production for the 2018/19 season is expected domestic barley consumption is growing at 1.9 per cent, per year.
to be just below the five year average. Early estimates of national Total domestic use is expected to be approximately 4.4 million tonnes
sorghum production range from 1.4 to 1.9 million tonnes. There is in 2018/19, leaving 3.5 million tonnes of barley for export, which will
still a lot of variability in sorghum estimates at this early stage of the be a 10 year low in volume terms.
summer crop season, and early October rain has gone some way
towards improving confidence ahead of sorghum planting but more
rain is needed. With limited irrigation water to be used for cotton
production this year, a boost to sorghum production could come from
cotton growers looking to plant an alternate summer crop.
Overseas, global barley production is expected to be 141 million
tonnes in 2018/19 (down two per cent) and only just above the
10-year average. This continues a three-year trend of declining global
barley production driven by less production in the European Union
and Australia.
Global sorghum production is expected to be 59 million tonnes, an
increase of two per cent but still below the 10-year average.
Global coarse grain production is largely corn, which is expected to be
up by three per cent to 1,068 million tonnes, and will be the second
highest level of global production on record.
The volume of corn used in stockfeed is growing by 3.5 per cent
per year and is a major factor in the consistent, growing demand
observed for coarse grains. Global barley and sorghum consumption
has been flat over the past 10 years. Nevertheless, combined coarse
grain consumption has been rising at an average annual rate of 2.5
per cent, entirely due to the growth of corn consumption. Australian

8
 Global coarse grain production/consumption edges higher while ending stocks drop

1,500 300

million tonnes ending stocks

million tonnes produced

1,000 200

500 100

0 0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Corn Sorghum Oats Course grain ending stocks (RHS) Barley Millet Rye Data: USDA

60 Global coarse grain production/consumption balance

50

40

30

20
million tonnes

10
0
-10
-20
-30
-40
-50
2018/19
2014/15

2015/16

2016/17

2017/18
2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14
2000/01

2001/02

Data USDA

9
Australian barley prices have tracked similarly to wheat in 2018,
increasing strongly through the year in response to expectations
of below average production. At the time of writing, feed barley
had risen by 64 per cent from the beginning of the year to almost
390 AUD/tonne (F1 delivered Port Adelaide), which puts the
current market in the 10th decile.
Sorghum prices have risen by 34 percent this year, to over
400 AUD/tonne in early October.

Australian feed barley prices

500
450
400
350
300
AUD/tonne

250
200
150
100
50
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct

Kwinanna Port Adelaide Geelong Port Kembla Newcastle Brisbane Data: Profarmer

Our expectations for domestic barley prices, in this case illustrated

by the price for F1 delivered to Port Adelaide, are for barley prices to
drift towards the higher end of the forecast range*. Unless we see
enough rain to make for a big summer crop, it appears domestic feed
barley values will remain supported at around current values, at least
in the short term.
The outlook for sorghum values depends a lot on spring and summer
rainfall. Domestic supply and demand are very tight this year, so every
tonne of feed grain produced on the east coast is one less tonne that
has to be imported from South Australia or Western Australia.
With a reasonable amount of sorghum planting, and reasonable
yields, we would expect to see the drawing arc of grain into the
key feed sinks in southern Queensland and northern New South
Wales reduce and some pressure come out of the domestic feed
grains market.
On average, Queensland and New South Wales combined produce
around 1.5 million tonnes of sorghum, which could meet 20-30%
domestic feed grain demand in North Eastern Australia. However,
particularly in a year as dry as this, growers need the rain for
confidence before a summer crop goes in.

10
 Feed barley projection based on historical price movement*
500 (barley F1 - delivered Port Adelaide)

400
AUD/tonne

300

200

100 95% confidence interval

68% confidence interval
0
Jul -13

Dec -13

May -14

Oct -14

Mar -15

Aug -15

Jan -16

Jun -16

Nov -16

Apr -17

Sep -17

Feb -18

Jul -18

Dec -18

May -19

Oct -19
Data: Rural Bank, Profarmer

Sorghum projection based on historical price movement

600 (sorghum - delivered Brisbane)

500

400
AUD/tonne

300

200

100 95% confidence interval

68% confidence interval
0
Jan -10

Jun -10

Nov -10

Apr -11

Sep -11

Feb -12

Jul -12

Dec -12

May -13

Oct -13

Mar -14

Aug -14

Jan -15

Jun -15

Nov -15

Apr -16

Sep -16

Feb -17

Jul -17

Dec -17

May -18

Oct -18

Mar -19

Aug -19

Data: Rural Bank, Profarmer

*This forecast is not a recommendation. The chart projects forward based only on historical price movements. The projected field takes no account of current or likely near or medium-term conditions.

11
Oilseeds

Production
Australian canola production this season is expected to be the
lowest for nine years. Estimates of national production range from
2.0 to 2.9 million tonnes, a decrease of 47 per cent compared to the
previous season.
The drop in production is due in part to less area planted to canola
this season (down 27% year-on-year) and dry and drought conditions
in the eastern states which will impact yields. Due to the dry and late
start in Western Australia, canola tended to be sown as a normal part
of crop rotation but less so as an opportunistic crop, contributing to
the drop in area. In the eastern states, some canola crops have been
abandoned and others are being cut for hay owing to the dry season,
frost and strong prices for hay.

Oilseed production estimates 2018/19

QLD NSW VIC SA WA National

Canola MMT 0.3 0.43-0.46 0.3 1.47-1.64 2.52-2.90
% change -50% -36% -18% -27% -32%
Soybean MMT 0.01 0.03 0.04-0.05
% change -36% -27% -28%

Data: Australian Crop Forecasters, ABARES, USDA, PIRSA

Growth in global soybean production is driving total oilseed production higher

400 140
350
120
300
100
million tonnes

million tonnes
250
80
200
60
150
40
100

50 20

0 0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Soybean ending stocks (RHS) Canola ending stocks (RHS) Soybean production (LHS) Canola production (RHS) Data: USDA

Overseas, global canola production is expected to be two per cent

lower in 2018/19 compared to the previous season. Production in
the European Union is expected to be the lowest since 2008/09.
Nevertheless, growth in the production of other oilseeds will see
total oil seed production increase to a new record high of 604 million
tonnes, led by a 10 per cent increase in global soybean production to
almost 370 million tonnes (USDA, 2018). Total global oilseed stocks
will rise with the boost in soybean production.

12
 Global consumption of oilseeds is growing steadily higher at an
average annual rate of 3.7 per cent over the past decade. Looking just
at canola, global consumption is growing at 2.2 per cent. Demand is
expected to continue to rise at a similar rate owing to the acceleration
of the use of oilseeds in food and especially the steady expansion of
livestock industries.
Domestic consumption has averaged 1.7 million tonnes in recent
years, leaving very little for export this season. On the east coast,
local canola production is expected to fall below the volume of canola
required by the domestic crush.

Global oilseed production / consumption balance

25

20

15

10
million tonnes

5
0
-5
-10
-15
-20
-25

2018/19
2014/15

2015/16

2016/17

2017/18
2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14
2000/01

2001/02

Canola Soybean Data USDA

Australian canola prices have been trending higher since the beginning of the calendar year. Canola delivered to Port Adelaide has risen by
35 per cent to 620 AUD/tonne, a 10th decile price at the time of writing. Low and uncertain production this season is clearly giving support
to local prices. Particularly on the east coast where 85-90 per cent of the domestic crush capacity is located.

Australian canola prices

700

650

600
AUD/tonne

550

500

450

400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct

Kwinanna Port Adelaide Geelong Port Kembla Newcastle Nov 18 Matif Rapeseed Data: Profarmer

13
 Canola - components of price movement Overseas, oilseed markets have been less robust this year with
September 2017 to September 2018 canola ICE January 2019 back to the same level as the start of the
590
year around 500 CAD/tonne. Similarly, European February 2019
580 futures values are close to October 2017 value at 376 EUR/tonne.
570 Soybean values (CBOT January 2019) have dropped by 11 per cent
560 over the past year in anticipation of a large soybean harvest in North
and South America and ongoing trade tensions between the US
550
and China. Despite a softer tone in some offshore oilseed markets, a
540 weakening Australian Dollar combined with strengthening domestic
$ / tonne

530 premiums have pushed Australian canola values higher.

520
Our expectations for domestic canola prices are to move in the upper
510 half of the charted forecast range*. The main drivers behind that
500 view are lower Australian production this season, steadily growing
international demand, weather related delays to shipments from
490
Sep’ 17 EURO FX Domestic Sep’ 18 Canada, weakening Australian Dollar and wet weather delays to the
canola @ canola @ US soybean harvest combining to push progress behind the five-year
Pt. Adel Pt. Adel average pace.
Data: Profarmer, Barchart, Reserve Bank of Australia

Canola projection based on historical price movement*

(canola - delivered Port Adelaide)
700

600

500
AUD/Tonne

400

300

200

100 95% confidence interval

68% confidence interval
0
Jan -10

Jun -10

Nov -10

Apr -11

Sep -11

Feb -12

Jul -12

Dec -12

May -13

Oct -13

Mar -14

Aug -14

Jan -15

Jun -15

Nov -15

Apr -16

Sep -16

Feb -17

Jul -17

Dec -17

May -18

Oct -18

Mar -18

Aug -19

Data: Rural Bank, Profarmer

*This forecast is not a recommendation. The chart projects forward based only on historical price movements.
The projected field takes no account of current or likely near or medium-term conditions.

14
Pulses

Australian pulses production is expected to be the lowest since the 2014/15 season. Estimates of national production are close to 1.7 million
tonnes, a decrease of 36 per cent compared to the previous season. The decline in production this season is particularly apparent for chickpeas
and field peas, which are estimated to drop by 66 and 19 per cent, respectively. The production drop for chickpeas appears stark in the context
of recent ramping up of production just three years ago.

Pulse production estimates 2018/19

QLD NSW VIC SA WA National

MMT 0.05 0.03 0.05 0.41 0.55
Lupins
% change -35% -22% -7% 17% -4%
MMT 0.01 0.12 0.23 0.35
Lentils
% change -25% -43% -13% -22%
MMT 0.21 0.09 0.04 0.02 0.004 0.37
Chickpeas
% change -65% -85% -24% -16% 8% -66%
MMT 0.02 0.07 0.11 0.01 0.20
Faba beans
% change -44% -28% -17% 18% -24%
MMT 0.03 0.04 0.11 0.04 0.23
Field peas
% change -26% -20% -24% 10% -19%
Australian Crop Forecasters, ABARES, USDA

The decline in Australian production in 2018/19 is due to a large drop

in the area sown to pulses (chickpea -63 per cent, field peas -13 per
cent, lentils -29 per cent, lupins, -13 per cent, faba beans -13 percent)
as well as dry seasonal conditions that will impact yields. Being
export exposed to the extent that 75 per cent (five year average)
of Australian pulse production is exported, the area sown to pulses
this season has much to do with Australian growers responding to
changes in export markets. For chickpeas and lentils India plays a
particularly important role.

15
India is the largest producer, consumer and importer of pulses in the
world. The Government of India plays an interventionist role in its
agricultural markets seeking to maintain minimum prices for Indian
farmers. Changes to price support in recent years have boosted
support for pulses ahead of other crops. Despite growing demand for
human consumption of pulses, and use in stockfeed, the new policy
setting has seen production and stocks of pulses increase putting
pressure on domestic prices. The Government of India has favoured
restricting imports over allowing domestic pulse prices to soften.
That’s little consolation for Australia’s pulse producers, who now face
price and demand uncertainty from the world’s largest importer of
pulse crops. What we can be certain about is the Indian Government’s
propensity to pull and push the tariff lever in an attempt to manage
Indian domestic prices.
Movement in Australian pulse prices has been mixed in 2018. The
market for chickpeas (desi), has found some support since the lows
set earlier this year immediately following the introduction of tougher
Indian tariff measures. These tariff measures continue to see Australia
sidelined from this market, leaving Australian chickpeas to find homes
in Pakistan and Bangladesh markets. Poor availability of chickpeas
(desi), owing to the poor condition of the Australian crop, is providing
some support to chickpea (desi) markets.
While the spread between desi and kabuli chickpeas has opened
up, chickpeas (kabuli) are holding up reasonably well with new crop
sitting at around 580-600 AUD/tonne delivered to Port Adelaide.
Given that there will be some inflexible demand for Australian
chickpeas that needs to be filled this season, the less than favourable
production outlook does continue to bring support to local chickpea
(kabuli) values. On the other hand, the global supply and demand
balance for chickpeas points towards more downside than upside
for prices.

Global pulse production is trending higher and Australian production returns to average
100 6.0

5.0
Australian production (million tonnes)

80
Global production (million tonnes)

4.0
60

3.0

40
2.0

20
1.0

0 0.0
2008-09
2006-07

2009-10
2007-08

2018-19
2012-13

2013-14

2014-15

2015-16

2016-17

2017-18
2010-11

2011-12

Beans Peas Chickpeas Lentils Pulses/nes Lupins Total Australia (RHS) Data: ABARES & Australian Crop Forecasters

16
 Mixed trends in pulse prices in 2018
1600
1400
1200
1000
AUD/tonne

800
600
400
200
0
09-11-11 09-11-12 09-11-13 09-11-14 09-11-15 09-11-16 09-11-17

Kwinanna lupins Port Adelaide Faba Beans Port Adelaide Lentils Brisbane Chickpeas Data: Profarmer

Local new crop faba bean prices have taken off over the last two
months with values increasing by 75 per cent since the start of
August. Faba beans have found support from strong export demand
for faba beans of human consumption quality, tightening supplies in
Europe and deteriorating prospects for the Australian crop. On the
demand side, strong export demand for human consumption quality
into Egypt continues to be a source of price support. However, this
demand does tend to slow once Ramadan begins, and is likely to
impact Australian markets from mid to late March 2019. However, the
level of price support seen for the food grade products means that
faba beans are no longer competitive for use as stockfeed, and so we
expect to see heavy discounts for feed grade faba beans whilst high
prices persist.
In comparison to faba beans, lentils have found a much more modest
level of price support with nipper lentils currently sitting at around
450 AUD/tonne and 430 AUD/tonne delivered to Melbourne and
Adelaide, respectively. However, given the dry conditions across South
Australia and Victoria this season, local demand is keeping lentil
prices relatively firm. Lentils are increasingly being used in stock feed
as the price for other grains has increased. Export demand remains
weak due to ongoing tariff pressure from the Indian market and
continues to make for sideways price movement for lentils.
Lupin values across the country have been underpinned by ongoing
demand for protein in east coast stock feed markets. Western
Australian lupin values have firmed by around 30 per cent from March
to October, placing the current prices in the 10th decile. Shipments
into the east coast are providing another source of demand for
Western Australian lupins, adding to existing opportunities in
export markets.

17
About the research
The Australian Crop Annual Review includes data and outlooks on
production in Australia and globally, seasonal conditions, prices,
demand and the financial performance of Australian farms.
Significant effort has been taken to secure the most recent
data available.

About Ag Answers
Ag Answers is a specialist insights division of Rural Bank.
Recognising that good information is the key to making good
business decisions, Ag Answers provides research and analysis
into commodities, farmland values, farm business performance
and topical agricultural issues to enable farmers to make
informed decisions.

About Rural Bank

Rural Bank has been a wholly-owned subsidiary of Bendigo and
Adelaide Bank Limited since 2010. It is the only Australian-owned
and operated dedicated agribusiness bank in the country, providing
exceptional financial services, knowledge and leadership for
Australian farmers to grow.

This report is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s).
The information herein is believed to be reliable and has been obtained from public sources believed to be reliable. Rural Bank Limited, ABN 74 083 938
416 AFSL / Australian Credit Licence 238042 makes no representation as to or accepts any responsibility for the accuracy or completeness of information
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