Big Rain Means Big Win for Farmers

February 12, 2024

Despite the floods devastating some parts of the country, cattle and sheep producers and cotton, rice and sorghum growers are some of farming’s big winners from Australia’s rain-soaked summer.

Rabobank’s head of agricultural commodities, Stefan Vogel, said farmers – with the exception of those hit by flooding and storm damage – had done well out of an El Niño weather pattern delivering the opposite of what was expected.

More rain is forecast in parts of the Northern Territory, Queensland, NSW and Victoria in a boost for most cattle and sheep producers, and many summer crops. Rain meant more feed for cattle and sheep and was falling at the right time for summer crops such as sorghum and millet, and for cotton and rice producers.

Central Queensland cotton grower Aaron Kiely, who farms at Emerald, said he was on track for an above-average harvest after timely rain over the past two months that had already delivered big savings on irrigation costs.

Mr Kiely said cotton growers in Queensland’s Central Highlands were in a good position to boost yields and take advantage of prices hovering around $640 a bale, down from more than $700 last year.

“There are a lot of positives to this rain unless you’ve been caught up in the nasty storms, or further north with Cyclone Jasper in December,” he said.

Mr Kiely said his cotton crop was looking good ahead of picking, expected to start around March. He said favourable weather conditions created the potential to delay picking into May and June to boost yields.

“Going into 2024, this rain is great for our region. Our dryland [non-irrigation] farmers will have great opportunity leading into the start of their season and the inflow into weirs and rivers will boost irrigation allocations,” he said.

Farmers in the west finished harvesting a grain crop of about 14.3 million tonnes, including 7.35 million tonnes of wheat, before Christmas. The harvest was about 40% down on the previous year after a much drier 2023 in the state’s vast wheat belt.

Official forecasts ripped up

Rabobank and others, including official federal government forecaster ABARES, face big revisions of their cotton, sorghum and rice production estimates on the back of the east coast rain.

The federal government has already revised its farm export earnings forecast to $67 billion following recent rains. In June, it forecast that farm export earnings would fall by 17% to $65 billion in 2022-23.

In December, ABARES forecast cotton production to fall by 26% year-on-year to 925,000 tonnes, based on lower planting due to very low rainfall in the planting window and a drop in irrigation allocations.

Mr Vogel said cattle and sheep producers were probably the biggest winners from the rain, despite some moving to de-stock towards the end of 2023 based on the El Niño forecast.

“November rain and now the rain late in 2023 and early in 2024 is bringing more confidence back into the cattle market because producers know they are going to have decent amount of feed, probably for a few more months,” he said.

“In my mind, this is really benefiting the industry, and clearly a lot of those cattle are held in Queensland and in the Northern Territory, where we have seen quite a bit of rain.”

Cattle prices crashed from some of the highest levels in the world in 2023. The eastern young cattle indicator ended the year at $4.57 a kilogram, down from about $8.50 a kilogram in January 2023, and hit a low of about $3.50 a kilogram in October amid El Niño fears.

“This rain is actually very welcome by the farming industry to get it up and running for the next season, and just to help us see that even in those El Niño years which are supposedly dry, we can keep our hopes and moods up because that’s what farmers have to do sometimes,” Mr Vogel said.

(Source: Financial Review)