EP3: The weather with you

ARTICLE BY EP3: CONVERSATIONS | 1ST JULY 2024 | BY CHRIS LAWLOR

Much of coastal Victoria from Maffra in the East to Heywood in the West are having the worst or driest March-June many can remember, on farm at Hamilton last week there are horrific losses across sheep farms, many lambing while trying to hand feed grain at the same time as there is virtually no green feed available. Dead ewes and lambs are being picked up in large numbers, tough mentally for seasoned farmers enduring meat and wool prices well below long term averages, see Lamb Chopped.

Near Yambuck some dairy farmers after a poor spring and low silage cuts dried off-spring calving cows early in the hope of building grass covers by August, and avoiding buying quite as much hay at $200+/t…..after 3 wet seasons and good milk prices…..dry and starting at $8/kgMS is hurting. With the dry still affecting much of Tasmania there is a lot of oaten hay on the ferries which even with freight subsidies is $400+/t landed.

Now GDT prices do indicate Milk Processor step ups, but with virtually no farmer owned co operatives anymore and Fonterra on the market, the likelihood of previous year’s competition seems slimmer and slimmer.

On a positive note BOM is saying the El Nino-Southern Oscillation (ENSO) is currently neutral and models suggesting La Nina pattern from August, which bodes well for East Coast farmers.

I farmed through El Nino and La Nina weather cylce’s in Southland, NZ and the affects weren’t as consistent as I see here. My observations are that during a strong La Nina cycle the whole East Coast, the Murray Darling Basin right from Queensland to Mildura and everywhere South of the Murray as well as the Eyre Penninsula and Tasmania have much better than average growing seasons…..Areas like Coorimungle and south of Leongatha are arguably too wet.

In this weird neutral phase, Tasmania and everywhere west of Warrnambool have experienced an unusually dry March-June, seriously affecting growth rates and crop strikes. Notoriously unreliable North Victoria is sitting pretty with good moisture and crop strikes, the Hume dam is recharging at 66% of capacity and even a weak La Nina should top it up before the irrigation season keeping water prices at a sustainable level. Everyone knows that with water buybacks there is going to be a lot less next time El Nino strikes…..

Also positive is land prices are not crashing, but flat to a 10-15% drop…..which in this environment is arguably not too bad, areas with reliable irrigation still hot…..some recent sales include

• Early $5,000/acre near Heywood
• Early $7,000/acre near Woolsthorpe
• $14,000/acre MID Irrigated Maffra

As long as there isn’t a flood of properties on the ‘spring market’ prices should hold, if supply is way over demand this could see values dip more and anyone highly leveraged could see equity drop.

A shortage of Beef in the USA (Beef Boom) is seeing good demand there, although the Brazilians are getting a lot of lower cost product into China/Asia.

With sheep numbers growing through the last run of La Nina wet seasons, and live export being phased out, the supply/demand curve indicates there is unlikely to be any substantial lift in prices for the rest of 2024. Global sheep numbers are very interesting, Global Flock.

Positive for dairy farmers but not so good for the croppers, wheat future prices have taken a tumble.