They say the darkest hour is just before dawn. And so again it has proved to be the case with the ending of the drought after a particuliarly nasty hot summer filled with bushfires, dust storms and virtually no rain. The rains began in mid Februrary and have been constant ever since. This has resulted in a transformation in the country side. What was bare soil blowing dust last year is now lush pastures or green crops. This is how the Australian landscape has always been. The variability between seasons is the hardest thing for farmers to manage. The table belows shows Temora has already received substantially more rainfall this year compared to last year and there is still five months to run.
The rain has been widespread across NSW and even Waverley Park in Queensland is having a very good season. The scene is set for our tenants to have a very good year this year.
Farmland Investment agriculture prices
The last six months have seen some very dramatic fluctuations across various commodity markets. The COVID pandamic has largely been favourable to commodities such as wheat and meat that are seen as essentials in the food chain. However, the wool and cotton markets have felt the full brunt of the ‘consumer lockdown’.
The first graph below shows how the wool market rallied and peaked
through 2017 and 2018, and has been in decline for the past 12 months.
There are a number of factors behind the fall in the wool market. The US China trade war was the cataylist for the market beginning to fall and the
COVID pandamic has exacerbated the bad situation.
It is not a problem caused on the supply side of the equation. The second
graph below shows the slow but dramatic decline of the Australian wool
industry over the last 30 years. Production has dropped over 70% since
Wheat and canola pricing remains robust. However, we are starting to see an erosion in forward pricing for wheat as the trade begins to factor in a large crop on the eastern seaboard.
Sheep meat and cattle prices have been extremely strong in recent months. As producers attempt to rebuild their herds and flocks after the three year drought, this has resulted in less animals being sold for slaughter. The reduced supply has driven up prices to record levels.