Farmanco Facts - September 2021

Rob Sands begins the September edition with his Editorial, opening paragraph below.


The 2021 year is shaping up well for most of our clients. However, I do feel the pain of those clients who have had crops under water for an extended period as it could well be their worst year ever. I wrote this article at the end of August and by the 4th of September, many growers in the areas indicated on the map below have sustained varying levels of frost damage. There is no doubt that mother nature can deal some cruel blows to farming businesses.

(Figure 1 - DPIRD Extreme Weather Events Tool showing areas that experienced air temperatures less than or equal to -1°C.)


Contributors to Farmanco Facts for September are Ben Curtis (Should I worry about losing trade value, if I hold machinery for longer?); Mae Connelly (Location, location, location – where world wheat stocks are located matters); Laurence Carslake (Export oaten hay, China, Oats for grain) and Chris Robinson (Mouse Control 2021).


Key Points:

Should I worry about losing trade value, if I hold machinery for longer?

(Ben Curtis, Management Consultant)

  • Running a machine for more years, making the changeover figure higher than you would like, should not be a factor that drives you to change over your machines

  • Holding machines for longer should be considered

  • Depreciation per hour of use is the true cost of machinery to your business

  • Calculate the true cost of machinery to your business.

“There are two main numbers we focus on throughout the life of pivotal farm business machines: their value and what is owed on them. Sometimes it is easy to confuse which number is the most important.”

***


Location, location, location: Where world wheat stocks are located matters

(Mae Connelly, Grain Marketing Consultant)

  • Total global wheat stocks are the fifth largest on record

  • There is an inverse correlation between global wheat stocks-to-use ratio and global wheat prices

  • In 2021, global wheat stocks are relatively high, but global wheat prices are also high

  • The reason the correlation has been lost is because of the shortage of wheat stocks in major exporters

  • The lack of available exportable tonnes of wheat has importers concerned, and global wheat prices have rallied.

“World wheat stocks remain at historically high levels, so why have wheat prices been at historically strong levels over 2021? A significant reason for high prices has been the fact that while total world wheat stocks are high, stocks that are in the major wheat exporters are at record lows.”

***


Export oaten hay, China, oats for grain

(Laurence Carslake, Management Consultant)

  • Chinese export licences are still not reinstated or renewed for hay exporters

  • There is increased demand for feed grain into China

  • The harvest index of the oat crop is influenced by variety and soil moisture to depth

  • Average finishes usually result in a harvest index of 40% to 60% of hay yield

  • This year, unless you have storage and/or a contract with your long-term hay processor, grain looks to be the best option.

“From my observations, there is likely to be a higher amount of feed grain or hay carryover on-farm than in the last two seasons (WA).”

***


Mouse Control 2021

(Chris Robinson, Agronomist)

  • Mouse control — monitoring and being proactive are key

  • Be proactive with baiting mice before grain has formed

  • Baiting this spring can reduce the likelihood of an outbreak next autumn

  • There is a strong preference for the higher strength 50g/kg Zinc Phosphine baits at 1kg/ ha.

“There are many parts of Australia dealing with damaging mouse levels and significant areas under threat where there are (currently) low levels of mouse activity. For the first time in the modern era, this includes much of Western Australia.”

***

Farmanco Marketing Pty Ltd is a Corporate Authorised Representative No. 341189 of Primary Financial Services Pty Ltd (AFSL No. 338360). Don McTaggart (No. 298483), Ryan Duane (No. 407412), Mae Connelly (No. 315016) and Adrian Clancy (001283272) are Authorised Representatives of Primary Financial Services Pty Ltd (AFSL No. 338360). Primary Financial Services Pty Ltd is restricted to providing financial services to wholesale clients only as defined under the Corporations Act 2001.


General Advice Disclaimer: The information and opinions within this document are of a general nature only and do not take into account the particular needs or individual circumstances of investors. The Material does not constitute any investment recommendation or advice, nor does it constitute legal or taxation advice. Primary Financial Services Pty Ltd (ABN 37 136 347 610) (The Licensee) does not give any warranty, whether express or implied, as to the accuracy, reliability or otherwise of the information and opinions contained herein and to the maximum extent permissible by law, accepts no liability in contract, tort (including negligence) or otherwise for any loss or damages suffered as a result of reliance on such information or opinions. The Licensee does not endorse any third parties that may have provided information included in the Material.