Hi all,
Here is the latest Progressive Agriculture Update for you to enjoy!
Cheers,
Andrew Bomm
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Prices
Temporary markets have softened a little at the end of the season. Prices for decent volumes are around the $520-$530 mark across the Murray and Bidgee, though there have been some erratic prices at small volumes.
I’d expect markets to open higher and strengthen over July if we don’t see at least average or better falls in the catchments. Volumes available in opening allocations plus carryover across the system are well below what permanent crops need, and with the outlooks so poor (especially Vic high reliability) these users could be aggressive in the market early. Demand in zones 7 and 11 is likely to be high, and with trade zones open brokers may be busy.
Carryover
The 15 May outlook from DPI Water indicated that carryover against NSW General Security is likely to be 16-19 per cent. This would be extraordinary if true, and represents about 300GL available for use or trade at 1 July. But does it actually exist or is the department way off on carryover again?
Possible trade rule changes
A recent MDBA weekly report noted that:
“The volume of [Goulburn] IVT delivered to the Murray in 2018-19 was close to 430 GL. This volume was not just a record for the Goulburn Valley, but also for the combined volume of IVT (Goulburn and Murrumbidgee valleys) delivered in a water year.”
Here’s a pretty glaring depiction of what’s happened.
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As a consequence, the Victorian Government is reviewing IVT rules, to be completed by the end of July. If the rules are tightened, it will increase the premium on below choke entitlement and temporary water, and the discount on Goulburn 1A entitlement values until demand patterns shift further up the system.
Whether there will be a change to the application of choke trade rules this season appears less clear.
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Some weather data
An explanation for poor allocations and some cause for hope for winter cereals. The first two maps depict rainfall for the past year and two years respectively. The latter two are upper and lower layer soil moisture.
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Chinese wobbles
China is getting into one hell of a stand-off with the people of Hong Kong over their attempts to muscle their way into the Hong Kong legal system. It’s bad timing, given they’re already in another huge stand-off with the US over terms of trade between the two countries. The Chinese Government prefers to focus on the enormous task of centrally managing a capitalist economy of 1.4 billion people. A major challenge is dealing with the hangover from their recent construction boom, and local sources suggest that their massive ‘Belt and Road’ global infrastructure initiative is a good way to keep millions of construction workers employed.
China doesn’t need these external fights on its hands and it will be interesting to see what gives. There’s every chance that they may seek to settle their trade dispute with the US on more favourable terms to Trump.
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Weather index insurance
We’re making progress on getting a weather index risk management option in front of irrigators. Along with a couple of collaborators from Strategis Partners and Weather Index Solutions, we’ll be having a dinner with irrigators in Griffith in August to finalise the options we can put in front of businesses.
For those exposed to volatile allocation and temporary water price, this is potentially a good option to smooth out revenue fluctuations. Having a weather hedge in place can help with finance options and forward contracting crops. If you’re interested in coming to the dinner in Griffith give me a buzz.
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AFL premiership
West Coast are good value at $7.50 to go back-to-back. Lay the Pies – never been a team 10-3 struggling so much.
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Somehow Related
Check out this great podcast from comedians Glenn Robbins and Dave O’Neill.
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RGA conference 1-2 August
The RGA are running what looks to be a great conference in August. They’ve got some amazing presenters in break out sessions offering heaps of choice.
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Seagulls and the rooster
The funniest man in agriculture, Billy Bob of Clubroot Acres, is back with another great offering.
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Reagan at his best
Some absolute gold in here from a time when the calibre of political leadership was better.
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