Rabobank has recommended that Australian farmers focus on wheat cultivation over canola in the upcoming 2024/25 season, anticipating significantly improved crop profitability compared to the previous year. The drop in fertiliser and chemical prices is expected to boost farmers’ earnings, with the cost savings outweighing a projected decline in average grain prices.
Australia, a key global agricultural exporter, faced dry conditions that impacted crop yields in the previous season. However, a shift towards wetter weather forecasts larger harvests for the upcoming season, fostering a more positive outlook among farmers.
Rabobank highlighted that the reduced costs of fertilisers and agrochemicals, potentially lower by up to 20% in 2024/25, would enhance farmers’ profitability despite an anticipated 6% decrease in average grain prices. Gross margins are projected to increase from the previous season’s levels, although they are expected to remain below seven-year averages.
The bank forecasted a gross margin of A$281 per hectare for wheat farmers, representing a 34% increase from the previous season. In comparison, malting barley is expected to yield a gross margin of A$282 per hectare (up 33%) and canola a margin of A$251 per hectare (up 26%).
Given its lower variable cost, wheat is positioned as a favorable crop choice over canola, potentially leading to expanded wheat plantings at the expense of other crops.
Rabobank anticipates wheat plantings exceeding 12 million hectares, barley over four million hectares, and canola around three million hectares for the upcoming season. These projections reflect a strategic shift towards more profitable crops based on market dynamics and cost considerations.
As Australian farmers prepare for planting activities in the coming weeks and anticipate harvests commencing from around October, the focus on wheat cultivation is poised to drive improved financial outcomes and bolster agricultural productivity in the region.