The 2022 harvest was the harvest that kept on giving. With everything from waterlogged paddocks, interrupting rain, high disease pressures and big yields – it was a harvest that delivered many ups and downs across the state. As with every year it’s important to reflect on the year that was and look at what we can carry into the 2023 marketing year.
2022 has been shaped by increasingly volatile markets influenced by drought conditions the previous season, out of Canada, and the devastating war out of Ukraine. Record prices have again been broken as food security concerns played out on global markets. Weather is still very much a factor of markets, with one rainfall event rapidly changing the sentiment on the marketplace. Macro-economic factors are also heavily affecting supply and demand outlooks and recession fears that are weighing on commodities markets, adding a level of downward pressure to the current environment. The last 12 months have been eventful to say the least.
So, looking back in time, what should we take with us for 2023?
Every harvest is different. Across the five harvests I’ve now been a part of, the market has behaved differently in each one. Yes, there have been some trends, but each marketing year presents a different set of circumstances that influence prices. This year, too, has shown that the expectations around quality and rain forecast can be vastly different to the reality. You can’t expect the pattern or same level of pricing to continue into 2023 for the new crop. There will be a different range of challenges to face, maybe some similar ones, but the markets and pricing will also change.
Pulses and on farm storage. If ever there was a year that highlighted the importance of pulse storage on farm, it was 2022. Late rains and a cool end to the growing season meant desiccation took much longer than normal. It also exposed the lentils to more weather damage and marking, limiting market opportunities. As well as this, due to the size of the crop, sites for delivery filed up quickly. The volume of tonnage with pulses this year was unlike any crop South Australia has seen before. These constraints throw up some serious questions about on farm storage to be able to manage these logistical issues. Good on farm storage systems mean instead of panicking around delivery points for slightly out of spec lentils, there is the opportunity to put them on farm to be cleaned at a later date, allowing harvesting activities to continue.
Sometimes we don’t know how much is in the paddock. One of the challenges of the 2022 season was estimating production. Some areas have had yields never seen before, which makes it really difficult to know what to expect out of the paddock. This has resulted in the crop out of South Australia and beyond being underestimated, and much more grain than expected being available on the marketplace. Even in NSW, where floods affected large areas of cropland, yields were underestimated. Yes, there were unharvestable areas, but some of the paddocks were able to be harvested after the flood waters have drained away. Every harvest will throw up its surprises around yields but, at the end of the day, what happens in your own paddock and managing your position will be the best way to tackle this.
Volatility is not going anywhere. Volatility is one of those characteristics of our markets that is highly frustrating but also one that creates lots of opportunity. The ability to manage volatility well becomes the priority in our businesses and, with more geopolitical, economic and environmental factors having influence over price, it makes sense to work backwards to what can be controlled. What is our base level of production? What numbers are we comfortable to work with? Who do we have working with us to ensure we’re on the right track?
Yes, there have been several challenges, but the volume and good prices of this year have been rewarding and I’d prefer to have logistics constraints than to be washing out contracts.
2023 is likely to be just as eventful in its own way, as much of what’s happening globally still has to sort itself out and there is still the massive 2022 crop that Australia has to execute. The volatility is likely to continue but the question is, “how are we going to go about managing it?”