Profitable times ahead for SA

ABARES economist Caroline Gunning-Trant, who spoke at the Yorke and Mid North ABARES Regional Outlook Conference at Wallaroo last Thursday, said winter crop production in SA is estimated to have risen by 31 per cent.

"This reflects not only an increase to the areas south, but also higher yields due to generally favourable crop conditions," she said.

Receipts from beef, sheep, lamb and wool had also risen, assisting the incomes of mixed enterprises.

But she said a predicted El Niño was at the forefront of everyone's mind.

"There is a 70 per cent chance of an El Niño event happening this year," she said.

"If you look at the rainfall outlook they're expecting only a 35pc chance of this region exceeding median rainfall."

But the impact of an El Niño event on crop production was not uniform.

"It is difficult to predict," she said.

"The El Niño events in the past 30 years are not necessarily associated with a fall in crop production.

"The timing of rainfall and extent will be what influences yields."

Excellent soil moisture meant SA was well placed to face any challenge El Niño might provide.

"Upper soil moisture, the top 20 centimetres, is the wettest 10 per cent of May compared to a 30-year period extending from 1961 to 1990," she said.

"The lower layer of soil moisture level extends from 20cm to 1.5 metres – it's a larger, deeper store that is slower to respond to seasonal conditions, and it tends to reflect the accumulated effect of what's happened over a longer period.

"Given this is in the top 10pc again for this region, crop development in this region will be less reliant on in-crop rainfall."

Producers were also responding to global market signals, namely those of prices.

"World indicators for oilseeds, wheat and coarse grains are forecast to decline in the upcoming year, but still to remain relatively favourable," she said.

"We're expecting the world indicator price of wheat and coarse grains to fall about 5pc, driven by a forecast rise in world supply of these grains mostly because of high carryover stocks.

"Oilseeds, we are expecting a more significant decline of 9pc to 10pc in prices.

"We are also expecting the world indicator price for canola to fall slightly as well."

The total area of Australian winter crops planted would rise to 22.6 million hectares because of expected good returns for wheat and canola production.

Total winter wheat crop production was forecast to fall by 12pc to about 38.8m tonnes, which largely reflects a return to average yields.

"Certainly in SA and WA last year yields were above average," she said.

"For SA, despite the outlook for below average rainfall in the next few months, due to the soil moisture profile we're expecting total winter crop production to grow by 17pc to 7.2mt.

"In SA we have a larger area sown to wheat, at the expense of barley."

Ms Gunning-Trant said the average farm cash income for sheep in SA this year was estimated to rise by 12pc to $103,000, after a significant drop of 35pc last year.