EP3 Brief

The weeks big new topics.

1. Fertiliser supply has become a government problem, not just a market one

The federal government is now underwriting fertiliser imports, stepping in to absorb price risk and secure supply as disruptions through the Strait of Hormuz continue. Strategic reserves are being used, and deals are being struck just to ensure product lands in time for planting.
This is no longer a functioning market, it is a managed one, and that tells you how tight things really are.
Read full article (FarmOnline)

2. Australian grain production is now at real risk of a double digit drop

Growers across NSW and Queensland are delaying planting or walking away entirely, with dry conditions and a lack of fertiliser forcing hard decisions. Surveys show nine out of ten growers still don’t have urea secured, with costs up more than 20pc for most.
This is shifting from a tough season to a potential supply event.
Read full article (FarmOnline)

3. El Niño is not the story, the shift in risk is

More than a century of data shows El Niño years consistently drag yields lower, with national wheat production typically falling around 15pc. In NSW and Queensland, the downside risk is far more extreme, with a large share of seasons falling more than 20pc below expectation.
Margins are already tight, and the odds are now moving further against growers.
Read full article (Episode3.net)

4. Domestic urea could be coming, but it won’t fix this cycle

Projects like Neurizer are promising urea production costs as low as $200/t, well below historic import prices, with ambitions to undercut the market. However, regulatory delays mean meaningful supply is still at least two years away.
Relief is coming, just not in time to help this season.
Read full article (FarmOnline)

5. WA has had a strong start, but costs are capping the upside

Early rainfall has set up Western Australia for a solid season, with good subsoil moisture and strong canola planting. But rising fuel and fertiliser costs are forcing growers to pull back area and inputs, even with favourable conditions.
Even in a good season, profitability is now the limiting factor.
Read full article (Farm Weekly)

6. Processing capacity in WA is back in play

Two mothballed abattoirs have been listed for sale, reopening the conversation around regional processing capacity after a series of abrupt closures. The assets present an opportunity, but also highlight how fragile the processing network has become.
If capacity doesn’t return, freight and competition risks remain elevated.
Read full article (Farm Weekly)

7. Fuel, fertiliser and migration are now political issues

New research suggests up to 60pc of voters align with “Australian-first” views, with supply chain dependence, rising input costs and migration pressures driving a shift in sentiment, particularly in regional areas. Support is moving, and upcoming by-elections will test whether it converts into votes.
Agricultural inputs are no longer just an economic issue, they are becoming a political one.
Read full article (FarmOnline)