Grain growers reap reward of plummeting diesel prices amid top start
Thousands of farmers embarking on major sowing programs on the back of a solid autumn break are poised to reap the reward of plummeting diesel prices.
GRAIN growers are facing a cost bonanza as major input costs drop to lows not seen in years ahead of a promising season.
Heading the charge is a 20 per cent drop in diesel prices compared to this time last year, as thousands of farmers embark on major sowing programs on the back of a solid autumn break.
“Farmers are filling tanks up and locking in decent purchases coming into seeding,” said Mecardo grains analyst Andrew Whitelaw.
While Melbourne terminal diesel prices averaged $1.35 a litre this time last year, the March average was $1.13 a litre and dropped to $1.01 last week.
Mr Whitelaw said over the course of seeding to harvest, an average grain grower could save about $8750 on diesel this season compared to last year.
And prices look set to drop even further after the US oil price plunged into negative pricing for the first time ever on Tuesday, to hit a bizarre minus-$38 a barrel.
Rabobank agriculture analyst Wes Lefroy said the price plunge, due to a massive drop in demand globally from the coronavirus pandemic and a glut in oil production, would see farmers benefit from cheap prices for months at least.
“The demand factors are so weak at the moment as a result of Covid-19, so we do consider there’s going to be a pretty favourable diesel price for at least the next six months.”
Warracknabeal grower Marshall Rodda, who operates a 2200-hectare cropping and livestock property said he was saving about 30 cents a litre this season, after purchasing diesel at $1.05 a litre.
“Fuel is a huge input cost,” Mr Rodda said.
“Now with seeding happening we have about three tractors running some days, using about 500 litres a day.
During harvest, Mr Rodda said he could be use double this.
“All of a sudden machinery is using 1000 litres a day at harvest which can span over a month,” he said.
Waubra grain farmer Doug Hobson ordered 1500 litres of fuel three weeks ago at about $1.09, a drop from about $1.35 last year.
“We are saving about 25 cents a litre, fuel is sitting at a level we just didn’t think it would get to,” Mr Hobson said.
“Fuel and chemicals are one of our major components, and we can now put savings in other areas.
“Anyone overall who is doing it tough would be happy to get savings where they can.”
Rupanyup grower and Grain Producers chair Andrew Weidemann said increasing his fuel storage was on the cards to take advantage of the attractive prices.
“Diesel is the lowest I can remember for a number of years,” Mr Weidemann said.
“We are looking to increase our storage to take advantage of the prices.”
Mr Weidemann said the price drop couldn’t have come at a better time, with Victorian growers well placed this season, ahead of the traditional ANZAC Day sowing start date.
“Subsoil moisture levels are the best I have seen in about four years,” he said.
“Growers are really well placed, they have had good temperatures and good summer rain.
“It is looking good.”
Navarre grower Barry Bibby, who began sowing vetch and oats about two weeks ago, said good rainfall this month meant he began sowing earlier this season.
“We started sowing a little earlier this year as we got good rain at the start of the month,” Mr Bibby said.
“We are in a better position compared to last year as our soil moisture was down.
“We have probably received about 100mm in autumn.
“Now we are sowing into moisture which is good.”
In the Western District, Werneth grain grower, Troy Missen said he was in a strong position, with plenty of soil moisture after receiving early rain in mid-January.
“We started sowing red wheat in the last week of March, and we are now just finishing canola,” he said.
“The season is looking good with great subsoil moisture.
“Now we are just hoping for a dry winter.”
Wheat, lentils and beans were looking to be the dominate crops this season, according to Mr Weidemann.
He said sowing in Victoria will “crank up” this week.
“The Wimmera has started, and the Mallee has been going for about 10 days,” Mr Weidemann said.
“Growers have sown vetch, feed oats and barley and will move on to canola in the coming weeks.”
In terms of chemical supply for the season, Mr Weidemann said it was “hand-to-mouth”.
“Chemical retailer manufactures are short on chemicals, because of rain on the east coast and low stock,” he said.
However, he said fertiliser supply was now under control.
“I have been in chats with the fertiliser industry who have said there is plenty available,” Mr Weidemann said.
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