THE Australian winter crop sowing season is currently underway, benefiting from favourable conditions in most regions, according to a commodity review from Rural Bank.

Early planted crops have germinated well and are off to a good start, however, global wheat prices have been negatively affected by improved weather conditions in the Northern Hemisphere and the expectation of a 22-year high in Canadian planted area.

Coupled with this is the continued indication from the Bureau of Meteorology that drier conditions are on the way with the chance of above median rainfall for June to August under 30 per cent for the region.

The forecast is being influenced by several factors including an ENSO-neutral pattern (neither El Niño nor La Niña) tending towards El Niño in the latter part of the forecast period, and the chance that a positive Indian Ocean Dipole (IOD) event may develop in the coming months, as well as longer-term trends.

The Indian Ocean Dipole (IOD) is currently neutral and long-range forecasts suggest a positive IOD event may develop by June.

However, long-range forecasts for the IOD made during this time of the year have historically had low accuracy.

A positive IOD increases the chances of below average rainfall for much of south-eastern and central Australia.

After three consecutive years of La Niña that brought above average rainfall to much of Australia, we are likely heading right into an El Niño.

But according to the Climate Prediction Center of the National Oceanic and Atmospheric Administration in the US, there is a 62 percent chance for El Niño to occur as soon as during May-June-July; probabilities for a development later during the year go up to 80 per cent or more.

Meanwhile, growers in Australia are taking advantage of good soil moisture conditions to plant the 2023/24 winter crop.

While early planted crops have shown promising growth, limited rainfall in some regions has caused topsoils to dry out, leading to a slowdown in planting activities.

This has resulted in some farmers re-evaluating their plans, potentially reducing canola planting in favour of more cereals.

In Australia, wheat prices have not declined as significantly as offshore markets, decreasing by $10-20 per tonne across port zones in April.

Local markets have remained quiet as growers focus on planting the new crop, resulting in limited selling pressure.

Barley markets have remained stable, with smaller feedlots preferring barley over wheat, supporting domestic prices.

Export markets have gained some support from the potential resumption of exports to China, but this is still uncertain.

Canola prices have been volatile, experiencing large price swings and falling by around $34 per tonne compared to the previous month.

Demand for Australian grain in the export market remains strong, as indicated by record-paced wheat and canola exports until the end of February, according to the Australian Bureau of Statistics.

China continues to be the largest consumer of Australian wheat, holding a 26 per cent market share and expected to import over seven million tonnes of Australian wheat this season.

Traditional Asian destinations such as Indonesia, Japan, and the Philippines are also significant buyers.