Cropping Success, Market Shifts, and Outlook for Southern QLD & Northern NSW

The Southern Queensland and Northern New South Wales regions have experienced a busy period on the cropping front, with most producers in the major cultivation regions benefitting from a good summer harvest and a full profile of soil moisture for winter plantings. This has allowed volume plantings, particularly of winter cereals. The Moree Plains, during recent inspections, has been noted to be particularly wet with most croppers opting for a wheat or barley option to avoid potential high moisture issues with chickpeas; while the Darling Downs has seen a mixed plant, though some dryland paddocks have had the option to double crop this season.

Wild pigs are a topic of conversation, particularly throughout the Darling Downs, where recent seasons appear to have supported a significant uplift in numbers. For those brave enough to plant chickpeas, this is an added management issue of particular concern this season.

Prices at the time of writing appear to have taken a hit, with a relatively large volume of winter cereal already in storage, a good season in Western Australia, and a large plant in the Moree Plains and Darling Downs all contributing to lower prices.

Over the last 12 months we have continued to see market growth in the prime cultivation land classifications, particularly recently in the Bongeen Plains (Toowoomba – Cecil Plains), with rates of $20,000 per hectare dryland not uncommon for plains country, and some recent signals of growth in the Moree Plains district pushing $10,000 to $14,000 per hectare for prime dryland. Market growth drivers are particularly reflected by neighbour or nearby landholder expansion, resulting in this market movement.

Alternatively, some regions, for example northern areas of the Jimbour Plain where some corporate holdings have become available, have seen limited market growth due to a temporary oversupply. We are aware that many of these corporate sales in Queensland are advised to reflect land tax pressures and a view of greater opportunity to reinvest in southern states where seasonal conditions have caused a softening of the market.

The Southern Downs region (Warwick) and into the Toowoomba district – which has been lifestyle dominated for some time – has started to see some movement in irrigation and dryland cultivation property, with market growth evident particularly in permanently irrigated areas. Rates of $40,000 to $60,000 per hectare for permanent irrigation supported by reliable water allocations are becoming more frequent.

Speculation and conversation regarding the impact of government water buybacks underpinning and likely causing water value increases are rife throughout the Condamine, Balonne, and Border Rivers regions. Such discussions would appear well-founded, considering the Government represents a motivated purchaser with the capacity to buy, seeking volume from throughout the basin.

Areas of relative weakness or good value appear to reflect where supply of property to the market is highest. That said, my personal opinion currently sees value in mixed farming country, where demand appears less than that for straight grazing or cropping operations. Locations of interest, in my opinion, include Millmerran and Coolatai for mixed farms. Though traprock grazing country around Inglewood and Stanthorpe also has some appeal, given windfarm income opportunities/speculation, and more importantly, recent lifts in lamb/sheep meat prices. Lamb particularly is noteworthy, rising above the 1000 cents per kilogram mark for the first time ever.

While cattle prices are no longer at those record levels seen a couple of years ago, a growing sense (at least in the north of the country) of potential and optimism is apparent. Many producers are noting the strength of the market through winter to date and are hopeful of a further lift following an eventual seasonal break in the south, due to less stock likely to be presented to the market at that time and increased restocker demand. Record beef exports also support a potential floor in the cattle market moving forward and further highlight the potential upside.

While exposure to the United States market (our biggest beef export destination) highlights some tariff-related risks, global beef supply sees opportunities in alternate markets such as China, where exports have been increasing in recent months, likely reflecting the fallout between United States/China tariff positioning.

Market risks continue to be a constant factor post-COVID-19 pandemic, and the evolving war situation in the Middle East has been, unfortunately, no different. While tensions at the time of writing appear to have slightly subsided, the reaction at certain stages following strikes on Iran show just how volatile the situation is, and the potential for significant increases in oil and therefore fuel prices has been demonstrated. While inflation is slowing, such events continue to pressure already tight margins under the new baseline for many input costs. These circumstances continue to encourage cautious decision-making and selective purchasing. This is reflected by a general increase in marketing periods and movement away from seller’s market conditions. We are also witnessing an increased proportion of near-neighbour purchases in the market recently, reflecting the motivation to realise production efficiencies through scale.

Looking ahead, the opportunity is for rain in the southern part of the country to create increased demand from restockers and further support a relatively strong sheep and cattle market.

The introduction of the “Super Tax” may represent a trigger point for restructuring where property has previously been held in superannuation. Obviously, the risk associated with taxing unrealised gains in relation to property is substantial, and accurate, independent advice will be critical in navigating this change. Given the stage of the rural property market — which could be referred to as a balancing point, currently tipped in either direction by seasonal conditions – a significant change in market supply (listings) could alter the scales.

Unfortunately, no one has a crystal ball, and the economy and the local market remain difficult to predict. However, property value increases experienced over the last five to 10 years do present an opportunity to reinvest, utilise that equity, and potentially create diversified growth, which would hedge some of the risks outlined above.