Australia is expected to produce a near-record 28 million tonnes of wheat from its upcoming harvest, the biggest in five years, as ideal weather during the growing season lifts yields in the world’s No.4 exporter of the grain, a Reuters survey showed.
A large Australian wheat crop, in a world market already flush with supplies following a bumper output in the northern hemisphere, could further drag on global benchmark prices of the grain and ensure cheap food supplies for Asian buyers.
Wheat prices plunged to a 10-year low at the end of August with the U.S. Department of Agriculture increasing its estimate for world ending stocks in 2016/17 to a historic high of 252.8 million tonnes.
Australia’s wheat output in the year to June 2017 will range between 26.7 million tonnes and 31 million tonnes, the Reuters survey of 10 analysts, traders and brokers showed, indicating a median forecast of 28 million tonnes – the most since an all-time high of 29.6 million tonnes was reached in 2011/12.
“Whilst there are isolated stories of water logging … on the whole the crop will benefit and there is increased certainty around this year’s winter crop production,” said Peter McMeekin, origination manager at trader Nidera Australia.
The survey’s median estimate is 10 percent higher than what the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) predicted in June and 6 percent more than what the U.S. Department of Agriculture (USDA) forecast in August.
The USDA will update its estimates later on Monday, while ABARES is due to issue its forecast on Tuesday.
Australia, which produced 24.19 million tonnes last year, is one of the top suppliers of wheat in Asia, with Indonesia – the world’s second-largest importer – relying heavily on the Pacific nation for its supplies of the grain.
India, which is expected to step up wheat imports after two years of lower production at home, is also keeping an eye on the Australian crop.
THREAT FROM TOO MUCH RAINS
While the Australian crop has been thriving in widespread rains, the country needs dry weather in October to ensure good quality and to get the crop ready for harvest, which takes place between October and December.
In parts of New South Wales (NSW), a key wheat growing state on the east coast of Australia, there has been a heavy downpour, resulting in water logging in farms.
“There’s also an issue with excessive moisture and potential water logging in New South Wales – we’re just at the beginning of September and parts of NSW have had nearly double their monthly average rainfall,” said James Fell, chief analyst at Grain Information Services in Sydney.
One agricultural commodities analyst, however, said it was too early to get worried about rains. “If we can get a dry finish to the crop in October, we are just fine,” he said.
Source: ReutersPrevious Next