Australia wheat production - Australia's 2018/19 Wheat Production Forecast Lowered

Australia has lowered its wheat production forecast over the 2018-19 season, according to the latest crop forecast report, which was released on June 13, from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), amid weakened planting intention of farmers in the country’s east coast region due to a extended period of drought.

ABARES said the world’s fourth-biggest wheat exporter is expected to produce 21.9 million tonnes of the grain during the 2018/19 season, as compared to a previous higher estimate of 23.7 million tonnes. The yield may come in at even lower level if the winter rainfall is not timely and sufficient, it noted.

Australia saw an eight-year low wheat production in the 2017/18 season and is slated to see a below-average yield for another following season.

May of this year was the third driest on record that Australia went through, with the rainfall in the month less than half the normal average. Moreover, the outlook for 2018-19 winter rainfall is currently unfavorable, according to the Bureau of Meteorology.

This could be a serious trouble for farmers on Australia’s east coast, one of the country’s major wheat producing regions, as the bad weather will let them miss the crucial and optimal wheat-planting window typically occurring between late April and early June.

Due to lack of rain, some wheat planters have been trying to sow in dry soil in case of the delayed schedule of planting.

“The crops are late but not in strife yet,” said John Hatty, a farmer in rural New South Wales, west of Sydney. “As long as we get rain … I’ve got my fingers crossed.”

The acreage for wheat planting in New South Wales is expected to decrease by 10 percent to 2.8 million hectares, a record low in the past 13 years, ABARES said.

Although the gross wheat production will decline, yield from the Australia’s west is expected to cover some of the shortage and ease impact of dryness in the east.

According to ABARES, wheat output from the country’s largest producing and exporting region is forecast to come in at 8.1 million tonnes, a year-on-year increase of 2.5 percent, though timely and sufficient rainfall will be needed to ensure the normal crop development and growth.

Effect On Wheat Prices

Global benchmark prices have jumped nearly 14 percent since early April when poor weather swept across major wheat exporters like Australia, Russia and the U.S., leading to traders’ concern about lower global supply. The ABARES’s updated forecast of Australian wheat production could further drive up global wheat prices.

Also Read: China’s Anti-Dumping Deposits on U.S. Cargoes Bolsters Australian Sorghum

For the past few weeks, Southeast Asian buyers have been on the sidelines, waiting and keeping a close eye on both desperately needed rainfall and wheat price movement in Australia.

“We still have some stock so we are trying to use as less as possible. Those who are buying APW currently have no other option,” a Southeast Asian buyer said.

There are also rising concerns on squeezed profits resulting from the soaring global wheat prices. “We have been trying to raise our flour prices but there is a strong reluctance from end-users — its currently our biggest struggle,” a Northeast Asia miller said.



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