Predictably, ABARES has cut its national grain production forecasts for the 2017 season as it factors in the impact of the poor season in Queensland and NSW.
ABARES cut its forecast for the Australian 2017 wheat crop to 21.6 million tonnes, down 2.5mt from the June estimate and 38 per cent below last year’s record harvest. It said Australia’s total winter crop production is expected to decline by 39pc to 36.3mt, reflecting the expected decline in average yields from the exceptionally high yields last year.
Adverse seasonal conditions through Queensland took a significant toll on winter crop production, ABARES said. Unfavourable weather in late autumn and winter made it difficult for the establishment and development of crops.
Above average rainfall in March resulting from Tropical Cyclone Debbie was followed by well below average rainfall from April to August across all Queensland cropping regions. It said earlier sown crops performed reasonably well as they could develop root systems capable of accessing stores of soil moisture from Cyclone Debbie.
Frosts in August are expected adversely affect yields in southern cropping regions, ABARES said. Crops in south-west cropping regions were generally in very poor condition at the end of winter and it is likely many will not be harvested.
Queensland wheat production was lowered to 900,000t, which would be half of last year’s 1.8mt harvest. Barley production for Queensland was lowered to 150,000t, also half the size of last year’s crop. Queensland chickpea production for 2017 was pegged at 650,000t, down from 1mt in 2016.
ABARES said Australian winter crop output would decline even further, without spring rains needed to finish crops through central and southern NSW and through parts of SA and southern WA.
Grain prices through southern Queensland continued to edge higher last week, but its seems that most of the northern production losses are already built into the market. Stockfeed wheat gained $10 to $330 delivered into the Darling Downs.
The USDA also released its monthly world supply and demand estimates last week. The report confirmed an abundance of global grain supplies, despite the poor crop through much of Australia.
The USDA report didn’t deliver many surprises. Russia’s wheat crop was raised and Australia’s crop was lower with the drought. World wheat production for 2017/18 was edged higher by 1.7mt to 745 million on the back of a 3.5mt increase in the Russian crop.
However, global markets seem to have digested the massive Russian wheat harvest, with world prices edging higher over the past fortnight.
High Australian wheat prices is already eroding wheat exports into Asia, as buyers switch to cheaper Black Sea supplies. Wheat exports from the Black Sea region to Asia, reportedly, climbed to an all-time high last month as buyers took advantage of cheaper prices at the expense of Australian wheat. Additional Black Sea export capacity and improving quality is also making it easier for Asian buyers to incorporate more wheat from Russia and Ukraine. Both Russia and Ukraine have been investing in new ports, rail lines and storage capacity in recent years.
