Strong demand for Australian wheat

Strong demand for Australian wheat

ANALYSIS
Agribusiness
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Shrinking global wheat production is expected to see robust export demand for Australian wheat.

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Shrinking global wheat production is expected to see robust export demand for Australian wheat through the 2021-2022 season.

Global forecasters have been ratcheting production estimates lower through the season on the back of unfavourable weather. The full extent of wheat production losses in the northern hemisphere is only being realised as the harvests in North America, Europe and the Black Sea near completion.

Further cuts to world wheat production are expected to see world wheat export supplies shrink to the lowest level seen in close to a decade and push more demand to Australia. Local grain exporters are reporting strong buying interest from global buyers and they expect this to continue into next year.

Statistics Canada made larger than expected cuts to Canada's wheat crop last week when they cut it by a further 1.2 million tonnes to 21.7mt. This is sharply below last year's bumper harvest of 35.2mt.

Private forecasters are lowering projections in Europe and Russia as the harvest data is tallied.

Floods and excessive rain have reduced the size and lowered the quality of the European Union wheat harvest. Respected European grain analysts Strategie Grains cut its EU-27 soft wheat production estimate by a further 2.4mt to 129.1mt, sharply below early season forecasts. The wet harvest has also adversely affected grain quality with a significant proportion of the crop downgraded to feed wheat.

Russia's wheat yields are also coming in lower than expected, prompting further reductions in production estimates. Private forecasters are saying the wheat crop will fall short of 75mt, more than 10mt less than last year's record crop.

Expectations of Australia's upcoming harvest are starting to slip after a dry start to spring in WA and SA. Severe frosts and the dry start to spring triggered the Grain Industry Association of WA to cut its wheat production estimate for the state by 700,000 tonnes to 10.6mt last week. The revised estimate still points to a record large winter crop harvest for the state, although not a big as was expected in late winter.

New crop farmer selling in Australia remains slow with many growers anxious for another rain to finish crops.

Southern Queensland grain prices were few dollars lower last week as buyers wait for harvest selling next month.

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