East coast Australian grain prices steadied last week as farmers and buyers assess impacts of the recent flooding rains across NSW.
Fortunately, Queensland grain farmers had finished most winter crop harvesting when eastern Australia was inundated by 75 millimetres to more than 150mm of rain in less than 48-hours.
NSW farmers at the epicentre of the torrential rain event are assessing quality losses as they gradually get machinery into paddocks. It will be weeks before farmers will be able to access lower lying country, were in some cases crops were completely submerged.
Initial indications have revealed significant and widespread downgrading of grain quality.
Grain storage companies have introduced falling number machines to measure the structural integrity of the starch following the rain. The falling number tests are mostly coming in at less than 150, well below the minimum 300 required for most grades. Farmers in some areas have been luckier, with falling numbers still holding above 200.
It's a big financial blow for farmers, many of which were just starting to harvest wheat crops when the rain hit.
Stockfeed wheat prices are about $100 a tonne less than the benchmark Australian Premium White bids. Lower prices are being offset by bumper yields, with many farmers still reporting wheat yields upwards of more than 4 tonnes a hectare.
Despite the rain affected harvest, Australian farmers are on track for a record large wheat harvest. The Australian Bureau of Agricultural and Resource Economics and Sciences raised its forecast for Australia's 2021 wheat production estimate to a record large 34.4 million tonnes last week, up 1.8 million tonnes from its previous estimate.
The increased production outlook underscores expectations of bumper yields in the Australian harvest, although ABARES also echoed market concerns about rain damage to crops.
"Heavy rainfall in November in eastern states and South Australia has delayed crop harvests and is likely to result in quality downgrades of crops in some areas," the report stated.
"Early receivals in NSW have pointed to lower quality wheat in some regions but good oil content of canola crops."
Australia is off to a flying start to the 2021-22 grain export season. Australia shipped close to 1.5 million tonnes of wheat in October. Exporters are now adjusting export programs to include more stockfeed wheat and less milling wheat.
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