Australia cut its forecast for wheat exports to a five-year low, flagging reduced domestic harvest expectations and a dent to world trade overall from reduced Chinese import needs.
The forecast for canola exports was trimmed too.
Abares’ Australia’s official commodities bureau, reduced by 555,000 tonnes to 18.10m tonnes its forecast for the country’s wheat shipments in 2014-15, on a July-to-June basis.
The revised forecast represents a decline of 234,000 tonnes year on year, and would represent the weakest performance since 2009-10, although still representing a higher number than the 10-year average.
With the forecast for prices reduced too – by $16 to Aus$307 a tonne for farmer returns from the average Australian prime white wheat (APW) pool, a drop of 8.6% year on year – the value of the country’s wheat exports will tumble by some Aus$500m to Aus$5.61m.
Abares highlighted its downgrade last week to 24.23m tonnes, from 24.59m tonnes, in its forecast for the Australian wheat harvest, restating that although “the opening to the 2014–15 season was generally favourable” for crops, “conditions over winter were mixed”.
“Yields are expected to decline in most states.”
However, the bureau also highlighted prospects for much-reduced imports by China, which became the third-ranked importer of Australian wheat last season, behind Indonesia and Vietnam, and with shipments soaring 36% by value.
“The increase in Australian exports of wheat to China partly reflected increased demand for milling grade wheat to blend with domestic supplies,” Abares said.
However, in 2014-15, “an increase in production and improved crop quality are expected to reduce [Chinese] demand for imported milling grade wheat for blending with domestic supplies”.
Indeed, China’s reduced needs were behind a downgrade of 4m tonnes to 144m tonnes in world wheat trade this season, down 12m tonnes year on year.
‘Isolated frost and disease’
The US Department of Agriculture last week reduced its forecast for Australia’s 2014-15 wheat crop by 500,000 tonnes to 25.5m tonnes, “reflecting persistent dryness in the north eastern growing areas and developing dryness in the more important western and south eastern growing regions”.
However, it kept its export estimate at 19.0m tonnes.
Separately, Rabobank on Tuesday issued a forecast for the Australian wheat crop of “circa 24m tonnes”, saying that “isolated frost and disease damage throughout south eastern grain-growing regions continue to take the shine off a very positive start to the season”.
Rabobank also noted that the potential for Australian crop setbacks has kept its wheat values “relatively well supported compared to global prices”.
Abares also on Tuesday reduced by 267,000 tonnes to a four-year low of 2.30m tonnes its forecast for Australia’s canola exports in 2014-15, citing the dent to output prospects.
“In 2014–15, Australian canola exports are forecast to fall by 28% to 2.3m tonnes, largely reflecting a forecast 10% fall in production,” the bureau said.
“The value of canola exports is forecast to fall by 41% to $1.1bn, reflecting forecast lower export shipments and prices.”
Abares last week reduced by 83,000 tonnes, to 3.39m tonnes, its estimate for Australia’s canola production.
The USDA last week pegged the crop at 3.45m tonnes.
(Source – http://www.blackseagrain.net/novosti/australia-cuts-wheat-export-forecast-to-5-year-low)