Australia’s wheat harvest, which it was feared earlier would set an eight-year low, may end up as one of the largest on record, as El Nino’s failure to bring poor weather continues to cheer producers.
Some commentators have issued estimates for the Australian wheat crop of “more than 27m tonnes”, Tobin Gorey at Commonwealth Bank of Australia noted, a figure which could see the harvest take a crack at becoming the second largest on record.
Australian wheat production set its all-time high, of 29.91m tonnes, in 2011-12, with the second higher figure currently the 27.4m tonnes reached the year before.
“The market estimates are in the range of about 25m-27m tonnes,” Mr Gorey.
The harvest estimates are well above figures of 20m tonnes, and below, which were being voiced earlier in the year, with the onset of El Nino, which has a history of causing undue dryness in eastern Australia, and lowering yields.
Estimates have been on an upward trend since early August, when National Australia Bank, which had been one of the more downbeat forecasters, lifted its estimate to 21.6m tonnes, noting that weather conditions had been better than it had feared.
Grain trader Pentag Nidera upgraded its estimate on the same day from 22m-23m tonnes to “potentially exceeding” 24m tonnes.
Pentag Nidera on Thursday, after a crop tour of eastern Australia, said that it “cannot violently disagree” with the estimate of 26.0m tonnes proposed by the US Department of Agriculture.
“Overall, crops look to be in excellent condition,” the Queensland-based group said, if noting “a question mark over soil moisture levels in South Australia”.
Mr Gorey said that there was still scope for dryness to have some impact on production.
“The difference between the higher and lower estimates depends on how optimistic you are about rainfall in the next six weeks or so,” and how generous the so-called “finishing rains” for the crop will prove.
However, he highlighted that markets were already factoring in a decent harvest result, with Sydney futures for January – which closed on Thursday at Aus$275.00 a tonne, down 1.1% on the day and 18.7% from a July high – losing ground both on flat price and against Chicago values.
“The premium was at Aus$40-45 a tonne, but has come down to about Aus$20, mid Aus$20s a tonne,” he said.
Indeed, the extra production will leave Australia requiring to ship far more wheat in 2015-16 than initially expected, if it is to avoid a build-up in stocks.
A 26m-tonne crop “would imply an Australian export task in the vicinity of 18m tonnes will be required”, Pentag Nidera said.
Abares, the official Australian commodities bureau, earlier this week raised its forecast for shipments to 17.5m tonnes.
(Source – http://www.agrimoney.com/news/hopes-rise-further-for-australias-wheat-harvest–8780.html)