National Australia Bank hiked its forecast for the Australian wheat harvest, but to levels well below those officials are expecting, as mounting dryness provokes fresh debate over production prospects.
“Solid and timely rainfall” in Western Australia and New South Wales had boosted crop prospects since NAB’s last crop forecast, two months ago, when the bank, one of the most pessimistic commentators this year, pegged the crop at 21.6m tonnes.
“The risk of El Niсo,” which has a history of bringing dryness to many key grain-growing areas, “is pushed back towards [southern hemisphere] summer”, said Khan Horne, general Manager of NAB agribusiness.
“We have revised our production forecast to be 1.4% higher than last year,” he said, implying an estimate of a 24m-tonne crop.
However, that is still short of the forecast of 25.28m tonnes from Abares, the official Australian commodities bureau, and significantly below some market forecasts which topped 27m tonnes last month, before drier weather set in during what is a key period for determining yields.
While better-than-expected winter rains for many areas have taken dire scenarios for the crop off the table, moisture is needed now in many areas to promote grain-fill.
“Challenges remain approaching summer,” NAB said, highlighting in particular a need for rains in parts of Queensland and Victoria, although threats were worst for summer crops, such as sorghum.
‘Weather proving unkind’
The comments came as Queensland-based grain traders Pentag Nidera said that “there is no doubt the dry conditions are impacting yield in Australia”.
While stopping short of issuing a forecast, the group raised the scenario of the harvest falling 1m-2m tonnes short of previous expectations.
And at Commonwealth Bank of Australia, Tobin Gorey said that “The spring weather is proving to be unkind.
“And it is certainly well short of the perfection required to meet the most optimistic of production estimates.”
‘Unwind the optimism’
Speaking after a field trip, Mr Gorey said that, with weekend temperatures forecast to reach “well into the 30s Celsius” in parts of South Australia, “many farmers I spoke to are bracing for their yields to fall a half tonne per hectare as this sudden heat takes its toll.”
He added: “The market is continuing to unwind the optimism about winter wheat crops.”
Indeed, Sydney wheat futures closed on Thursday up 2.4% at Aus$298.00 a tonne, taking to 9.2% their recovery from a late September low.
(Source – http://www.agrimoney.com/news/australian-wheat-prices-rise-as-dryness-worries-revive–8834.html)