Wheat condition has improved markedly in Eastern Australia, after rain moved through the region.
“Much of South Eastern Australia received welcome rainfall in early May,” said Rabobank. “After a hot and dry start to autumn, this break will be very welcome”.
Fears were growing for Australian winter wheat, which is sown between April and June, due to dry conditions.
“Winter crops were facing very dry planting conditions on the east coast but good rain has markedly improved sentiment,” said Phin Ziebell, at National Australia Bank, said.
“In May, many parts of Eastern Australia enjoyed good planting rain, lifting optimism around wheat yields this season.”
And the Western Australian wheat belt needed little support, having “enjoyed arguably the best start to the wheat season in living memory,” Mr Ziebell said.
Improving conditions are weighing on Australian wheat prices, even as Chicago wheat rallies from its early-March lows.
“Australian producers have seen a limited increase in farm gate prices, as a combination of wet weather domestically and lacklustre export demand kept a lid on prices,” said Rabobank.
But these lagging prices could open up export opportunities.
“Australian wheat is looking the cheapest it has been for some time,” said Tobin Gorey, at Commonwealth Bank of Australia.
July wheat futures in Australia closed at $273 a tonne on Friday.
La Nina hopes
But Rabobank warned that “follow up rain over the next few months will be important in ensuring that the crop reaches spring in good condition”.
“Weather forecasters expect rainfall to tail off now for a while,” said Mr Gorey.
Still, Australia’s Bureau of Meteorology (BOM) says that above average rain across Eastern Australia is likely over the June to August period.
And Australian wheat farmers, who will take us much rain as they can get, will now be looking forward to the possibility of La Nina, which usually brings heavy rains to Eastern Australia during the crucial seed feeling period of August and September.
The BOM currently has the possibility La Nina in 2016 at around 50%, with other forecasters putting the chance as high as 75%.
(Source – http://www.agrimoney.com/news/australian-wheat-fears-ease-after-may-rains–9596.html)