Australia’s wheat crop could be in for a dramatic upgrade, potentially to a record high, thanks to wet weather which has put “stellar yields” in prospect – if stoking the quality worries already live in the world market.
Forecaster Lanworth pegged the Australian wheat harvest this year at 24.3m-29.3m tonnes, with a central estimate of 27.2m tonnes, flagging “overall beneficial conditions during the growing season”.
Indeed, satellite imagery shows “record vegetation density… across nearly all major growing regions”, the analysis group said, adding that Australia was “on track for stellar yields” in wheat.
The group’s harvest forecast is well above the 25.4m tonnes expected by Abares, the official Australian commodities bureau, and would represent a sharp improvement on last year’s harvest of 24.2m tonnes.
The estimate is also above the 26.5m tonnes expected by the US Department of Agriculture, and a little ahead too of the 27.0m-tonne forecast last week by the International Grains Council, upgraded by 1.0m tonnes.
However, even Lanworth could be significantly underestimating crop potential, according to the Australian arm of crop trader Nidera – which says a record harvest could be on the agenda.
“The largest domestic wheat crop 29.6m tonnes was recorded in 2011-12 and at this point in time it is hard to see this year’s crop being under 30m tonnes,” said Peter McMeekin, origination manager at Nidera Australia.
He flagged the support to yields from rains which some forecasters are linking to the switch to a potential La Nina weather pattern, which meteorologists at New Zealand’s NIWA said on Thursday has a 55% chance of developing in the September-to-November period.
Mr McMeekin said: “Queensland, New South Wales and Western Australia were the big beneficiaries from last week’s rainfall.
“Whilst there are isolated stories of waterlogging and calls for Noah to build an ark, on the whole the crop will benefit and there is increased certainty around this year’s winter crop production.”
However, the extent of the rain has begun to raise concerns over crop quality, amid growing concerns that the huge world wheat supplies disguise a dearth of supplies with high specifications.
While rains in the growing period are generally helpful to yields, moisture encourages ripe kernels to sprout, cutting milling quality.
New South Wales-based grain trader AgVantage said that “whilst there is a glut of lower grade quality wheat in the world market, there are concerns for the quantity of higher protein wheat.
“We believe growers that can produce high protein wheat this year will benefit from higher-than-traditional grade spreads between APW and APH2 or better,” APW referring to Australian premium white wheat, and APH2 prime hard wheat.
‘Need a drier period’
At Commonwealth Bank of Australia, Tobin Gorey said that “forecasters expect rainfall for several days in eastern parts of Australia’s winter grain region.
“The extra moisture might well work against grain quality.”
Australia’s winter crops “are looking at large production potentials but, with harvest approaching, crops will need a drier period to ensure a good finish”.
Mr McMeekin acknowledged that the rains had hurt prospects for Australian chickpea production.
“Chickpeas don’t like wet feet so the waterlogging issues combined with high disease pressure will likely see a downward revision in Pulse Australia’s next production estimate,” due in mid-September, he said.
The prospect of a huge harvest has only added to the task Australia faces to boost its exports, to avoid a large carryout inventory at the close of 2016-17.
Mr McMeekin talked of a 20m-tonne export programme over the next 12 months, ahead of the pace expected by the USDA for 2016-17 of 18.5m tonnes, with the IGC foreseeing volumes of 18.0m tonnes.
After a slow period for shipments, Mr McMeekin said that Australia, the southern hemisphere’s top wheat exporter, was “finally catching some export demand”.
“Sales of new crop wheat have been reported into Thailand, Philippines and Vietnam over the past week and the trade is seeing further export enquiry for both the old and new crop shipments.
“Over 200,000 metric tonnes of business is reported to have been concluded with APW values pegged at $213 a tonne CNF Thailand, and ASW [Australian standard wheat] at $203 CNF Philippines for February shipment.”
(Source – http://www.agrimoney.com/news/australias-wheat-crop-could-be-in-for-dramatic-upgrade–9892.html)