January 31, 2011

 

Australian wheat farmers to sow record acres in 2011

 

 

Australia, the world's fourth-largest exporter of wheat, will possibly see its farmers sow record acres with the grain this year from benefits of soaring prices and good soil moisture, analysts stated on Friday (Jan 28).

 

While the country is recovering from devastating floods in parts of eastern Australia, high prices, easing drought conditions in Western Australia, and good soil moisture in the country's east and west would encourage farmers to seed more acres, said Wayne Gordon, a grains analyst at Rabobank.

 

Gordon said farmers could plant well in excess of 14 million hectares, particularly if Western Australia, normally the country's grain top exporting state, returned to average rain after suffering the driest season on record.

 

"The reality is that farmers will plant as much as they can if they have moisture in the ground so we could see a record wheat planting of something like 14 million hectares plus," he said.

 

The previous record was 14 million hectares in 2009/10 when 21.9 million tonnes was harvested nation-wide, according to the government's chief commodities forecaster.

 

Although planting of the 2011/12 crop does not start until April, Gordon estimated that next season's harvest yields 25.2 million tonnes based on average yields as farmers plant every acre available.

 

Rabobank expects the 2010/11 crop, now in the final stages of harvesting, to yield 22.7 million tonnes.

 

"Western Australia will be the key - if there's more normal rainfall then we could see the state harvest 8 million tonnes," said Gordon.

 

The state's grain growing regions last year suffered the driest year on record, producing only 4.4 million tonnes compared with 8.2 million tonnes in 2009/10.

 

The country's wheat growers could also be set for two years of back-to-back strong profits despite eastern Australia experiencing one of the wettest harvests on record.

 

Strong global feed and milling prices, plus record yields have combined to produce very strong wheat gross margins.

 

Many eastern growers likely to have experienced their most profitable wheat growing year in a decade, Australia and New Zealand Banking Group (ANZ) said in a report on Friday.

 

It said the average east coast wheat gross margin (gross income less costs such as fuel and fertilizer), was estimated at AUD350 (US$348.15) per hectare compared with a long-term average of AUD100 (US$99.47) per hectare.

 

"This year has the scope to be just as profitable," said ANZ senior agricultural economist, Paul Deane.

 

"Australian growers are already moving to take advantage of the recent rally in global produce, selling at over AUD350 (US$348.15) per tonne for the new crop using Chicago Board of Trade swaps this week," said Deane.