February 1, 2012

Australia's 2012 wheat output to hit record high

Australia is likely to produce 27.7 million tonnes of wheat 2011-12, the highest on record, reported Rabobank's January Agri Commodities.

Historically high stocks of the wheat meant Australia had become one of the lowest cost origins of low protein wheat in the world, which was very competitively priced against corn in Asian markets.

Mild conditions at the end of the growing season had resulted in overall protein levels being well below average.

More wheat was expected to be exported to China in 2012-13, due to corn becoming relatively expensive and less used in western world feed formulations.

"Wheat has been making its way into feed rations in China with demand growing 90% in the past 10 years to leave feed usage at 17 million tonnes in 2011-12, according to our estimates, Luke Chandler, the head of Rabobank's Agri commodity markets research division said.

The bank warned against factoring in higher production and lower prices until crops were in the bin.

"High volatility of yields across the agri complex in recent seasons suggests assumptions about available supply are dangerous," the bank said.