February 15, 2012

 

Australia expects record 2012 wheat yield

 

 

Australia on Tuesday (Feb 14) lifted its estimate for wheat production this year by 4.2% to a record 29.5 million tonnes, as key growing regions have completed harvesting before the onset of heavy rains.

 

Chicago Board of Trade wheat slid nearly 1% on Tuesday, falling for a fifth time in six sessions, as forecasts of crop-friendly weather in the US Plains and Australia's estimate of a record large harvest weighed on the market.

 

"Australia will be competing in the world market through the end of the year even when the other origins come in," said Adam Davis, a senior commodity analyst at Merricks Capital in Melbourne, referring to Australia's wheat production forecast.

 

"It is going to stretch Australian export infrastructure, prices are already reacting to high global prices."

 

Australia's higher output forecast follows a USDA estimate of a rise in global supplies.

 

A USDA report last week showed the world ending stocks at 213.10 million tonnes in the 2011/12 crop year, up from the January outlook of 210.02 million tonnes and above analysts' expectations for 209 million tonnes.

 

Exports of wheat from Australia, the world's fourth largest supplier, were also revised up by 3.2% to 22.3 million tonnes from the previous forecast, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said in its latest crop report.

 

"Harvesting of this season's winter crop is now virtually complete with only a small number of southern areas still to complete harvest," ABARES said. The winter-planted crops are normally harvested early in the new calendar year.

 

Some downgrading of cereal crops occurred in Queensland, New South Wales and Western Australia states because of wet conditions during the harvest.

 

In New South Wales, the second-largest wheat-growing state, winter crop production is estimated to have fallen by 26% versus the previous harvest to just over 7.9 million tonnes.

 

Rainfall in November and early December delayed the harvest and resulted in some crop losses due to flooding in the north, according to ABARES.

 

In western Australia states, wheat production exceeded early expectations and is estimated by ABARES to be up by 135% in 2011-12 to a record of around 11.7 million tonnes.

 

"Yields were assisted by above average rainfall in October and are estimated to be around 2.3 tonnes a hectare, the highest average wheat yield on record for Western Australia," ABARES said.

 

However, the winter crop harvest in southern Queensland and northern New South Wales was completed before recent flooding, ABARES said.

 

It estimates 75% of the wheat crop is milling grade.

 

Still, some analysts doubted ABARES's estimates.

 

"The (Australian) report today is perhaps a little higher than expectations," Jonathan Barratt, an independent agricultural analyst in Sydney, said.

 

"On the eastern seaboard, we had major concerns on the yield and the quality of the wheat," Barratt said.

 

Turning to summer crops, ABARES said generally favourable growing conditions are forecast to drive higher yields and production.

 

The upbeat forecasts come despite some eastern Australian agricultural belts being inundated with flood rains for a second year running, with at least two more months of the summer wet season to go.

 

The Bureau of Meteorology's seasonal rainfall outlook for February to April 2012 favours wetter-than-average conditions across western Australia and generally average conditions for much of southern and eastern Australia.

 

But La Nina, a weather phenomenon usually linked to heavy rains and flooding, in Australia showed further signs of weakening over the past two weeks as the tropical Pacific Ocean warmed, according to the bureau.

 

The total summer crop area is estimated to be largely unchanged in 2011-12 at 1.6 million hectares versus the previous year.

 

ABARES said some producers of summer crops in southern Queensland and northern New South Wales had faced untimely heavy rainfall and flooding.

 

"There is likely to be downgrading in crop quality and crop losses for these producers, however until the flood water recedes, the full extent of crop damage will be unclear," it said.