March 3, 2008

 

Australia's 08-09 wheat output could double to 26 million tonnes

 

 

Wheat production in Australia could double to 26 million metric tonnes next crop year from drought-affected output of 13 million tonnes this crop year ending March 31, Rabobank Australia Ltd. forecast Monday ( March 3, 2008).

 

Summer rainfall helped replenish soil moisture levels in much of the eastern states, but further rains will be needed before planting in May and June, particularly in Victoria, South Australia and West Australia states, senior commodity analyst Luke Chandler said in an analysis.

 

"Depending on further rains, Australian wheat production may double in 2008," with Rabobank currently forecasting the crop in a range of 23 million to 26 million tonnes, he said.

 

This will result in a rebound in Australian exports from late 2008 and also ease domestic supply shortages, weighing on prices, he said.

 

Australia is usually a major global supplier of wheat.

 

More broadly, fundamentals for the new global crop this year are expected to result in a "significant increase in world wheat production and stock rebuilding," he said.

 

This should create a bearish environment for prices. However, increasing investment from funds into commodity markets, including wheat, is likely to skew prices to the high side of historical fundamental fair values, he said.

 

Nearby global wheat prices will continue to be supported by tight old crop fundamentals, which include firm demand for high quality wheat, he said.

 

"Discretionary demand will be at a minimum, given current price levels as consumers hold off until new crop supplies come onto the market," the analysis forecast.