March 9, 2007

Biofuels boost Australian grain farms
 

The outlook for the Australian grain-growing sector is bright, thanks to the growing demand from the biofuels sector.

The Australian Bureau of Agriculture and Resource Economics (ABARE) is expecting grain production to bounce back this year, said ABARE's Vince O'Donnell at the Outlook conference in Canberra.

O' Donnell said the low world grain stocks are pushing world prices up, due to increased demand for feed grains for biofuels, combined with the expansion of livestock industries.

ABARE executive director Phillip Glyde said 2006/2007 had been a tough year, with grain growers in eastern states particularly hit hard.

The upside though, said Glyde, is agricultural commodity prices generally to shoot up in 2007/2008 and a return to normal seasonal conditions could further elevate crop production.

Winter cereal production, assuming normal seasons, is forecast to be 38.4million tonnes, 23 million above last year's drought-reduced crop, according to Glyde.

World wheat prices are currently at their highest level for 10 seasons, at A$242 a tonne, up from A$191 a tonne last year.

ABARE is forecasting a 21 percent rise in the value of wheat exports, up to A$3.8billion.

O'Donnell said demand for biofuels was expected to drive demand for grains and oilseeds in the medium term.