March 17, 2008

Australia forecasts 10 percent surge in winter grain planting for 2008-09

Australian grain producers anticipate a surge in winter grain planting for the 2008-09 season, eager to capitalise on high domestic and world wheat and coarse grain prices.

The Australian Bureau of Agricultural and Resource Economics (ABARE) said total winter grain plantings for 2008-09 are forecast to increase 10 percent, to 13.4 million hectares.

With drought affecting much of southern Australia and below average harvests for two consecutive years, an improved 2008-09 winter grain harvest is crucial to the viability and income of producers, ABARE said.

Producers' desire for quick income from cropping is likely to impact cattle and sheep numbers, with herd and flock rebuilding to be slowed as producers increase their focus on cropping.

Australian wheat production is forecast to increase to just below 26 million tonnes in 2008-09, almost double the 2007-08 harvest of 13.1 million tonnes.

ABARE said that while the increased production volumes for 2008-09 is forecast to push Australian wheat prices 18 percent lower, to an estimated AUD359 (US$331) a tonne, prices are still well above the average returns in 2005-06 and 2006-07, of AUD192 (US$177) a tonne and AUD240 (US$221) a tonne, respectively.

Generally, Australian grain production is estimated to expand on very favourable returns, reflective of strong global demand.