April 23, 2012

Australia's 2012-13 wheat production likely up while prices stay weak

While ensuring domestic prices to remain relatively weak by world standards, Australia is set to produce another big wheat crop this crop year, agricultural lender National Australia Bank Ltd. (NAB.AU) reported Friday (Apr 20).

Production is forecast to reach 26.1 million tonnes in the year ending March 31, 2013, down 12% from a record 29.5 million tonnes last year, Michael Creed, the bank's agribusiness economist, said in a monthly sector review.

"Driving our view is the expectation of above-average yields on the east coast, where the wettest two-year period on record has set up an excellent subsoil moisture profile."

Rapeseed will be planted on some lost wheat acreage.

Australia's annual wheat demand of around six million tonnes is expected to remain more than adequately supplied. Shipments are happening at a record pace, but if the crop forecast comes to pass, total domestic supply at the end of 2012 could reach a massive 36 million tonnes, weighing on Australian prices relative to Chicago futures for some time, Creed said.