Drought concerns grow in Western Australia

Farmers in Australia's top wheat producing state have two weeks to wait and see whether their autumn plantings are at risk of the kind of drought which sent production tumbling four years ago.

 

In Western Australia, which typically produces more than 35% of the country's wheat, winter rains arrive on average on May 20, according to an analyst.

 

The failure of rains to arrive around then would stoke concerns of a repeat of 2006, when a lack of rain curtailed the state's production to 5.1 million tonnes, compared with a high of 11.1 million tonnes three years before.

 

"In 2006, when the state did not get the break, soil in parts turned to sand, production was decimated," the analyst said. "Drought is high up on the radar again, although looking globally, a poor crop might not have the same impact on prices as in 2006-07, when supplies were so tight."

 

The comments followed a cut of about one million tonnes to seven million tonnes by CBH Group to its forecast for Western Australia's wheat harvest, because of the dry conditions.

 

Farmers have been sowing wheat in dry ground in hope of rains, the grain handler said.

 

Mitch Morison, general manager commodities at rival AWB said, "The market is starting to get concerned about the dry conditions in Western Australia.

 

"However, the market is still dealing with burdensome global inventories from previous seasons and this tends to cap the scope for price rallies," he said.

 

Agriculture officials in Western Australia are due shortly to produce a monthly update on its agricultural prospects. Their April 8 report said that the state had received "fairly widespread, but patchy, rainfall events" in late March.

 

"Grain growers are approaching the growing season with caution," they added.