May 29, 2012

 

Australia expects higher wheat crop yields on abundant rainfall

 

 

As farmers in one of the world's top exporters wind up planting, Australia's eastern grain-belt has raised hopes of higher yields for the 2012-13 wheat crop due to much-needed rainfall over the weekend.

 

Rains in Queensland and New South Wales (NSW), which together account for a bulk of the nation's high-protein hard wheat output, received between 25-50 millimetres of rain last week, the Australian Bureau of Meteorology said.

 

Timely rain has put the rapeseed crop in NSW on track for a record harvest.

 

Charlie Aldersey from MSM Milling says with plantings at record levels, and prices at near record highs, it could be a big year for rapeseed.

 

He says some areas of western NSW have planted the crop for the first time; and the weekend rain was just in the "nick of time".

 

"It's put a smile on the face of a lot of farmers, and the industry in total; some had planted earlier enough that they had had some emergence, and others had dry planted and they were just hanging on, hoping that the rain would come".

 

Weeks of dry weather had led some farmers to worry about yields. But despite the rains, analysts are still forecasting a smaller 2012-13 harvest of between 24 and 26 million tonnes as farmers move away from wheat to rapeseed and livestock where they achieve greater returns.

 

The Australian Bureau of Agricultural and Resource Economics and Sciences expects a 2011-12 crop of 29.5 million tonnes. Global wheat prices have rallied in recent weeks on concerns over adverse weather in the world's top suppliers the US, Russia and Australia. The prices of benchmark Chicago wheat futures climbed more than 17% in the week to May 20, its biggest weekly gain in 16 years.

 

"It's pretty timely," said Bruce Woods, a grain farmer is Queensland. "When you speak to people across the board, they seem to have received enough rain for crops already planted to germinate and for those yet to be planted."

 

Queensland and NSW had received less than 20% of their average rainfall in May, leading to slower seeding. Farmers had said 25 millimetres of rains was needed to provide top-soil moisture, supplementing good sub-soil moisture, which would allow seeds to germinate before any potential yields are lost.

 

Still, most parts of Western Australia, the top exporting region, have received blow average rainfall, causing concerns as the planting deadline of mid-June approaches.

 

"Western Australia and parts of South Australia are still too dry and it is causing some worry," said one Melbourne based trader.

 

"Everything will get planted within the time frame as farmers will plant in the dry soil because they are used to it and of course global prices are very encouraging."

 

Western Australia and South Australia produce the most prime and standard wheat, which is in demand for milling across Asia. The USDA is forecasting Australia will produce 26 million tonnes in 2012-13, although forecasts by many domestic banks are lower at between 24-25 million tonnes.

 

Global wheat stocks should fall to a four-year low by the end of the 2012-13 season, the International Grains Council said in a monthly update last week. A spring drought in wheat-growing regions on the Black Sea has already reduced the outlook for this year's harvest, but forecasted rains could halt the damage in the coming days and weeks, a crucial period for crop development.