July 8, 2004

 

 

Australia's 2004/05 Wheat Production Seen At 23.5 Million MT

 

Australia's 2004/05 wheat production is forecast at 23.5 million metric tons, while barley production is forecast at 7.3 MMT, according to information from the U.S. Department of Agriculture's Foreign Agricultural Service web site, dated July 1 and released Wednesday.

 

Wheat/Barley Production Prospects for 2004/05

 

Australia's 2004/05 wheat and barley crops are forecast at 23.5 million MT and 7.3 million MT, respectively, unchanged from Post's previous forecasts. These forecasts take into account widespread, beneficial precipitation during the month of June and are predicated on average weather conditions for the remainder of the 2004/05 growing season. The planting of the 2004/05 winter grain crop is now virtually complete.

 

The Australian Bureau of Agriculture and Resource Economics revised their 2004/05 wheat production forecast downwards from 24.0 million MT to 23.3 million MT in their most recent Crop Report, which was released on June 8, 2004. The reduction was mostly attributed to lower expected wheat area. In the Crop Report, ABARE revised their 2004/05 barley production forecast upwards to 7.8 million MT, versus the prior 6.3 million MT. This increase was mostly attributed to larger expected barley area, the report said. The late arrival of planting rains in key areas has favored barley, a shorter season crop.

 

Another large grain crop is expected in Western Australia, Australia's major grain producing and exporting state. In a recent status report, Co- operative Bulk Handling (CBH), the major grain handler in Western Australia, indicated they expect to receive 12 million MT of grain (including grain, oilseeds and pulses) from the 2004/05 winter crop. In 2003/04, CBH winter crop receivals totaled an all-time record of over 15 million MT, sharply higher than the previous record of 12.2 million MT in 1999/2000.

 

During the month of June, widespread precipitation was registered across most winter cropping areas of Western Australia, South Australia, Victoria and southern New South Wales (NSW).  Northern NSW and Queensland, however, had below average precipitation during the month.

 

Prior to June, Victoria and southern NSW were both suffering from below average rainfall, which had delayed planting. The June rains allowed growers in these areas to plant winter crops, with most of the planting now complete. The more limited precipitation in Queensland and northern NSW did provide valuable follow-up rains for crops that had already been planted.

 

Prices Softening for 2004/05 Wheat and Barley Crops

 

Softening world grain prices have begun to pressure expected pool returns for the 2004/05 wheat and barley crops. On June 21, 2004, AWB Ltd. lowered its Estimated Pool Returns (EPRs) for 2004/05 for the majority of the milling grades, with the EPR for the benchmark APW wheat grade now set at A$217 per MT, versus an EPR of A$226/MT in 2003/04. ABB Grain Ltd., which runs the barley pool in South Australia, recently announced that the gross barley pool indicators for 2004/05 are A$175-$185 per MT for malting 1 barley and A$147- $157 for feed 1 barley. A recent decline in the Australian dollar, which helps boost returns from exports, is providing some support for domestic grain prices. The Australian dollar is currently trading at about US$0.69, down sharply from the peak of US$0.80 in early 2004.

 

Wheat Export Pace

 

Wheat exports for the first half (Oct-Mar) of MY 2003/04 of 7.6 million MT are about 15% shy of the export total for all of MY 2002/03, according to data from the Wheat Export Authority. Indeed, export quantities for the first half of MY 2003/04 have already exceeded full-year 2002/03 for Egypt (+554%), China (172 TMT versus zero), South Africa (618%), and Turkey (462%). CBH reports that grain exports (including all grains, oilseeds and pulses) from their Western Australian facilities have averaged record-setting levels of over one million MT per month since November 2003.

 

ABARE Crop Report

 

ABARE is scheduled to release revised estimates/forecasts of grain and oilseed crops in their next issue of the Australian Crop Report, due out on Sept. 7, 2004.

 

Source: USDA