Australian wheat crop outlook promising, some risks

Widespread rainfall in June on Australia's farm lands boosted the outlook for wheat production this crop year, Rabobank Australia reported Monday (July 13) as it held unchanged on month its output forecast of 22.8 million tonnes.

However, it warned of two key emerging risks to the crop, namely an increased chance of an El Nino weather episode, which is usually but not always associated with below-average rainfall, and potential yield impacts from reduced use by farmers of fertilizer and crop chemicals, with producers being more risk averse in spending terms in the current economic climate.

For canola, the total area planted is expected to be higher than the previous year, but the late start to plantings in Western Australia - usually the biggest producer state - has reduced area and yield expectations in some regions, it reported.

Separately, Perth-based marketing advisory service Profarmer Australia said crops made a better start to the season in the eastern states than in Western Australia due to earlier and more planting rains.

"Nationally, all crops this season have had a better start than in previous seasons," Profarmer reported in a newsletter issued late Friday, in which it also acknowledged the potential for a sharp El Nino-related drop-off in crop condition in spring.

"With wheat acres thought to increase on last season, strong tonnages could again be seen," it said. "All crops have had a great start to the season."

Australia produced 21.4 million tonnes of wheat last crop year ended March 31. After annual domestic demand of almost 7 million tonnes is met, the balance is available for export, making Australia a major supplier to the global trade.

National canola output last crop year was 1.88 million tonnes, most of which is available for export.