August 22, 2011

 

Australia's 2011-12 wheat forecast revised down

 

 

The effects of dry weather on Northern New South Wales and Queensland's crops have prompted the National Australia Bank Ltd to reduce the production forecast of wheat to 21.8 million tonnes this year.

 

According to Dow Jones, the bank's forecast is down 12% from its April projection of 24.75 million tonnes and 17% from a June estimate of 26.2 million tonnes by the government's Australian Bureau of Agricultural and Resource Economics and Sciences. Actual output in the year ended March 31 was a record 26.3 million tonnes.

 

With annual domestic consumption of around six million tonnes, the size of the annual harvest is critical in determining the quantity of wheat available for export. Australia is usually one of the world's five major exporters.

 

"A significant lack of rainfall in the Brisbane and Newcastle port zones had managed to significantly erode topsoil moisture while crop development has been generally slow," the bank said in a monthly commodities report.

 

NAB's new crop forecast is the lowest of industry projections, while Abare's is the highest.

 

The bank's agribusiness economist, said if it were not for the rainfall this week in New South Wales, an even lower Australian crop would be in the cards.

 

"Fortunately, excellent weather across the Riverina managed to consolidate yields and prevent a collapse of the New South Wales crop," he said.

 

Average wheat yields are expected in Western Australia, South Australia and Victoria states, while below-average yields are expected in New South Wales and Queensland, he said, adding that as spring rain is vital for crop development, considerable risks exist for production in both directions.

 

The economist is not alone in rating the importance of the rains this week in southeastern Australia.

 

Another analyst noted that below-average rainfall in June and July in the eastern states raised market concerns about the outlook for the new crop but said these concerns have been overplayed.

 

"Indeed, a bumper new crop is still expected, reflecting a combination of high sub-soil moisture, an increase in area planted to grains and a positive spring rainfall outlook, with these factors moderating the impact on harvest tonnage of below-average rainfall during June and July," the analyst added.

 

Australia and New Zealand Banking Group reported Friday (Aug 19) that the rain this week significantly improved crop prospects, with east coast and South Australia now having received average rainfall for August, with 9 days of the month remaining.