October 28, 2011
Australia's 2011-12 wheat forecast revised up
Australian wheat crop production forecast was revised up by the National Australia Bank (NAB.AU) Thursday (Oct 27) after favourable September rains.
An analyst even said that there is further upside potential, thus, raising the possibility of a record national crop.
Australian wheat production always attracts global market attention at this time of year given the big impact a bumper crop like last year's can make to global supply, especially following several severely drought-reduced harvests in recent years. After domestic wheat demand of six million tonnes a year is met, the balance of production is available for export, usually making Australia one of the top five suppliers to the global trade.
NAB is projecting wheat production this crop year ending March 31 at 25.05 million tonnes, lower than an estimate in September by the Australia Bureau of Agricultural and Resource Economics and Sciences of 26.2 million tonnes, which is just short of record output of 26.3 million tonnes in 2010-11.
"With another solid crop on the cards and yields close to being locked in, the market will start refocusing its attention on quality," a NAB's agribusiness economist, said in a monthly review. "Any quality downgrades this season are likely to expose producers to significant downside on prices received."
A risk management adviser at commodity manager AGvise at Merredin town in Western Australia's central wheatbelt, said the mild spring weather in Western Australia suggests protein levels could be relatively low, but there has not been enough wheat harvested and tested yet to make a definite call.
NAB's forecast for national production in 2011-12 is based on output in Western Australia of 8.9 million tonnes, while Abares's estimate is nine million tonnes.
But the advisor also said he would very surprised if output in the state does not easily beat nine million tonnes, with some talk in the trade of the crop yielding more than 9.5 million tonnes.
Much of the northern wheat belt, particularly its western areas, could be enjoying the best growing season ever, he added.
Anecdotally, there are reports of some northern crops yielding up to 3.4 tonnes a hectare, he said, falling just short of doubling Abares's statewide long-term average of 1.76 tonnes/hectare.
Heavy rainfall across the wheat belt in recent days could benefit southern crops in the state, but crops north of Merredin are mostly "done and dusted," with the rain now delaying harvest, the advisor said.