Mixed outlook for Australian wheat

The Australian Bureau of Agriculture and Resource Economics (ABARE) on Dec. 15 forecasted in its commodities report that Australian wheat production and wheat exports would increase in 2009-10.

However, lower global prices and high domestic production would push down domestic prices for Australian wheat, ABARE reported.

World wheat production in 2009-10 is expected to be the second highest on record at around 667 million tonnes compared to last season's record production of 687 million tonnes. ABARE said that the forecast record supply of wheat and lower expected global demand for feed wheat, the world wheat indicator price is forecast to average $219 per tonne in 2009-10. The agency said it expected downward pressure on domestic wheat prices because of lower global prices combined with higher domestic supplies.

Australia's domestic wheat production and exportable supplies are forecast to increase compared to last season, but the relatively high Australian dollar, if sustained, will adversely affect returns for Australian wheat producers, ABARE said.

The average pool return for Australian premium white wheat is forecast to be A$256 a tonne in 2009-10, compared with A$324 a tonne in 2008-09, according to the agency. The domestic cash price for wheat used for livestock feed has fallen to an average of A$229 in November 2009 after averaging A$323 for the whole of 2008-09, ABARE said.

ABARE forecasted domestic wheat production to rise by 5% to 22 million tonnes in 2009-10. Australian wheat exports on a marketing year basis (October to September) are forecast to increase to 15.1 million tonnes in 2009-10, 3% higher than in 2008-09, ABARE said. This increase reflects higher expected production for the year. However, the value of Australia's wheat exports on a financial year basis is forecast to fall by15% to A$4.3 billion because of forecasted lower world wheat price and an assumed higher Australian dollar.