January 25, 2024

 

Australia now expected to produce more wheat this year as wet weather arrive

 

 

Australia is poised to produce much more wheat and other crops in 2024 than previously thought after rainfall confounded expectations that an El Nino weather pattern would maintain dry and hot conditions, analysts and industry associations said.

 

The scale of the weather turnaround has been striking, with the driest three-month period on record between August and October giving way to what some landowners said is their greenest summer in memory.

 

While rain has caused some flooding and crop destruction in the country, higher overall production should lift the value of Australian farm output.

 

At current prices, the extra wheat, barley, canola, sorghum and cotton that analysts think is likely to be harvested thanks to the rain is worth roughly $2.5 billion, Reuters calculations showed. A larger wheat harvest would add to a global surplus.

 

The rain, which mainly fell across eastern and southern regions of Australia, has transformed the outlook for many Australian crops.

 

"Everything is heading for amazing," said Ole Houe at IKON Commodities in Sydney. He expected a roughly 30 million metric tonne wheat harvest instead of around 24-25 million tonnes if the weather had remained dry.

 

The upcoming barley crop could be two million tonnes larger than if the rain had not fallen and around 200,000 more tonnes of canola could be brought in, according to consultants.

 

Sorghum and cotton are already in the ground and heading for harvest around April.

 

Rod Baker at Australian Crop Forecasters said he had lifted his sorghum estimate to 1.7 million tonnes and some analysts predicted up to 2.5 million tonnes, far above a government forecast of 1.5 million tonnes made in December.

 

Richer pastures could slightly reduce meat exports as more animals are kept on farm, while reducing the amount of grain needed for animal feed, freeing it up for sale overseas, analysts said.

 

Cattle and sheep prices have shot up, though they remain below the highs of 2021 and 2022.

 

Some caution remains among farmers, however.

 

The weather bureau predicted median or above-median rainfall for much of eastern and southern Australia in the coming weeks, but it is unclear whether the El Nino phenomenon, which typically brings drier conditions, will end.

 

- Reuters