August 17, 2011

 

Drought trims Australian wheat, record rapeseed crop

 

 

The lack of rain in eastern Australia, which is already slicing wheat hopes, has also begun to shrink expectations of a record rapeseed yield, which eventually led farmers to give them up for grazing.

 

The Australian Oilseeds Federation followed up a series of upgrades to its estimate for the 2011-12 Australia harvest of the rapeseed variant with a downgrade of 100,000 tonnes, to 2.49 million tonnes.

 

The figure would still be the highest on record for Australia's rapeseed production, according to USDA data, although now with a margin of only 30,000 tonnes above the 1999-2000 high.

 

However, it highlights the continuing concerns over dryness notably in part of New South Wales and Victoria which have already prompted Commonwealth Bank of Australia to cut hopes for the country's wheat.

 

"Much of New South Wales has experienced four consecutive months of below-average rainfall, which has served to impact crops grown in the western margins of the cropping zone," the federation said. "Some growers are reported to be about to open their crops to grazing due to their expected poor prospects."

 

Farmers also face a "significant" risk of mice infestations, with the threat of weeds boosted by conditions "which have not been conducive to spraying".

 

Australia's rapeseed prospects are being viewed with keen interest even in the European Union, where a disappointing harvest of rapeseed in top producer Germany, and in Ukraine, a leading exporter to the region, has left buyers prepared to look further afield for supplies.

 

The UK grain arm of a leading European commodities house said on Friday that "with good prospects also for Canada, and later in the season, Australia, the overall supply no longer looks so tight".

 

The downgrade comes two weeks after Commonwealth of Australia cut its forecast for Australia's wheat crop, also citing east-coast dryness, which the group said had left crops looking backward and "thin".

 

Indeed, CBA analyst Luke Mathews said last week that a USDA estimate of 25 million tonnes for the Australian wheat crop was "high because of the recent deterioration in east coast seasonal conditions".

 

And, while some rain is forecast for eastern areas, this may not provide the relief hoped for by investors who gave Australian wheat a soft start to the week, even when futures in the grain rose on foreign exchanges.