August 31, 2011

Western Australian wheat to surge

The production of winter crops including wheat in Western Australia will surge against the present forecast if the state receives good rainfall through September, according to industry sources on Tuesday (Aug 30).

Western Australia usually accounts for up to 40% of national wheat output. Last year, the state produced a drought-reduced 4.7 million tonnes, contributing less than 20% of total national production. The state's output will help determine export availability in Australia, usually one of the world's top five wheat exporters after domestic demand of six million tonnes is met.

"If we get a reasonable September, it could be a fantastic season," a grain operations manager at Cooperative Bulk Handling Ltd. (CBH), said. "The foundations are good here."

CBH is comfortable with its most recent estimate for total winter crop production in the state of around 11.3 million tonnes, which implies wheat production of around 7.9 million tonnes.

July and August were outstanding months for rainfall in the state's wheatbelt, but September is the money month as far as crops are concerned, so some rainfall events through the month will set the crop up well, he said.

The rainfall outlook for wheat-growing areas in Australia in the September-November period suggests wetter-than-normal weather is favoured in the Western Australian wheatbelt, the Australian Bureau of Meteorology said.

CBH operates a near monopoly over storage and export grain logistics in Western Australia.

Agricultural lender Commonwealth Bank of Australia (CBA.AU) said further rainfall is needed to boost production in central and northern areas of New South Wales state and southern Queensland state.

The bank reiterated its national production forecast for the crop year that began April 1 at 23.5 million tonnes, which if achieved would be down 11% from actual output of 26.3 million tonnes in 2010-11.

National Australia Bank Ltd. (NAB.AU) also reiterated its national output forecast for wheat in 2011-12, at 21.8 million tonnes, saying the impact of dry weather on crops in northern New South Wales state and Queensland state will result in below-average yields.