Australia wheat crop outlook trimmed; El Niño continues

Australian analysts Wednesday began lowering national wheat production forecasts in light of poor growing conditions in northern New South Wales and Queensland and a continuing El Nino climate episode.

 

Two analysts now put wheat output projections around 20 million to 21 million metric tonnes, down from estimates last week of 22 million to 23 million tonnes, but they still say production could go either way depending on rainfall.

 

"I'm probably sitting somewhere in the 18 to 21 range," but 21 million tonnes is probably the number most people would pick right now, said Robert Imray, a risk adviser and managing director at agricultural marketing concern Farmarco Australia Pty Ltd.

 

Wheat output in the last crop year ended March 31, 2009, was 21.4 million tonnes. After annual domestic demand of almost 7 million tonnes is met, the balance is available for export, making Australia a major supplier to the global trade.

 

Imray said the situation for crops in Queensland and northern New South Wales is "reasonably critical," with anecdotal reports of some crops being sprayed out, baled for hay or being turned over to livestock.

 

National production could fall to 18 million tonnes if by the end of September central and southern New South Wales is still dry with hot and windy weather, he said.

 

However, many weather forecasters are predicting rain in this region Thursday through Saturday and "an inch of rain generally later in the week would shore up current production," he said.

 

Crops in southwestern New South Wales are also starting to face some pretty fair risk, but the difference between this year and the previous drought years of 2002, 2006 and 2007 is that rainfall events are coming through, even if they aren't delivering much rain, Brett Stevenson, a risk management advisor at consultancy MarketCheck.

 

Most climate models continue to predict further development of an El Nino episode, although not as emphatically as a month or two back, the government Bureau of Meteorology reported Wednesday. Six of the seven leading international climate models surveyed by the Bureau predict that the tropical Pacific will continue to warm and to remain above El Nino thresholds for the remainder of 2009.

 

El Nino periods are usually associated with below normal rainfall in the second half of the year across the southern and inland eastern parts of the country. As would be expected, rainfall was below average across much of eastern Australia during July and August, with particularly dry conditions through Queensland and most of northern New South Wales, the bureau reported.

 

But drought conditions aren't widespread enough at this point to justify further cut in the forecasts for the crop, Stevenson said by telephone.

 

"Even if we have a pretty sort of average finish to the season - which looks a bit like it is at the moment – we're going to be over 20 million" tonnes of wheat nationally, he said. "There going to be some awful looking areas of course but the dry weather isn't general enough across the whole crop to send us to 15 million tonnes."

 

Meanwhile, recent rainfall has helped crops in Victoria and South Australia and bodes well for agricultural chemical sales, crop chemical company Nufarm Ltd. (NUF.AU) Managing Director Doug Rathbone said.

 

"The weather was great and the crops look terrific," he said in a luncheon address in Melbourne. "We'll see what the October spring rains bring and how that goes but, quite frankly, in South Australia, down the Yorke Peninsula, the crops looks great. In large parts of Victoria, the crops look good," he said.

 

If northern New South Wales and Queensland states receive similar rains, "it will be a boomer," a euphemism for a big crop, he said.