September 11, 2018

Australia wheat forecast cut by nearly 13%
 

As a result of crippling drought throughout the east coast regions, Australia has lowered its wheat forecast by almost 13%, positioning the world's fourth-largest exporter at a 10-year low.

According to the Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES), wheat production during the 2018/19 season will total to 19.1 million tonnes.

In June, ABARES forecasted wheat production as 21.9 million tonnes but the country's chief commodity forecaster had cut its outlook because the east coast, which is Australia's second-biggest wheat producing region, recorded less than 20% of its typical rainfall over the last three months.

Lower wheat production will reduce Australia's wheat export capacity, which in turn, increased prices, amid concerns over a shortfall in supplies. Prices of wheat rose to its highest last month.

Typically, Australia exports two-thirds of its wheat howeverfaced with dry weather, demand from domestic millers will likely to supersede major importers such as Indonesia.

Additionally, in August,the Reserve Bank of Australia warned that the severe drought can potentially impact the economy negatively.

ABARES shared that production across Australia's east coast will total to only 5.74 million tonnes, which ranks it as the second consecutive season below average output and down from its June estimate of 9.3 million tonnes.

In 2015/16, the east coast's total production reached 17 million tonnes. "It is terribly sad, without rain over the next couple of weeks, I don't think we will get a crop at all," Dan Cooper, a farmer in Caragabal, New South Wales, located 400 km (250 miles) west of Sydney, said.

While Australia's east coast production is suffering, ABARES said production from the west has been aided by timely rains.

ABARES analysed that production from Western Australia will hit 9.6 million tonnes, up from its previous estimate of 8.1 million tonnes.
 

Source: Reuters.