Third-largest Australian winter wheat crop on record expected
The 2011 total winter wheat crop is expected to be Australia’s third-largest on record, according to a new industry report released by specialist agribusiness bank, Rabobank.
Rabobank estimates the wheat crop at 25.6 million tones for winter, despite variable crop conditions along the east coast and in South Australia. The expected increase in Western Australian production should compensate for the anticipated fall in the East Coast production.
Rabobank senior analyst Dean Smith said that Spring has proven to be Australia’s season of discontent with prices falling sharply for most soft commodities, including wheat, barley and canola. He said that soft commodity prices have been heavily influenced by continuing concerns over the European debt crisis and the resulting flight to safety by global investors.
“A very significant rainfall event at the end of September dramatically improved crop conditions along the East Coast, either consolidating or improving yields. The majority of the Western Australian winter crop is in superb condition, with some regions being declared ‘best ever’,” Mr Smith said.
Australian Food News previously reported an earlier prediction by the Australian Bureau of Agricultural and Resource Economics and Science that Australia would see its second largest wheat harvest during 2011-2012.
International grain market picture
Australian wheat exports are “very likely” to exceed 18.3 million tonnes for the 2010/11 season, the latest report says, with exports already having reached 17.1 million tonnes by August 2011. Mr Smith forecasts China to become one of the top export destinations for Australian wheat over the coming six months.
Mr Smith says a key ‘signpost’ to watch out for in international grain markets will be Chinese involvement, with Chinese grain reserves at historically low levels.
“China has traditionally held a very large strategic grain reserve however, with domestic demand exceeding supply in recent years, stocks are very low meaning it is reasonable to suggest that China’s demand for feed grains should provide some real support for grain prices,” Mr Smith says.
“Recent evidence to support this took place in early October when prices for corn fell to six dollars a bushel – China entered the market and purchased close to one million tonnes.”