Heavy rains have, in bringing “washed out fields and unharvestable crops”, cost Australia’s wheat harvest a crack at the title of the largest ever, and are threatening quality downgrades too, Rabobank said.
The bank forecast the country’s newly-started wheat harvest at 35.5m tonnes – a hefty result by historical standard, being 47% above the five-year average.
“The nation is set to harvest its third consecutive bumper winter [grains] crop,” the bank said, with persistent rains, typical of La Nina in eastern Australia, having supported yield prospects.
Barley output was expected to set a record, of 14.8m tonnes, with canola production seen at 7.2m tonnes, also an all-time high. Total grains output was pegged at 61.9m tonnes.
‘Too much of a good thing’
However, the most recent round of inundations, which saw parts of Australia receive four times their average October rainfall within 24 hours, has denied the wheat crop the chance of challenging last year’s 36.3m-tonne result.
The state of Victoria “was on track to break production records until last week”, said Rabobank agricultural analyst Dennis Voznesenski, adding that “too much of a good thing… has robbed Queensland of a record year” too.
For the season overall, New South Wales has been “hardest hit by excess rain”, and poised for a dip of 28% year on year in its overall grains production, with the wetness expected to have reduced quality too.
Reporting that New South Wales farmers “are battling conditions even wetter than last year”, Mr Voznesenski said that “crop quality has also been significantly impacted” – both directly, and through the setback to fieldwork that rains have caused.
“Prevalent weed and disease issues had been compounded by farmers not being able to get on to paddocks to spray because of wet conditions.”
There is “even more feed-quality wheat now expected from the state than last year”.
The comments come as Australia is braced for further rains, which are expected for farmers to prolong the harvest, as well as threaten further field floods, as well as quality downgrades.
“Across New South Wales, parts of Victoria and southern Queensland, we expect to see considerably less hectares harvested than were planted, due to excessive rains” at some point in the season, Mr Voznesenski said.
Nonetheless, Australia looked poised for a further season of bumper grain exports, with an exportable surplus of 53.5m tonnes, including some supplies left over from last season.
That is in fact more than the country’s grain export capacity of 47.5m tonnes, Rabobank said, viewing that Australia’s “ability to supply world markets will be limited by supply chain bottlenecks”.
The extent of supplies will weigh on Australia’s grain values, Mr Voznesenski said, forecasting that “with another near-record crop in the process of being harvested, and still significant carry-over from last year, we expect local prices to be pressured below global levels”.
However, separately, analysis group Episode3 flagged worse prospects for prices of lower grade wheat than higher quality, given the extent of damage from the rains.
“A big supply of lower protein wheat makes the discount [to high spec wheat] increase as the trade looks to get hold of whatever high protein is available for the milling industry,” the analysis group said.
“This is already starting to occur, with current discounts to ASW growing dramatically.”
The group reported the discount of ASW (Australian standard white wheat) to the APW (Australian premium white wheat) as represented by ASX futures at some $130 per tonne in New South Wales, the highest on data going back to 2004.