There’s more than a touch of irony in the news that while Australia’s forthcoming wheat harvest is looking better with the possibility of the best exports tonnage for four years, world prices are now at two years lows and could fall further as the second largest crop on record around the world is forecast.
The Australian Bureau of Agricultural and Resource Economics (ABARE) said yesterday that output might touch 22.7 million tonnes, up from the June forecast of 22 million tonnes and the 2008-09 crop of 21.4 million tonnes.
But world wheat prices overnight Monday fell to $US4.52 a bushell on the Chicago Board of Trade, the lowest in more than two years and a continuation of the weaker trend of the past month or more as it has become apparent that the second largest global wheat crop every could be in prospect.
ABARE said the higher estimated harvest followed better weather in August and early this month in Western Australia and South Australia in particular.
Australian farmers have planted a record area to wheat after prices rallied to an all-time high last year and will begin the harvest from about November.
ABARE said that total winter grains output is forecast at about 36 million tonnes.
That would be 2.8 million tonnes more than the previous season and 1.2 million tonnes more than ABARE’s forecast released in June 2009.
Barley production may be nearly 8 million tonnes and canola output around 1.7 million tonnes.
“In Western Australia, South Australia and Victoria the majority of crops are well placed leading into the spring months,” the bureau said in a statement.
“Rainfall in the spring months is crucial for crops in all regions to reach current potential.”
"Western Australia, South Australia and Victoria the majority of crops are well placed leading into the spring months," ABARE said.
"The prospects for winter crops in most regions in Queensland and the northern New South Wales grains belt have been adversely affected by below average winter rainfall.
"Crops in southern New South Wales are in urgent need of good rains, with some having already failed and the yield potential of most others declining rapidly."
Australia may plant 19% more cotton in 2009-2010, the bureau said with output reaching an estimated 375,000 tonnes.
“The area sown to summer crops is forecast to be 5 per cent lower in 2009-10, reflecting the continued lack of irrigation water for rice and cotton planting.
"The below average winter rainfall in the major summer cropping regions has also adversely affected the outlook for grain sorghum plantings,” ABARE said.
The United States Department of Agriculture says global wheat production could top demand by around 17 million tonnes in the 2010 crop year, now underway.
Global production is estimated at 663.7 million tonnes, compared with the 2008-09 harvest of 682 million.
In its monthly update, issued on Friday the agency said the US, Australia, Russia and Canada were expected to have larger production. The US crop could be the second largest on record.
Global wheat exports were forecast to fall 14% to 121.1 million tonnes and there will be an increase in stocks and downward pressure on prices.
The USDA said it expected global ending stocks for 2009/10 to be 186.6 million tonnes, up 3.0 million from August’s report and 64.0 million tonnes higher than the 28-year low in 2007-08.
That will help hold down prices and the all time highs of more than $US13 a bushell of February 2008 will be a thing of the past.
A poor crop in Argentina won’t be enough to influence prices.
