Well, media reports had heartache in store for farmers yesterday with the latest winter harvest update from the federal government’s commodities forecaster, ABARE (Australian Bureau of Agricultural and Resource Economics).
But in the event it was a bit anti-climatic, the report was fairly underwhelming, given the headlines, although buried in it is a taste of what we should see in coming weeks as more information becomes available.
In fact the real damage for growers isn’t crops lost completely to the floodwaters and heavy rain, it’s the damage caused at this time of year which has cut quality levels.
But instead of an update that took into account the impact of the flooding and wet weather in parts of NSW, southern Queensland and Victoria, the agency maintained its bullish forecast of a crop size for wheat of 26.8 million tonnes, but admitted quality will be lower because of the wet weather.
And ABARE said an update next week would take into account more up to date reports of the rain and flood damage, especially from NSW.
That will include a report on price forecasts, production and export values. It will be out next Tuesday.
Grain markets, which had been fretting about the wet weather in Australia for the past week, will have another seven days on which to trade and worry.
Chicago Board of Trade wheat futures rose to a four-month high on speculation of a big downgrade to the Australian harvest.
The National Australia Bank has already forecast a 40% drop in the wheat harvest. That helped CBOT prices to end up 14c for the March contract at $US7.93 a bushel.
They had earlier touched $US7.9875 a bushel, the highest since August 6 after Russia banned wheat exports because of drought reducing its harvest.
Wheat prices are up nearly 15% since the start of last week, thanks to speculation about the impact of the Australian rains.
Overall wheat prices are up 65% this year thanks to a combination of the impact of the Russian drought, floods and wet weather in Australia and Canada and dry weather in the prime American Great Plains region could cut the country’s harvest next Spring.
ABARE said the winter grains harvests will be up around 22% this year to 43 million tonnes, despite rain damage to grain crops across eastern Australia and drought through Western Australia.
Wheat production is expected to rise to 5 million tonnes on last year to 26.8 million tonnes, and barley production is also expected to be 24% higher.
Canola production will rise, but not by as much, with a 7% increase forecast.
Wheat production in Western Australia is expected to fall 56% on last year, with a harvest of only a 3.5 million tonne harvest, compared with the long term average of around 7.5 million tonnes.
The big winners; rice (and cotton amongst the non-grain crops). ABARE says rice plantings are expected to be four times greater than last season, with the bureau saying 89,000 hectares will be sown this season.
In its report yesterday ABARE explained the impact of the wet weather on the quality of the grains harvested.
"Despite the adverse effect of the recent rain in eastern Australia on the quality of winter crops, it is forecast that record yields will still be achieved in most of the eastern grains belt.
"Up until recently, there have been near ideal growing conditions in the eastern states for most of the season, with excellent planting conditions early in the season, followed by a wet spring.
"The wettest spring on record in eastern Australia was followed by heavy rainfall in December, particularly in New South Wales, where some flooding has occurred in the central and southern areas of the state.
"Although above average rainfall was welcome in early spring, recent heavy rainfall has caused harvest delays and has reduced the quality of winter crops that were due to be harvested.
"In regions that have recently received heavy rainfall, the chance of achieving prime milling grades of wheat has been reduced for crops yet to be harvested.
"Wet weather causes softening of the grain and lowers protein levels, and can result in the grain germinating (‘shot and sprung’).
"As a result, some of the rain-affected grain will only be suitable for stock feed purposes.
"The wet weather will also diminish the ability of barley crops to achieve malt grade, meaning a higher proportion of the barley crop will be feed grade quality, compared with last season.
"The full effect of the downgrade in quality of wheat and barley will not be known until more of the harvest is complete in southern regions.
"The wet conditions have also been a significant problem for pulse crops (such as chickpeas) in the eastern states throughout the 2010–11 season.
"The recent rainfall has meant that large areas of pulse crops in Queensland and northern New South Wales will not be harvested, as the wet conditions have caused fungal diseases.
"Pulse crops account for around 4 per cent of the national winter crop production."
But there is a silver lining, as ABARE pointed out the size of the summer crops will be larger, as we saw with the rice harvest above.
"The total area planted to summer crops in 2010–11 is forecast to rise by 67 per cent from last season, to 1.5 million hectares.
"This would be the largest area since 2001–02.
"High cotton prices and abundant supplies of irrigation water in most cotton growing regions are forecast to result in
