Wheat and other crop estimates continue to be revised down. Very serious for thousands of Aussie farmers. Too late now for many winter crops. Hopefully summer rains will be above average.
Drought stokes fears of smallest Australian wheat crop in a decade
Conditions for Australian crops have deteriorated so much that there is growing talk that the wheat harvest may fall below 20m tonnes – a plunge of more than 40% from last year's record high.National Australia Bank earlier this week issued a forecast for a 23.3m-tonnes Australian wheat harvest in 2017-18, undercutting estimates from the likes of the International Grains Council of a 24.8m-tonne crop, and the US Department of Agriculture's 25.0m-tonne figure.NAB cautioned over the lack of rain for the crop, and said that "if it stays dry, we expect further downside risks to this outlook".However, the extent of the dryness means that even the NAB forecast may be overstated, many commentators believe, with concerns over canola production too.'Terrible start'At the Australian office of grain merchant Nidera, origination manager Peter McMeekin said that while "many still have Australian wheat production up around long-term average levels of 24m-25m tonnes, the reality is the Australian wheat crop is suffering big time."Last year's record production," when wheat output topped 35m tonnes, "is now a distant memory, as the trade here in Australia come to terms with the possibility of a sub 20m-tonne wheat production year, for the first time since 2007".In Western Australia, grower Aaron Edmonds told Agrimoney.com that "at the moment, any talk of a crop above 20m tonnes is head-in-the-sand stuff.Western Australia, the country's top grain-growing state, "had a terrible start to the season", he adding that canola crops had suffered particularly badly."There was a large swing to canola [in sowings] and that has taken the dry start the hardest. Some of the worst canola crops I have ever seen."'Going to be down significantly'The Grain Industry Association of Western Australia on Friday, in a preliminary estimate for the total Western Australia harvest, of crops including oats and lupins as well as canola and wheat, pegged it "within a range of 10m-12m tonnes", compared with 18.16m tonnes last year."With the season looking so patchy and areas still waiting on good rains, the total grain production for Western Australia is going to be down significantly on the record harvest achieved in 2016," the association said.While some south western areas of the state had received late-June rains which "turned the season around", offering the "potential of at least average grain yields", crops in other regions are suffering."The recent rainfall events did not reach the north and eastern Geraldton port zone and the north and eastern Kwinana port zone," the association said."These regions still have large areas of land where crop has not emerged."At this stage, around 30%of intended crop area in the Geraldton port zone will not be harvested and about 10% of intended crop area in the north and eastern Kwinana port zone will not be harvested."'Understandably worried'One silver lining for wheat growers is that the concerns are at least helping to support prices, which have also been lifted by the North American drought worries which sent futures soaring on US markets, before a late-week correction.Tobin Gorey said that Australian prices were also likely to "fall somewhat, but nerves about local crop prospects will likely act a handbrake."Growers are understandably worried about crops given dry conditions in many Australian winter grain regions."Aaron Edmonds noted a jump in prices of noodle wheat, a premium variety, sold largely to Asia, and which he termed a "kind of barometer for the Western Australia crop."Its price has skyrocketed from around Aus$260 a tonne up to Aus$340 a tonne earlier this week."'Very attractive protein spreads'Indeed, Nidera's Peter McMeekin flagged the potential for Australian growers to find some consolidation in a knock-on effect of the depressed quality of the crop in the US – where the hard red winter wheat harvest of relatively low protein levels, and high protein spring wheat crop is at the epicentre of drought worries."With less rain, lower production and a more stressful growing season for the plant, comes protein," he said."The protein profile of this year's Australian wheat crop will most likely be much higher than last year."Continued high protein production issues in the northern hemisphere will quite likely manifest itself in very attractive protein spreads here in Australia."[/table]
