Attendees at last week’s Australian Grains Industry Conference in Melbourne spoke of the mixed outlooks for the national grain harvest.
Traders uniformly said the east coast grain harvest was shrinking as every week passes without rain while the Western Australian crop is getting bigger.
Eastern Australia’s drought is now being described as one in 20-year occurrence, with others saying it’s the worst in a generation.
NSW grain farmers have endured the worst of the drought but the insidious dry is also creeping north and further south.
Queensland has already gone from exporter to grain importer.
- Which way will the wheat market turn?
- Drought puts heat in wheat
- Rising wheat prices path of least resistance
Shipping reports show that more than a quarter of a million tonnes of wheat, barley and lupins will be discharged into Brisbane from June into August.
Drought has already taken a heavy toll on the NSW with farmers in most areas already conceding they will not harvest a crop.
Many traders now expected the NSW wheat production to plummet to a 10-year low of about 2.5 million tonnes. If realised, this would be two million tonnes less than last year’s drought reduced harvest.
Time for yield salvaging rains is all but over for most NSW grain farmers.
Traders were saying that most of the planted wheat and barley crops in the western Riverina won’t be harvested.Crops around Wagga and Temora have deteriorated significantly in the past fortnight, they said.
Traders are reportedly gearing up for a constant procession of coastal shipments from Western Australia, South Australia and Victoria in the 2018-19 season with the poor northern crop.
Western Australia is back on track for an above average grain harvest.
Good rainfall in July and early August has bolstered crops following a dry start to the season.
Industry crop watchers attending last week’s grain conference said the WA wheat crop is likely to exceed nine million tonnes with some saying it could even top 10 million with a soft spring.
Grain prices have continued to soar as Australia’s crop outlook deteriorates further as well as the worsening prospects for the European and Black Sea wheat harvests.
ASX January wheat futures, which are reflective of the new crop harvest price, rallied by $26 a tonne to $395/t, an increase of seven per cent for the week.
ASX wheat futures now up by more than $75/t since early July. It seems just a matter of time before the new crop wheat futures trade above $400/t.
Global wheat markets have continued to press higher in the past week as European and Black Sea yields fail to live up to pre-harvest expectations.
Overseas wheat markets are also paying more attention is now being given to the poor production outlook for eastern Australia.
US wheat futures are tracking European markets higher. US wheat futures rallied by five to six per cent last week and have now up by about 20pc in the past four weeks.
The USDA is expected to make further cuts in its world wheat production estimates when it releases its August world supply and demand report late this week.
Private analysts are forecasting that world wheat production will plummet by upwards of 30 million tonnes from last year’s record levels.