Latest report points to slightly higher US estimates of Australian wheat production

Growers eager to forward sell after release of forecasts

Cropping
The USA has increased its expectations of Australia's wheat crop production to 28.5 million tonnes, which is slightly below the latest domestic estimate from ABARES.

The USA has increased its expectations of Australia's wheat crop production to 28.5 million tonnes, which is slightly below the latest domestic estimate from ABARES.

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US farm body pegs Australian wheat production at 28.5 million tonnes, slightly below local estimates.

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On Friday last week, the United States Department of Agriculture (USDA) released its World Agricultural Supply and Demand Estimates (WASDE) report.

This saw Chicago Board of Trade (CBOT) wheat futures pressured lower. But strength in soybeans lifted corn and canola markets.

The WASDE report's global wheat outlook consisted of larger supplies, increased consumption and higher ending stocks.

Global production estimates were boosted by 4.46 million tonnes, led by increases in Australia of 2.5 million tonnes and in Canada of 2 million tonnes. This more than offset a 1 million tonne reduction in Argentina.

The WASDE report lifted Australia's wheat production forecast to 28.5 million tonnes, compared to the latest update from the Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) at 28.9 million tonnes.

Global ending stock estimates, excluding China, were increased to 155.69 million tonnes.

Australia is now forecast to export 19 million tonnes in the 2020-21 marketing year.

Domestic prices across the Black Sea region continue to show strength.

But this is more a function of slow grower selling - which will become less relevant in the near future when three more sellers come online in Australia, Argentina and Canada.

On its own, there wasn't much for the wheat bulls stemming from the WASDE report and it was viewed as slightly bearish.

But support was found from row crops, which painted a vastly different picture.

The US soybean production forecast was lowered by 3 million tonnes and estimates for corn production fell by 9.6 million tonnes due to unfavorable weather conditions - namely a storm that ripped through the main corn belt in Iowa.

US corn ending stock estimates were also reduced by 6.5 million tonnes, which was driven by recent Chinese purchases.

Although the USDA kept its forecast of Chinese corn imports at 7 million tonnes, it has been suggested this figure could easily double given the Chinese have purchased about 7 million tonnes to date already.

On the domestic front, it appears grower confidence is increasing - with strong forward sales taken across New South Wales for the month-to-date.

With an increasingly favorable forecast becoming more apparent, NSW is poised to harvest one of its best crops in recent times.

ABARES has forecast a whopping 10.26 million tonnes in production that that state alone.

With wheat crop potential ranging from 3 to 6 tonnes per hectare across the Port Kembla zone, current track numbers of $290-$300/tonne pose an attractive return - in the vicinity of $1000/ha - to the grower across most delivery sites.

This, combined with the rainfall outlook, is seen as attractive to the grower and is encouraging forward sales.

Old crop barley markets have nearly broken the inverse, with BAR1 trading $210-230/t XF throughout the Riverina and headed into the few remaining shorts on the Darling Downs until the new crop arrives.

Off spec barley has been difficult to place, with end users well aware of the size of the coming crop and - given the condition it is in - suggesting quality issues will be minimal.

The current rainfall outlook shows 10-20 millimetres is likely (at the time of writing) throughout the Port Kembla zone this weekend ahead, which indicates the potential of this crop is getting every chance to be realised.

The size of this crop is expected to 'stress test' the industry by harvest time.

This is why the development and importance of contactless harvest delivery systems have been accelerated to be implemented this coming harvest at all GrainFlow sites across NSW and Victoria.

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