Wheat market firms on smaller global crop predictions

New crop ASX wheat futures jumped $16 to $324 a tonne in the past week as traders react to the worsening outlook for grain crops in the US, Canada and most recently Russia.

New crop barley was $8 higher at $255 a tonne Port Kembla.

Pre-harvest assessments of the impact of the North American drought on wheat, barley and canola crops in the US Northern Plains and Canadian Parries are coming in worse than expected.

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A pre-harvest crop tour in North Dakota, which accounts about half of the national spring wheat production, highlighted the extent of crop losses in the region.

Tour participants projected that yields would fall 35 per cent below the five-year average. Many farmers have already started cutting the small and stunted crops for hay to feed to livestock over the winter.

It is expected to be a similar situation north of the border in Canada. The US Department of Agriculture is currently pegging Canada's wheat crop at 31.5 million tonnes, but private analysts are saying it will fall well short of this.

Some are already projecting the crop could slip below 25 million tonnes, which would make it the smallest crop in the past decade if realised.

Crop concerns are also extending into the Black Sea where Russian analysts are back-peddling on earlier lofty production estimates.

Disappointing yields and possibly smaller than expected plantings have seen two of Russia's leading grain analysts flagging the national wheat crop is likely to fall short of 80 million tones.

This is well short of the USDA's current forecast of 85 million tonnes.

Shrinking global wheat supplies in North America and Russia is viewed as supportive for Australian wheat prices for the 2021/22 season.

Australian grain growers are broadly optimistic about the upcoming winter crop harvest, but it's not without challenges.

July was a wet month in all states, with few missing out. Cropping zones across Australia recorded 100 to 150pc of the normal monthly rainfall. Some areas in Western Australia received more than double the average July rainfall.

Above average July rain has further boosted confidence among farmers in all states, although many farmers are desperately in need of sunshine and a few weeks of dry weather, to allow localised water to subside.

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