Australian officials raised their hopes for the country's
wheat exports even as they cut their forecast for the harvest, citing dryness
which yet threatens further production downgrades.
Commodities bureau Abares cut by 1.6m tonnes to 22.5m tonnes
its forecast for Australia's 2012-13 wheat production.
The downgrade, which put a tumble of 24% on the cards from
last season's record harvest, reflected dry weather in south eastern Australia
and in Western Australia, the top grains producing state, where "conditions for
crop planting and establishment were generally poor".
"Winter rainfall was below average, which hindered crop development
and reduced prospective yields to below average," Abares said, adding that even
its current forecast for a 39% drop in Western Australia wheat production could
prove an underestimate.
"Sufficient and timely rainfall will be required over the spring
to achieve currently forecast yields," said the bureau, whose figure compares with a 26m-tonne forecast from the US Department of Agriculture which is set on Wednesday to revise its crop estimates.
'Supply to remain
However, Abares raised its estimate for Australia's wheat
exports by 1m tonnes, to 21.5m tonnes, despite the downgrade to production,
flagging the rich stocks left over from record harvests in the last two
"Although wheat production is forecast to fall from last year's
record, the supply of wheat available for export from Australia will remain high,"
"Stocks of wheat in Australia have been boosted by consecutive
large crops in 2010–11 and 2011–12," the bureau said, noting that stocks held
by grain handlers last month were "well above stock levels at the same month in
"For example, stocks in August were around double those at the
same time in 2009."
Exports of 21.5m tonnes, while down 800,000 tonnes year on
year, would still be well above historical averages, and three times the level
of 2007-08, after a severe drought slashed production.
And, indeed, the country was last week reported to have sold
1m tonnes of its forthcoming crop already to Asian importers concerned at the
prospect of Black Sea exporters, which they traditionally turn too, running out
of supplies to export after drought-hit harvests.
On Monday, Oman bought 20,000 tonnes of Australian wheat.
Rabobank last week, while failing to put a figure on
Australian wheat exports in 2012-13, said it expected "increased export demand
for Australian feed wheat… as northern hemisphere production issues drive feed
"China is expected to demand up to 4m tonnes of feed wheat,
with the majority anticipated to come from Australia.
"We also see upside potential for high protein Australian
wheat due to production issues in Russia and the potential for lower protein levels
in Canadian and US spring wheat crops."