Australia upgrades wheat crop, but cuts sorghum

Australia's latest wheat harvest turned out higher than had been thought, thanks to a bumper Western Australia crop - but prospects look weak for summer crops, thanks to drought.

Abares, Australia's official commodities bureau, raised by 800,000 tonnes to 27.0m tonnes its estimate for domestic wheat production in 2013-14, making it the country's second-biggest crop ever.

The upgrade, which took the crop 20% above that the previous season, reflected an improved estimate for the harvest in Western Australia, usually the top producing state, and which enjoyed a 55% jump to a record  17.2m tonnes in output of winter crops overall.

The state enjoyed "favourable spring growing conditions in central and southern parts", Abares said, pegging the Western Australia wheat crop at 10.5m tonnes, up 900,000 tonnes on the December estimate.

The revision more than offset a small downgrade to 6.65m tonnes in the estimate for the crop in New South Wales, the second-ranked producing state.

And it took the Abares estimate for Australia's wheat crop above the 26.5m tonne figure in the US Department of Agriculture's benchmark monthly Wasde report, released on Monday, and the 26.2m tonne estimated by the International Grains Council.

'Unfavourable conditions'

Abares raised its estimate for the domestic barley crop too, by 925,000 tonnes to 8.55m tonnes, and for canola output too, by 138,000 tonnes to 3.55m tonnes upgrades also reflecting increased ideas of Western Australian production.

However, the bureau cut estimates for summer crops, including cotton, rice and sorghum, reflecting "low rainfall and heatwave conditions".

 "Generally unfavourable seasonal conditions during the 2013-14 summer crop planting window are expected to result in a significant decline in summer crop production," Abares said.

"The unfavourable conditions have limited the area planted to summer crops and reduced prospective yields of dryland crops."

'Severe rainfall deficiencies'

Conditions had been particularly poor in the main summer crop states of New South Wales and Queensland, which suffered "severe rainfall deficiencies" last month.

Maximum temperatures in northern New South Wales and Queensland were "up to 10 degrees Celsius above normal", Abares said.

And the "outlook for temperatures from February to April indicates a slightly higher chance of warmer-than-average daytime temperatures over most of New South Wales".

On rainfall there is a "slightly increased chance of drier-than-normal conditions across cropping areas in central and southern New South Wales and Victoria where chances of exceeding the median rainfall are between 35-55%".

Already, soil moisture levels in the lower layer are "largely average to well-below average in Queensland and northern New South Wales cropping regions", Abares said, with levels in the upper soil later "well below average to extremely low".

Cotton, sorghum downgrades

For cotton, Abares cut its output forecast by 35,000 tonnes to 940,000 tonnes, although this revision is less severe than that imposed on Monday by the USDA, which downgraded the crop by 87,000 tonnes to 893,000 tonnes.

Abares said that "because higher yielding irrigated cotton comprises a larger proportion of the total area planted to cotton than last year, it is assumed the average yield will rise by 4%".

For sorghum, Abares cut its production forecast by 320,000 tonnes to 1.28m tonnes a seven-year low, and well below estimates from other agencies.

The USDA on Monday kept its estimate for Australia's sorghum harvest at 1.9m tonnes, while the IGC foresees a 1.6m-tonne crop.

The downgrade comes at a time of buoyant demand for Australian sorghum from China, which uses the grain for making an alcoholic drink, baiju, besides as an ingredient in livestock feed.

The IGC pegs Australia's sorghum exports in 2013-14, on a July-to-June basis, at 1.1m tonnes.

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