Australia's early wheat harvest appears to have avoided significant damage from rains, supporting hopes that this year's harvest, expected to set a record on quantity, will prove better on quality too than the mediocre 2010 crop.

Wheat stocks held by Australian grain handlers as of the end of November, typically the first month when harvest production feeds through into expanding elevator stores, rose by more than 8m tonnes month-on-month, official data showed.

The data spoke on two scores of far less impact from rains than in the early harvest last season, which proved one of the worst on record for hold-ups from precipitation. Combines usually largely back in barns by Christmas were working in some areas in April.

First, the increase in elevator inventories was historically high, well above the 5.0m tonnes a year before, and the 6.3m tonnes stock rebuild in November 2009, at the start of a strong, but not rain-affected, harvest.

Less feed

Secondly, a data breakdown showed last month's inventory increase including a relatively-modest 1.20m tonnes of feed wheat.

That was less than the 1.76m tonnes of feed wheat delivered to grain handlers in November 2010.

And, the proportion of feed wheat in the crop was, at 14.9%, nearer the November 2009 figure of 11.8% than the 35.1% in November last year.

'Taken off some of the shine'

The data imply that the first 30% or so of the Australian crop avoided significant rain damage, although later tranches may prove more compromised, with fears over moisture building as the harvest has progressed south.

"Rainfall across southern Queensland and New South Wales, which has frustrated the harvest and is raising concerns around crop quality," the bank said, while adding that this was supportive for lamb prices, in boosting supplies of feed.

"Restocker demand should remain solid," NAB agribusiness economist Michael Creed said.

'Losses in both yields and quality'

Earlier this week, Commonwealth Bank of Australia analyst Luke Mathews noted that "widespread heavy rain fell throughout South Australia, Victoria and southern New South Wales over the weekend".

On Monday, eastern Australian grain handler GrainCorp noted rain disruptions to harvest activity throughout New South Wales, the second-ranked wheat producing state, last week with "the effect of rain on unharvested crops" prompting the group to step up activities to segregate receivals by quality.

In Western Australia, the top wheat producing state, handler CBH Group noted quality issues at two of its four regions.

In Albany, "total receivals are now expected to reduce due to losses in both yields and quality," the group said.