National Australia Bank extended a round of downgrades to
forecasts for the Australian wheat harvest, despite a wetter start to August,
which has eased producers' concerns in some regions.
The bank cut by 600,000 tonnes to an eight-year low of 22.7m tonnes its forecast
for the 2017-18 wheat harvest in Australia, the southern hemisphere's top
exporter of the grain.
NAB acknowledged some relief of the country's drought conditions,
saying that "the last week has seen some decent falls across Western Australia,
South Australia, Victoria and southern New South Wales".
However, this followed a July which "did not bring good news"
on output, bringing below-average rains, and with dryness remaining a crop
Indeed, NAB's downgrade is the latest of a series, with the
International Grains Council 10 days ago cutting its estimate for Australia's
wheat output by 2.0m tonnes to 22.8m tonnes.
"After the second driest June on record, rainfall across Australia's
main winter cropping states remained lighter than average in recent weeks, with
occasional patchy showers providing only limited relief," the council said.
Last week, Lanworth trimmed its forecast for the top to 17.1m-26.1m
tonnes, with a central forecast of 22.5m tonnes, saying that "dry weather has
dominated Australia's crop regions since April except for Victoria".
"Suppressed vegetation densities, derived from satellite
imagery, confirm severe drought stress in most of Australia."
Below 20m tonnes?
Tobin Gorey, at Commonwealth Bank of Australia, cautioned on
Monday that "north eastern grain regions are still not getting any rain",
although having the "saving grace" of cooler temperatures over the past few
days which has curtailed evaporation.
NAB cautioned of the potential yet for further downgrades to
its forecasts, saying that "if rainfall continues to be below average, a much
smaller crop – potentially in the very low 20s or high teens [in million tonne
terms] – is well within the realms of possibility".
And grain merchant Nidera Australia said last week that "the
harsh reality is that domestic wheat production is probably less than 20m
tonnes today and getting smaller".
Australia's wheat harvest has not fallen below 20m tonnes
since 2007-08, when it came in at 13.6m tonnes.
Last season, the Australian wheat harvest hit a record 35.1m