World wheat prices will fall in 2013-14, but remain above
average levels, Australian officials said, even as they forecast a rise in
world production of the grain – helped by a 13% jump in the domestic harvest.
Abares, Australia's official commodities bureau, in its
first forecasts for 2013-14, said that the world wheat price, as measured by US
hard red winter wheat export values, would average, at $320 a tonne, some 12% less
than in the current season.
However, this would remain above the average of $292 a tonne
in the five years to 2011-12, and follows a US Department of Agriculture
assessment of domestic values, at $7.00 a bushel, remaining historically strong.
Indeed, Abares said that 2013-14 prices may prove the strongest
for a few years yet, as a gradual rebuild in inventories undermines values.
Looking out over the next five seasons, "given higher
expected demand for grains and oilseeds, and forecast production, stocks are
expected to grow, but only slowly", the bureau said.
The bureau's wheat price outlook for next season reflects a
forecast of world production of 688m tonnes – a rise of 5% year on year, but
only just enough to outpace consumption, pegged at 686m tonnes.
Indeed, inventories in most major producing countries "are
expected to remain largely unchanged" -with the exception of Russia, for which a
30% rebound in stocks is factored in from levels this season depleted by a
drought-hit harvest and a strong pace of early exports.
Russian elevators will be refilled from a harvest seen
rebounding by 41% to 55m tonne, after "improved seasonal conditions underpinned
a forecast return to average yields".
Crops in neighbouring Kazakhstan and Ukraine are also seen
recovering strongly from drought damage last year with, in South America, the Argentine
harvest pegged for a 35% rebound, reflecting better weather, after excessive
harvest rains in 2012, and a recovery in sowings from multi-decade lows.
The crop in Australia itself will rise by 13% to 24.9m
tonnes, reflecting hopes for better weather than in 2012-13, when "generally
dry conditions, particularly in Western Australia", curtailed production.
"Additionally, the area planted to wheat is forecast to
increase by 4% to 13.8m hectares in response to expected favourable prices,"
However, exports will fall some 5% to 20.8m tonnes – on a
July-to-June marketing year basis – amid a return to refilling silos.
"Despite the forecast increase in production, a reduction in
stock drawdowns, which are supporting export volumes in 2012-13, are expected
to offset the effect of higher production," Abares said.
In fact, many observers believe that Abares has overstated Australia's
export prospects for 2012-13, believing that a reduction in price
competitiveness, fostered by the tumble in values of US supplies, will curtail shipments.
The Abares estimates are the latest in series of initial
forecasts for 2013-14 crops, although the full US Department of Agriculture estimates,
which are particularly closely watched, will not be released until next month.
The International Grains Council has forecast a rise to 682m
tonnes in world grains output, a harvest it said offered "limited scope for