Australia turns from record heat to inundations
By - Published 25/01/2013

Be careful what you wish for. Prayers for rain in some dry areas of Australia have been answered with inundations, turning crop losses from flooding rather than dryness into growers' main concern.

Days after some parts of Australia received record-breaking heat, when temperatures hit 49.6 degrees Celsius in Moomba, South Australia, eastern areas are battling with rainfall at the highest level in decades.

In Queensland, bearing the brunt of the rains, dumped by Cyclone Oswald, Tully received 600mm of rain, equivalent to nearly 2 feet, in 48 hours, with Samuel Hill being drenched by 148mm in six hours.

And more rain is in the forecast, with some coastal regions set to receive more than 400mm this weekend.

'Soggy setting'

The rains have, on agricultural markets, undermined prices of some summer crops, such as sorghum, which has been tested by the hot and dry weather, and which for May delivery eased to Aus$276.00 a tonne on Friday, down 3.3% in two sessions.

Luke Mathews at Commonwealth Bank of Australia, noting that "sorghum bids were lower", said that "summer crop producers in northern New South Wales and southern Queensland are hoping this weekend's forecast rain comes to fruition".

The rains look like "providing a soggy setting for Australia Day barbecues".

'Some damage inevitable'

And the rains have come as a boon too for some cane growers, such as those in the Maryborough area of Queensland, which "would have run out of irrigation water within the next four weeks if no rain had been received", according to cane industry group Canegrowers.

In Mackay too, where cane plantations have "copped a fair drenching", receiving 200mm-400mm of rain, "overall the benefit of the rain is clearly out weighing any negatives", the group said.

However, there were reports of lodged cane in Tableland, and "moderate to major flood levels" in Tully, while the 85% of the lower Herbert River flood plains inundated.

"Some damage to crop prospects is inevitable," Canegrowers said.

'Summer is supposed to be hot'

The rains have come even as dry weather further west is continuing to cause some concern among grain growers, although many commentators have sought to downplay fears given that sowings are still some weeks away.

"We are not worried," Mr Mathews said.

"It's the middle of summer. Summer is supposed to be hot and dry throughout the Australian wheat belt, particularly from central New South Wales to Western Australia.

"Wheat planting won't occur until April and we'll revisit the situation again in March."

At US broker Benson Quinn Commodities, Brian Henry said that "record heat in Australia has no bearing on a wheat crop that won't begin to be planted until basically May.

"Granted planting conditions could be less than ideal, if precipitation doesn't develop. We'll address it again in three months."

Nufarm profits hit

However, for some corporates, damage from dryness has already been done, for example at agrichemicals group Nufarm, which on Wednesday warned that "unusually hot" conditions had hurt demand for its products.

The results of the group's Australia and New Zealand division for the August-to-February period would be "well down" on those a year before.

"It is very likely that due to the poor first-half conditions in Australia, the regional result at the full year [to the end of July] will also be well down on the 2012 full year," Nufarm said.

While the company reassured over its overall results, its shares closed in Sydney on Friday at Aus$5.47, down 13.6% on their level before the trading update.

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