Grains output in Australia’s top growing state will be even lower than had been thought, after weak results from the early harvest, an industry group said, in the second caution in two days on the country’s prospects.
In Western Australia, “grain yields for all crops in the north of the state, where harvesting is 50-70% complete, are up to 50% below recent averages,” the Grain Industry Association of Western Australia (Giwa) said, seeing results in central and eastern areas running 25-30% below the mean.
Further south, where the harvest has only just begun, while yields are higher there are “in most cases still below average”, the association said.
‘Virtually no rain’
The comments came as it cut by a further 507,000 tonnes from last month, to 11.42m tonnes, its forecast for Western Australia’s 2019-20 harvest of major crops including oats, lupins and pulses as well as barley, canola and wheat.
A harvest at that level would be down 6.49m tonnes, or 36%, from last year, when Western Australia avoided the worst of the weather upsets which hit eastern Australia, and actually produced an above-average result.
In fact, a “return of between 11m-12m tonnes of total grain will be a good result considering the low growing season rainfall, higher-than-average temperatures in spring and virtually no rain in September”.
‘Quality is variable’
Much of the latest revision reflected weaker wheat expectations, with the crop downgraded by 410,000 tonnes to 5.85m tonnes, down more than 40% year on year.
The association added that for wheat “quality is variable”, although “protein is higher than in previous years due to the low yields”, with the crop stress that cuts productivity often seeing higher protein levels.
For barley, the harvest estimate was cut by 270,000 tonnes to 4.05m tonnes, a drop of 21% year on year, with Giwa cautioning that “yields are in most cases lower than they look, with high to very high screenings”.
Indeed, thanks to the extent of small kernels, and high protein levels, “few deliveries are making malt grades.
“This year, the state will struggle to produce the usual historical amount of malt barley of 1m tonnes.”
However, for canola, Giwa raised its harvest forecast by 80,000 tonnes to 960,000 tonnes, and signalled that further upgrades could lie ahead.
“Canola is yielding more than expected and total canola production could exceed 1m tonnes,” although this would still represent a substantial fall from last season’s 1.45m-tonne crop.
The estimate for lupin output was also upgraded, by 30,000 tonnes to 340,000 tonnes, as “yields are coming in higher than pre-harvest estimates”, with the oats production forecast lifted by 55,000 tonnes to 395,000 tonnes.
Even so, these results would be down on the 570,000-tonne lupin result last season, and the 575,000 tonnes of oats produced.
The report comes the day after Sydney-based GrainCorp warned that, “based on independent crop forecasts, the [2019-20] winter crop will again be significantly below average in eastern Australia”.
“Large parts of east coast Australia, particularly northern New South Wales and southern Queensland,” had been “affected by drought”.
It estimated the region’s production of wheat, barley, canola and chickpeas, the main winter crops, at 11.5m tonnes.
That would represent an improvement on the 6.5m tonnes produced the year before, but remains well below the 27.2m tonnes in 2016-17.
Western Australia vs Victoria
Eastern Australia looked again reliant on imports, although less so from Western Australia (WA) this time given the state’s own harvest woes.
“We will see more of the deficit of Queensland, northern New South Wales being supplied by Victoria and less out of WA,” GrainCorp chief executive Mark Palmquist told investors.
“WA crop is down from last year where Victoria is having a good and excellent crop again this year.”
Mr Palmquist was speaking after the company on Thursday reported its biggest loss since 1998, of Aus$113m, compared with earnings of Aus$71m a year before.
However, GrainCorp shares rose 4.0% on the result, which showed a less dramatic loss than some investors had expected.
The stock soared a further 11.5% to close at Aus$8.62 on Friday, on news that the Australian Competition and Consumer Commission antitrust regulator had cleared GrainCorp’s sale, for some Aus$320m, of its Australian bulk liquid terminals business to ANZ Terminals.