The International Grains Council cut its forecast for Australia’s dryness-stressed wheat crop, and warned of the potential for further downgrades, although seeing North American wetness as a behind recent price gains.
The intergovernmental group lowered its forecast for Australia’s overall grains harvest by 3.2m tonnes to 34.2m tonnes, citing “unfavourable weather”, with dryness having curtailed prospects for crops in both west and east coasts.
The downgrade - which came hours after Australia’s official Bureau of Meteorology forecast a “drier-than-average” close to 2019 for much of central, eastern and southern Australia, saying “warmer-than-average days are very likely” too – reflected in the main a 2m-tonne cut to the wheat harvest estimate.
That left it at 19.1m tonnes, close to the forecast from the country’s official Abares commodities bureau.
However, the IGC had also heard of analysts within the country “taking down estimates to the level of last year’s crop”, which Abares pegs at 17.30m tonnes,
If these estimates pan out, it was “looking probable” that the IGC would cut its forecast further.
At a global level, the Australian downgrade was offset by an upgrade to the European Union harvest estimate to leave the global wheat harvest forecast for 2019-20 at a record 764m tonnes, up 31m tonnes year on year.
The estimate for carryout stocks from the new season was raised by 1m tonnes to a record 272m tonnes, representing a 7m-tonne increase year on year.
Nonetheless, the council reported a 6.1% increase in its wheat price index over the past month, the sharpest such increase in more than a year, and attributed to spree of import orders from the likes of Algeria and Egypt, and jitters over the wetness-plagued North American spring wheat harvest.
“Early [price] declines, linked to heavy global supplies were later reversed on a flurry of new export tenders and deepening worries about North American crop prospects,” the council said.
The price of 14% protein dark northern spring wheat in US Pacific North West ports rose by $40 a tonne month on month to $264 a tonne, with that of Canadian exports of 13.5% protein western red spring wheat gaining $38 a tonne.
The IGC kept at 2.159bn tonnes its forecast for the global harvest of grains, excluding rice, in 2019-20, a rose of 16m tonnes year on year, remaining short of the record 2.187bn-tonne figure set three years ago.
The carryout stocks forecast for 2019-20 was nudged 3m tonnes higher to 601m tones, on “largely-than-previously-estimated opening inventories”, especially for US corn and Canadian wheat.