Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Drought-hit Australia cuts export hopes for wheat, canola, coarse grains

Twitter Linkedin

Australia slashed more than 2.7m tonnes from its wheat export forecast, making deep cuts to expectations for canola and coarse grain shipments too, as it counted the cost of drought damage to its crops.

Abares, the official Australian crop bureau, lowered to 18.15m tonnes, from 20.89m tonnes, its forecast for the country's wheat exports in 2017-18, on a July-to-June basis.

The downgraded figure, below a 18.5m-tonne estimate from the US Department of Agriculture, would take shipments nearly 4m tonnes below last season's result.

And it reflected in part what Abares termed "severe moistures stress" for crops in the likes of Queensland and northern and central New South Wales, thanks to "unfavourably dry conditions".

"Exportable supplies are expected to decrease because of the smaller harvest," the bureau said.

'Supportive piece'

The comments come amid an enhanced global wheat market focus on Australian prospects, given ideas of a record Russian harvest bumping up against infrastructure limits, so capping the country's expected rise in shipments.

Paris-based Agritel said that the "delicate situation in Australia is offering an element of support to international markets", in price terms.

US broker Benson Quinn Commodities said that Australia's woes "becomes a supportive piece" for US prices if they mean that extra "business materialises" for supplies of US hard red winter wheat.

However, Abares was cautious on importers' needs too, foreseeing a 3m tonnes in world trade because "wheat harvests in China, India, northern Africa and Turkey have improved in quality and volume.

"This has reduced demand for imports to meet the shortfall between domestic production and consumption."

Australia vs Ukraine

For canola, Abares cut its forecast for canola exports from Australia, the second-ranked shipper of the oilseed after Canada, by 510,000 tonnes to 2.04m tonnes for 2017-18.

The revision - which took to 43% the forecast decline in exports year on year – again followed a crop downgrade, with the bureau flagging in particular the dent to production prospects from "well-below-average rainfall in autumn and early winter" in top growing state Western Australia.

Abares also highlighted the prospect of reduced import needs in the European Union, the world's top consumer of rapeseed-canola, thanks to a bigger harvest, and the expectation of increased supplies from Ukraine, "a key competitor for Australia in that [EU] market".

Sorghum squeeze

In coarse grains, Abares also lowered its 2017-18 Australian export forecast – by 1.67m tonnes to 6.03m tonnes, the lowest in seven years.

For barley and oats, the decline again reflects drought damage to production.

However, in sorghum - of which Abares expects Australia to grow an extra 80%, representing extra sowings on land abandoned for winter crops – export growth will be curtailed by increased domestic demand.

Besides extra feeds needs of Australia's feedlot industry, now boasting more than 1m cattle on feed, demand for sorghum is being whetted by the introduction this year in Queensland, the sorghum and sugar-growing state, of an ethanol mandate of 3% of the biofuel in gasoline.

"The Queensland biofuel mandate will increase demand for grain sorghum and lead to higher prices for growers supplying the refinery.

"Increased domestic feed and industrial demand is expected to limit the volume [of sorghum] available for export."

By Mike Verdin

Twitter Linkedin
Related Stories

Evening markets: South American double whammy brings ags back down to earth

Ags lose early gains, undermined by a tumble in Brazil’s real, and falling rain in Argentina. Still, wheat futures remain in positive territory

Wheat leads respectable week for US crop exports

Sales of hard wheat - spring and winter - prove particularly strong. Cotton export data return to type - ie with strong sales but...

'Moribund atmosphere' in EU wheat market to extend into 2018-19

... says Strategie Grains, foreseeing another decent harvest, yet little chance of an export revival against tough Russian competition

Can cotton prices extend their rally?

History suggests futures will not stay long in the 70s cents a pound. So which way will they trend?
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069