The wheat harvest in Australia’s top growing, and exporting, state will soar 60% after rains last weekend proved a “game changer” in relieving crops from the threat of dryness damage, industry officials said.
Coming into August, many growers in Western Australia “were commenting that ‘it will start to get ugly’” without forthcoming rains, the Grain Industry Association of Western Australia (Giwa) said, adding that “crops across the state were starting to go backwards”.
However, the “just-in-time rainfall across most of the Western Australian grain growing regions” over August 7-9 “has been a game changer”, the association added.
“For some regions, the rain will halt the slide in grain yield potential that was occurring, although for most, it will push grain yield potential up.
“The outlook is now quite positive for most areas.”
Giwa, in its first forecast for Western Australian grains output for 2020, pegged it at 14.90m tonnes, a gain of 32% year on year.
For wheat, the harvest was pegged at 8.89m tonnes, up from the 5.55m tonnes recorded last year.
The figure is marginally above the 8.60m-tonne estimate being factored in by Abares, the official Australian commodities bureau, which pegs the overall Australian wheat harvest at 26.67m tonnes.
However, estimates remain behind the bumper 2018 level, when Western Australia – which avoided the dryness which dogged eastern states - produced 10.15m tonnes of wheat on Giwa estimates.
‘Could add tonnes’
The estimates come amid some discussion among commentators over Australian crop prospects, with Rabobank last week – ahead of the Western Australia rains – trimming its forecast for the country’s overall 2020-21 wheat harvest to 25m tonnes.
“Australia’s wheat production outlook continues to be good, but with dryness in some regions during June and early July, we have revised our 2020-21 wheat production estimate lower,” the bank said.
However, other analysts have expressed surprise that the US Department of Agriculture did not, in its Wasde briefing on Wednesday on world crop supply and demand, raise its Australian wheat crop estimate from 26.0m tonnes.
Benson Quinn Commodities, for instance, flagged the potential for an upgrade in September’s Wasde to the Australian wheat figure, “which could add tonnes to the bottom line” for the world wheat balance sheet.
StoneX, formerly INTL FCStone, earlier this week pegged the harvest at 26.9m tonnes.
In the Sydney futures market, bellwether January east coast wheat futures have fallen by 5.8% to Aus$274.00 per tonne so far this month, and set contract lows, besides underperforming the Kansas City hard red winter wheat contract which many Australian investors use as the benchmark comparator.
However, Rabobank said separately, on Tuesday, that Australian cash wheat prices should stay above 10-year averages, if falling below the Aus$450 a tonne reached in some ports “for extended periods during the drought” which lasted into this year for many areas.
“Basis was always going to be moving down from the highs of recent years, which had been fuelled by drought-driven supply shortages,” said Dr Kalisch Gordon, Rabobank Australian senior grains and oilseeds analyst.
But she added that prices were “expected to find a level of support from the rebuilding of grain stocks needed in Australia”.
Values are also expected to find support from export demand, whetted by the void in supplies created by the reduced European Union harvest, Rabobank said, adding that this was likely to prove a factor in the rapeseed-canola market too.
With the EU likely to see in 2020-21 “its lowest crop since 2006… this spells good news for Australia, pushing EU import demand to likely exceed last season’s record high”, Rabobank global grains and oilseeds strategist Stefan Vogel said.
“Europe is actually going to need a lot of Australian canola… maybe close to doubling the amount we took last year and getting back to volumes seen in 2017 and 2015 of around 1.9m tonnes,”
Giwa pegged the Western Australian canola crop at 1.23m tonnes, up from 1.10m tonnes last year, but below the 1.40m tonnes at which Abares has pegged the state’s harvest.
The association noted that canola, an earlier developing crop than wheat, suffered in many areas of Western Australia "from difficult establishment conditions".