Below trend growth to continue
It’s a season of stark contrast for Aussie wheat growers, with those in the west and south set for a bumper season while those in the east are doing it tough. International factors are also placing downward pressure on prices, with Canada producing one of its biggest wheat crops on record.
It’s a season of stark contrast for Australia’s wheat growers, with those in the west and south set for a bumper season while those in the east are doing it tough.
NAB Director of Commodities, Tim Glass, said the current situation highlights how what’s happening next door is not necessarily going to be driving prices. “Producers in northern Victoria and large areas of New South Wales have been hit by two frost events on top of a dry start in the north – the latest frost having a severe impact on wheat crops across some 1.7 million hectares,” Tim said.
“While farmers in the east would’ve expected this to boost the price by tightening supply, it’s actually softening on the back of large exportable surpluses in Western Australian and South Australia.
“The Western Australian wheat crop is forecast to reach 9 million tonnes – up from a forecast of 7 million tonnes three months ago. South Australia looks set to harvest 6 million tonnes, up from a traditional 4 million.
“These two states alone are producing wheat volumes greater than all of Australia during the middle of the last drought, and it will feed into the export market.”
International factors are also placing downward pressure on prices, with Canada this year producing one of its biggest wheat crops on record.
While many growers will sell at harvest to meet cashflow needs, Tim said there may be a rally in the wheat price post-harvest, if seasonal conditions don’t improve in northern NSW and southern Queensland.
“Anyone who decides to carry crops forward should keep a close eye on whether farmers can plant their summer crop.
“Right now they need about six inches of rain in order to plant sorghum. If there’s no rain prior to Christmas, there’s every chance the price of wheat will rise early next year due to a lack of feed grain in the system,” Tim said.
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