Australia wheat harvest to fall further than first thought


Australia's wheat harvest will, thanks to a lack of rain, fall more than has been expected this year, National Australia Bank said, issuing a production forecast well below those from many other commentators.

As well as crops losing yield potential from the dry weather, the conditions could also have reduced the area planted with the crop for 2017, the bank said.

National Australia Bank predicted a 23.3m-tonne wheat crop for the 2017-18 marketing year "based on rainfall to date and assumed average rainfall in major cropping areas for the rest of the season".

The extent of the decline from last year, when the harvest came in a record 35.1m tonnes, shows "just how severe the rainfall deficits were last month", as crops were attempting establish after sowing.

The NAB estimate is lower than figures from other global analysts - and would represent the weakest harvest in five years.

The USDA's June Wasde report had an Australian wheat forecast of 25.0m tonnes; the International Grains Council's latest prediction, last week, was for 24.8m tonnes while Australian commodities bureau Abares has pencilled in a 24.19m-tonne crop.

'Potential downside to yields'

NAB said that the Australian this year's autumn break, as sowings were beginning, "was rather mixed, with some areas receiving good rain and others missing out.

"More worrying than the patchy autumn break has been the extremely dry start to winter, which has been widespread across Australia."

June rainfall in the wheat belt in Western Australia, the top wheat growing state, was only 23% of the long term average, according to official data.

The bank also flagged a forecast from the Bureau of Meteorology's of below-average rainfall over the next three months in the Western Australian wheat belt, besides most of Victoria and New South Wales and parts of South Australia.

"If these rainfall levels transpire, there is a potential downside for grain yields."

'Like gold'

The International Grains Council last week, cutting by 800,000 tonnes to 24.8m tonnes its forecast for the Australian wheat harvest, flagged "growing worries about dryness…. especially in Western Australia and South Australia

 "Owing to below-average autumn rains in those states, soil moisture reserves have declined and not all the planned area may have been seeded to wheat."

Last week, grain merchant Nidera said that "many regions, such as north-western New South Wales, the Eyre Peninsula in South Australia and the northern half of the Western Australian cropping area are getting quite desperate.

"There will certainly be yield penalties and any production expectations above average would be extremely optimistic."

Australian farmers are "treating any unsold inventory as gold, and the shorts in the trade are struggling to find sellers".


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