Bumper grain harvest to boost lready large global stocks

11.08.2016

Australia’s 2016 grain harvest is looking like it could be one of the largest ever but it comes at a time when global markets are already awash with supply.

Private forecasters are tipping Australia’s 2016 wheat crop will exceed 28 million tonnes, which would make it the second largest harvest ever if realised behind 29.9 million tonnes in 2011-12.

Forecasters are also tipping the favourable weather conditions will extend well into the spring, which would go a long way to assuring above average yields. The latest Bureau of Meteorology is predicting above average rainfall for August to October across much of eastern Australia.

A wetter than normal winter in most of the country’s major cropping areas has created a near ideal start for grain crops, with many farmer saying it’s been their best start in years. Farmers have been buoyed by the regular rain with many farmers sitting on full moisture profiles ahead of spring.

Excess rain through parts of central west NSW has resulted in isolated crop losses. However most areas of the state are enjoying the spoils of a wetter than normal season. Excessive June rainfall through the central west and parts of the north west delayed the last of planting.

After two consecutive poor seasons, Victorian farmers are on track for above average yields. Most of the Wimmera is saturated which has allowed natural flows in the Wimmera River for the first time in four years. Mallee farmers are also off to a good start but many farmers are still hoping for soaking rain through August.

Western Australia is set for another huge harvest, where bulk handler CBH is expecting 14 to 16 million tonnes, up from last year’s 13.5 million tonne crop. Some are saying this year’s grain harvest may even exceed CBH’s estimates. The Grain Industry Association of Western Australia is forecasting total grain production of 17.5 million tonnes.

Timing of this year’s expected bumper grain harvest, may not be ideal for farmers with markets already brimming. World wheat production is expected to record large for a fourth consecutive year on the back of a record large Russian wheat crop, as well as big crops in the US, Europe, Canada and Australia. The USDA is forecasting world wheat production at a record large 738 million tonnes, which comes at a time when global stocks were already record large.

World markets have tumbled to decade lows on the hefty global supplies but markets are starting to show signs that a bottom may be near.  Markets have firmed in recent weeks on fears excessive wet weather in Europe will result in a massive downgrade in their harvest.  


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