Drought, frost cut Australia wheat crop hopes to 9-year low


Australia slashed its forecast for its wheat harvest to a nine-year low, while downgrading its canola crop to the smallest in seven years, citing "unfavourable" weather, which had hit some states with a double whammy of drought and frost.

Abares, the official Australian commodities bureau, cut by 2.58m tonnes to 21.61m tonnes its forecast for domestic wheat production in 2017-18, a result which would make it the weakest harvest since the 21.42m-tonne crop in 2008-09.

And the bureau lowered by 564,000 tonnes to 2.75m tonnes its estimate for production of canola, in what would be the weakest harvest since 2010-11, while cutting forecasts for output of other winter crops such as chickpeas, oats and lentils too.

'Moisture and heat stressed'

Abares flagged the setback from "unfavourable conditions in many key cropping regions.

Australia crop forecasts, change on previous, and (year on year)

Wheat: 21.614m tonnes, -2.579m tonnes, (-13.395m tonnes)

Barley: 8.009m tonnes, -103,000 tonnes, (-5.405m tonnes)

Canola: 2.753m tonnes, -564,000 tonnes, (-1.382m tonnes)

Oats: 1.033m tonnes, -128,000 tonnes, (-840,000 tonnes)

Lupins: 528,000 tonnes, -89,000 tonnes, (-504,000 tonnes)

Lentils: 419,000 tonnes, -111,000 tonnes, (-411,000 tonnes)

Source: Abares

"Rainfall was well below average in most cropping regions in June and was highly variable in July and August."

Production forecasts were cut for the range of states, including to grower Western Australia, where the forecast for overall winter crop output was slashed by 2.3m tonnes to 11.8m tonnes.

This included a 1.46m-tonne downgrade to 7.08m tonnes in the wheat harvest forecast.

In Western Australia, "crops in the northern and eastern central regions were moisture and heat stressed due to the unfavourable conditions" in June and July, Abares said, although flagging that "timely showers sustained most crops in the south".

'Severe moisture stress'

However, some of the most marked crop downgrades came in New South Wales, where output prospects had been hurt by "below-average winter rainfall and several frosts during August and early September".

In north western areas of the state, "crops suffered severe moisture stress", and many had now been "sprayed out or grazed", meaning they will not make it to harvest.

Although in eastern and southern areas of New South Wales, crops that were "sown early into good levels of soil moisture were in good condition at the end of winter… several frosts in late August and early spring are expected to adversely affect yields".

This was particularly the case for canola, "that was at the critical flowering stage", and for which the harvest estimate for the state was slashed by 250,000 tonnes to 620,000 tonnes - taking the state's forecast output, unusually behind that of Victoria.

For wheat, the New South Wales harvest was downgraded by 1.25m tonnes to 6.34m tonnes.

Further downgrades ahead?

Abares added that its overall crop estimates were at risk of further downgrades were possible unless rains arrive.

"This forecast production will only be achieved if spring rainfall is sufficient and timely," with central west New South Wales and parts of South Australia cited as particularly vulnerable regions.

Many commentators have already cut harvest forecasts to lower levels, with National Australia Bank earlier on Monday downgrading its Australian wheat production estimate by 2.6m tonnes to 20.1m tonnes, which would represent a 10-year low.

"Rainfall - or more accurately the distinct lack of it - is the major issue for production this year and while August saw southern producers receive a boost, frost activity has been above average, and some parts of New South Wales and Queensland saw abnormally hot weather," the bank said.

It added that a "poor finish could see [wheat] production drop into the high teens [million tonnes], especially given very challenging conditions in New South Wales".

'Quite promising'

However, not all news on Australian output prospects is quite so gloomy, with trading house Nidera flagging some reports from the early harvest, which has begun in Queensland.

In central Queensland, "reports to date from the early chickpea and wheat harvests are quite promising, considering most producers have had very little rain since cyclone Debbie drenched the region in late March", Nidera's Australian office said.


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