Rabobank expects hectares planted to remain similar, but total grain production to fall this year

02.06.2017

Australian grain production is expected to drop this year despite a similar area of land being planted to winter crop.

That is according to agricultural lenders Rabobank, who predict 22 million hectares will be seeded over the coming months.

Senior grains and oil seeds analyst Cheryl Kalisch Gordon said that area would include more canola and less barley and oats than last season.

She said given the variable start to the season, and 2016's record production, the total tonnage would be down year on year.

"There's every expectation that even though the hectares are the same across the nation, as a total for cropping won't exceed or approach last year's record highs," she said.

"The start to the season has been mixed across the country, and then the outlook over the forward three to four months is not as favourable as we'd like."

Wheat to mirror last season

Ms Kalisch Gordon said oat plantings would be down more than 10 per cent nationally and barley down just under 10 per cent, but despite the current low price, wheat hectares planted would mirror last season.

"It comes out in the wash at a national level as being steady year on year," she said.

"There are a couple of changes within states but on the whole it's very marginal, so we're looking at similar sorts of hectares on last year, and that's really a resistance against very low world prices and local prices for wheat."

Ms Kalisch Gordon said for the next few months, all eyes would be to the skies, with farmers looking at the weather in the long and short term.

"We're certainly watching the development of El Niño and the indicators there," she said.

"At this time of year the models are notoriously uncertain, however a higher number of El Niño models are indicating that over the three months, an El Niño will be developing by September, which is not good news.

"And what's providing possible a double whammy for Australia this year is the increasingly favourable movement of the Indian Ocean Dipole.

"So together with the El Niño, which affects the east more readily, and the Indian Ocean Dipole, which is a reflection of what will happen in the west more readily, the whole country does have an unfavourable three to four month outlook."

But in some good news for growers, Ms Kalisch Gordon said the Australian dollar was expected to soften against the US, which could push prices higher for Australian grain growers as they headed into harvest.

"Rabobank anticipates that we will see a depreciation [of the Australian dollar] over the next six to nine months," she said.

"That's where we can expect to see some upside in wheat prices and grain prices generally, with the softening of the dollar over that period."


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