Australia faces crucial 6 weeks for developing wheat crop

Australia is entering a decisive period in the development of its wheat crop, as the weather during August will bring clarity on whether production has been set back by a dry winter, market sources told Agricensus.

The country's winter crops got off to a good start with favourable weather conditions boosting expectations of a bumper harvest, but with the weather turning drier through winter, the loss of essential ground moisture reserves meant that development faced issues as spring's higher temperatures arrived.

"Western Australia was dry, and still is, in parts. But it got a decent fall of rain a week or two ago which kept them in the game, forecast has some more rain over the next 10 days which again will keep it ticking over," Market Check's head of strategy Nick Crundall told Agricensus.

"I think WA still has the potential to grow a good crop, but as always will come down to spring weather," Crundall said.

Western Australia is the country's biggest grain growing region, accounting for more than 50% of Australia's wheat production and with almost all that production typically exported.

"It's drier than is ideal, but recent rainfall has been sufficient to hold crop conditions for now... crops will hold as temperatures are cool. Mid-August through September is the key period, weather conditions through there will determine the high and low of production," an Australia-based trader said of Western Australia conditions.

In other regions, production in New South Wales is said to look very good as the state received good moisture with more forecasted in the weeks ahead, while Queensland, Victoria and South Australia need more rain to prevent a fall in crop production.

"If those areas have a below-average August, then we start dialling back production estimates," Crundall said, highlighting that bigger production in New South Wales could compensate for any losses in the state of Victoria.

The Australian Bureau of Meteorology (BOM) released its weather forecast for the August through October period on Thursday, highlighting expectations of good rainfall New South Wales, but warning of average or below average rain outlooks for Victoria, South Australia and Western Australia.

The country as a whole is currently expected to harvest 26.7 million mt of wheat and 10.6 million of barley in the 2020/21 marketing year - up 13% and 17% from the 10-year average respectively, according to the country’s bureau of statistics, Abares.