Australia's wheat crop expected to fall 11% on drought: NAB

A private Australia-based agricultural consultancy has cut its wheat production forecast to 15.5 million mt due to continuous dry and unfavourable conditions, according to the October edition of NAB's Rural Commodities Wrap.

"Our best guess for wheat is 15.5 million mt at this stage," the report said, citing the country's poor growing conditions, especially in New South Wales and Queensland.

This is 1.8 million mt lower than last year's drought-affected output, which came in at 17.4 million mt, and means NAB is the first agency that is forecasting the coming crop at below last year's,

Australian government estimates and the USDA are currently maintaining forecasts higher than last year's production, although the USDA's forecast was cut by 1 million mt in the October update of the Wasde report to 18 million mt.

Australia's ABARES is currently maintaining a 19.2 million mt forecast, 10% higher versus 2018/19.

In terms of regions, NAB is expecting Western Australia wheat production to come in at 6.3 million mt, Victoria at 3.5 million mt, on par with production in South Australia where "a good deal of crop" will end up being cut for hay.

While market opinions remain divided on the outlook, consensus is forming that Australia's new crop will come in markedly below current government estimates and many analysts are now looking for lower production than the previous year.

"Our estimate is at 14.5 million mt, conditions are very bad and we find that most people move very slowly on taking the crop down or up," one Australia-based trader said, with their estimate already reduced from 15 million mt .

"We are at 16.5 million mt, cautious... not too aggressive with the cuts," a second trader said, also adding that Australian flour millers will need to import Canadian wheat again this year.