Australian wheat exports to hit eight-year low: ABARES

Australian wheat exports are to fall 24% to 17 million mt in 2017/2018, according to the latest forecast by the Australia Bureau of Agriculture Resource Economics and Rural Sciences (ABARES), reaching their lowest level in eight years.

The cut is the result of climatic extremes of drought and floods that is estimated to slash the Australian wheat harvest by 42% to a little over 20 million mt, the bureau said.

“Exportable supplies are expected to decline as a result of the smaller harvest, despite this being partially offset by large opening stocks,” the report said.

The decline in Australian wheat production comes despite global production levels estimated to remain near record highs of 747 million mt, as Russian and EU production is expected to offset declines elsewhere.

However, high quality wheat supplies are expected to fall because of smaller harvests in the main producing nations of Australia, Canada and the US.

The bureau now expects the world indicator price – No 2 hard red winter FOB Gulf – to average $218/mt.

In terms of corn, the bureau said prices are expected to remain historically low as a result of record stocks with prices averaging $159/mt, up 1% from the previous 2016/2017 harvest.

Global production is expected to decline slightly to 1.04 billion mt, although that is set to be outstripped by rising demand.

Corn for feed is expected to rise 3% to 650 million mt as meat and dairy production grows globally, while consumption for ethanol and starch is expected to rise to 409 million mt, mainly due to demand growth in China, the EU and the US.

Total export earnings for Australian farmers is expected to fall by 3% to $47 billion in 2017/2018 as falls in wheat (18%), canola (52%) and barley (41%) were offset by growth in meat, cotton, wine and dairy export revenue.

The forecast was based on global economic growth at 3.5% in 2017 and 3.6% in 2018 at an average AUD-USD at 0.77.