Shrinking yields pare back Australian wheat crop to lowest level in a decade

Australian winter wheat production is set to drop 42% on year to 20.27 million mt, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said Tuesday.

The revision, which cuts 1.3 million mt on ABARES’s previous estimate in October, reflects both a drought which struck during the early stages of the crop’s development and recent flooding during the harvest.

Localised data shows some of the worst impacts of the drop-off in wheat production, with the wheat crop of New South Wales expected to see a fall of 58% to 4.79 million mt; its smallest crop in a decade as the state experienced some of the worst drought conditions on record during the crop’s vital development stage.

Heavy rains have further damaged the crop that remains in the ground during harvesting, leading to a further reduction in its expected size.

Western Australia is forecast to fall 25% to 7.52 million mt and, although the region has escaped largely unscathed from the heavy rains during its harvest stage, falling yields have put total winter crop production 2% below the ten-year average.

While the picture across South Australia was mixed during development, the state has experienced some of the worst damage to its crop during harvest, with heavy rainfall, strong winds, hail and frost all affecting the crop at one stage or another. Victoria is also forecast to see its wheat crop drop, falling 32% on last year to 3.6 million mt, driven by frost-related damage and the same wet weather which has hampered harvesting in other parts of the country.

Total crop production is set to be some 41% below last year’s anomalously high winter crop of 59.46 million mt, ABARES data showed.

Nonetheless, winter grain production for 2017-18 is also set to decrease 19% against the five-year average and 12% against the ten-year average. Total production at 35.12 million mt is a low not seen since the 2007-08 marketing year when Australia produced 25.42 million mt.

Despite the poor news for Australian agricultural production, the market’s reaction to ABARES’ forecasting was muted with much of the industry having already been braced for the downwards adjustment for several weeks now.

“The market was already prepared for Australia to harvest much less wheat than last year, but they did not expect that after such a long drought there would be heavy rain that could bring even more damage,” an analyst said.

Reflecting on the positives they continued, “Just a few days ago there were estimations of as much as 4 million mt of wheat lost in the south and east.”