Mecardo Analysis - Winter crop up but not a bumper
- By: "Farm Tender" News
- Cattle News
- Jun 18, 2019
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By Angus Brown | Source: ABARES.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) have the task of putting out an official forecast of the Australian winter crop for the coming year. The dry autumn hasn’t dampened plantings, but yields are not expected to lift at this stage.
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With the winter crop now in the ground we should have a reasonable idea of the planted area, but variation in yield will now drive production. Higher prices have driven up planted areas for the big three winter crops, wheat, barley and canola, but the dry autumn has meant plantings are well behind the big years of 2008-2013.
Wheat plantings have risen 8% this year to an expected 10.9 million hectares. From 2008-2013 wheat plantings were over 13 million hectares every year. The increase is largely driven by NSW, where plantings are up 39%. This is somewhat offset by a 5% reduction in WA.
Barley and Canola plantings are also up, but are much smaller than wheat, and the big years. Barley plantings are expected to increase by 12%, and Canola 6%.
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Yield is difficult to predict at the best of times, but with a dry autumn and forecast dry winter ABARES have gone for the lower end of recent estimates. Even so, big production increases are expected in NSW, Victoria and SA.
The national wheat yield is forecast to increase by 13% to 1.93t/ha. Big increases for NSW (90% to 1.9t/ha) Victoria (48% to 2.06t/ha) and SA (50% to 1.5t/ha) are expected to be countered by a 15% fall in WA, where yields of 1.84t/ha are expected.
The end result for the national wheat crop is a 23% increase to 21.19mmt. Figure 1 shows this is marginally larger than the 17/18 crop, but still the third smallest of the last 12 years. We know domestic demand is centred on the east coast, and some of the supply shortage is expected to ease, with the east coast wheat crop set to rise 82%. The export based WA market is forecast to fall 19%.
Barley and Canola production are also expected to rise nationally, up 12 and 18% respectively. Barley is the only crop expected to exceed its 10 year average (figure 2). Canola production (figure 3) is again expected to be relatively low, with an exportable surplus on the east coast no guarantee for the second year in a row.
Key points
* Wheat plantings have risen 8%, Barley and Canola plantings are up 12% and 6% respectively
* Grain production is expected to rise, especially in NSW, Victoria & SA
* The end result for the national wheat crop is expected to increase 23% to 21.19mmt
What does this mean?
Winter crop production is expected to be better, but not markedly. With improved seasonal conditions there is upside for yield forecasts, but the fact that planted areas are still relatively low will cap any moves towards ‘bumper’ crop territory.
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With domestic grain supplies expected to remain tight, if not as tight as last year, local basis should continue to find support. Historically large surpluses are required on the east coast to push our prices below international benchmarks, so while prices will continue to follow overseas trends, pressure on basis seems unlikely.
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