Country News

Wheat crop forecast downgrade

By Geoff Adams

Australia’s total wheat crop is forecast to reach only 15.5 million tonnes this year, after a tough spring brought low rainfall, frost and heat to key production regions.

The NAB rural commodities wrap forecast represents a downgrade from the bank’s 20 million tonne forecast last month, and comes as a very challenging winter cropping season draws to a close.

NAB Agribusiness economist Phin Ziebell said overall the NAB Rural Commodities Index had fallen 2.9 per cent in September, and the bank had revised down wheat production forecasts in key states.

“In Western Australia, the late break was followed by good June rain, but spring was unkind and we predict a WA wheat crop in the order of 6.3 million tonnes,” Mr Ziebell said.

“Victoria and South Australia should yield 3.5 million tonnes each, and crops are being cut for hay in NSW, where ongoing drought conditions have put our forecast at 1.75 million tonnes.”

The report shows resilience in livestock markets, with the National Trade Lamb Indicator sitting about $8/kg and the Eastern Young Cattle Indicator remaining flat.

“Looking at the wool market, the Eastern Market Indicator finished last week at $15.43/kg,” Mr Ziebell said.

“While the United States and China have reached a limited agreement on trade, the wool market is likely to face ongoing uncertainty.”

The report highlights that water availability will remain a key risk coming into summer, in both dryland and irrigated areas.

“Irrigation allocations in the Murray-Darling Basin are generally very low, and this is reflected in temporary water prices of around $700-800/megalitre,” Mr Ziebell said.

“We expect permanent plantings — including almonds, citrus and table grapes — will likely have a structural impact on water prices.

“Limited irrigation also means Australia will likely see another season of low cotton production, and prices are well below peak in Australian dollar terms, with Cotlook A averaging around $524/bale last month.”

Farm input prices were moderately higher, reflecting a weak Australian dollar. Domestic feed prices remain higher than international benchmarks, but are 15.6 per cent lower than this time last year.

“With a good deal of winter crop being cut for hay, domestic hay supply should be strong coming into summer,” Mr Ziebell said.

“While the NAB weighted feed grain index remains at $310/tonne this month, few graziers would have access to anything near those prices delivered on farm.”

In terms of seasonal outlook, the Bureau of Meteorology three-month outlook to January is below average in most areas, but closer to average in much of NSW.

“Northern and central western NSW continues to record root zone soil moisture levels in the lowest one per cent on record, so any improvement in seasonal outlook is very welcome,” Mr Ziebell said.

Global Dairy Trade auction results have improved recently, with the lower Australian dollar boosting farm gate offer prices.

Fruit and vegetables were mixed in September, with fruit falling 9.1 per cent and vegetables rising 3.1 per cent.