The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released its December Crop Report last week, and it came with some serious bumping of production figures.
The headline numbers make for good reading, at least for consumers looking for some harvest pressure to come on prices. ABARES increased forecast wheat production by 5.4%, adding 1.82mmt, bringing the total to 35.58mmt. This would be the third largest wheat crop on record and 4% larger than last year.
The 0.7mmt increase in production in WA was largely expected. An almost perfect spring in the west and strong tonnages to date suggest WA is again on track for its second largest crop on record. The average yield in WA is forecast at 3.01t/ha.
On the east coast, ABARES also bumped wheat production by 5.3%. Interestingly, the biggest mover was South Australia. ABARES added 0.5mmt to SA, an increase of 11.8%. ABARES increased average yields in SA to 2.37t/ha, up from 2.12t/ha in September, and well above the Wheatcast forecast of 1.83t/ha.
Victorian production was held steady from September, while NSW added 3.3%. Good early yields in northern NSW drove the increase.
Figure 2 shows barley was the big mover in the December Crop Report. A national increase of 8% equates to an extra 1.11mmt. For those thinking this will see feed prices sink, think again, as the majority (0.8mmt) of the increase was slated for WA, where the export market will soak up the barley. The big boost in the west will see a new record for Australian barley production.
The good spring in WA also gave canola production a solid boost. ABARES are forecasting an 18%, or 0.6mmt, increase in canola production compared to the September report. East coast production also had a small lift thanks to NSW, and to a lesser extent SA. Canola production is now forecast to be the second largest on record.
What does it mean?
The latest winter crop production estimates are unlikely to move markets at all. We already had an exportable surplus; now there is expected to be more to export. Prices will remain at the whim of international markets until we get into sowing season. Tanking canola prices last week on the back of falls in Canada are a stark reminder of how quickly that can happen.
Key Points
- The December Crop Report forecasts production increases for all winter crops.
- WA was the main driver, with good spring conditions lifting yields.
- International markets will continue to drive pricing with a large exportable surplus.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: ABARES, Mecardo
