The latest Wheatcast forecast was released last week, and while it’s a good read for statistics nerds, it’s not great news for wheat supply. Further dry conditions have weakened and narrowed the Wheatcast yield forecasts.
New South Wales wheat yield forecasts are still at the very top of the historical range despite having weakened, and the range has narrowed considerably over the last month.
As harvest approaches, the range of all forecasts will continue to narrow, as future weather has less influence on yield compared to what has already happened. The forecast yield of 2.68 t/ha is very strong but remains below ABARES’ forecast. Yield uncertainty is highest in the Riverina and Southwest Slopes.
Queensland’s harvest is almost upon us, and as such, yield forecasts have narrowed to an above-average 1.85 t/ha, also below ABARES’ latest crop report.
In South Australia, the range has narrowed, but mainly through upside being removed. SA’s forecast yield of 1.72 t/ha is just below average and down on every forecast since mid-July. Yield uncertainty is highest in northern cropping zones.
In Victoria, forecast yield has fallen and upside has been stripped out, with key regions not receiving enough rain recently. Victoria’s median estimate is pegged at 2.38 t/ha, down on ABARES and the lowest level since mid-June. Wheatcast indicates there is still potential to reach 3 t/ha, but it seems unlikely, looking at the forecast for the next week.
WA is the only state to receive a lift in forecasts, with the possible bands actually moving higher, which is unusual. WA’s median yield forecast is 2.05 t/ha, but this is still well below ABARES’ forecast of 2.73 t/ha.
Put it all together, and national yield forecasts have weakened back to levels seen in August. The median of Wheatcast forecasts is 2.24 t/ha, well above long-term averages but below ABARES’ forecasts. If we plug the Wheatcast median forecast into ABARES’ plantings, it gives a total production of 28.5 mmt. This is well below the 33.76 mmt ABARES forecast in the September crop report.
What does it mean?
The market appears to be agreeing with Wheatcast forecasts of declining yield potential on the East Coast. Figure 2 shows ASX Wheat futures rallying last week despite falling SRW futures in the US. It will be an interesting finish this year.
Key Points
- Wheatcast yield potentials have fallen, leading to lower median forecasts everywhere except WA.
- Time is running out for rain to increase wheat yields.
- Local wheat markets have moved higher independently of SRW, reflecting tightening forecasts.
Click on figure to expand
Click on figure to expand
Data sources: Wheatcast, ABS, ABARES, Mecardo
