Rain tipping the scales in favour of a big crop

Wet barley crop

RAIN - We know you have all been watching this forecast evolve over the past week. With most of the weather models in alignment, it is the most promising rain event for the year. We don’t want to jinx it, lets just hope it falls where you need it. There have already been good falls across the southern WA coastline, nicely following up from the rain they had two weeks ago. NSW also looks to get 20-50mm across the vast majority of the state. So what does this do for the Australian crop outlook?


ABARES has wheat production pegged at 26.7mmt, 13% above the 10-year average and planted on 13mha.  You could almost back-in NSW for a 10mmt+ type of harvest.  VIC for 4mmt, SA back on track for a 4mmt crop, and WA could be building towards a 10mmt crop as well.  We could make a pretty decent argument for a 28-30mmt wheat crop (assuming a good finish) with exports in the order of 12-14mmt.

The forecast rain is also a likely contributor to the fall in wheat values (CBOT futures) overnight.  Locally, we will likely see basis levels retreat as well. We would expect cash values to be back $3-5/t as the trade wait to see where and how much rain actually falls.


ABARES has Aussie barley production at 10.6mmt, up 10% from the long term average of 9.1mmt and planted on 4.4mha (up 8%). The record in 16/17 was ~13mmt, which on current area estimate, assumes an average yield of 2.95t/ha.  Too much damage has probably been done to SA barley crops to achieve this type of average.  However, bigger crops in NSW and VIC could help push the national crop towards this record.

Prices around $220/t are not particularly attractive (roughly decile 4) and are hard to make a firm commitment to. We suspect that feed values will fluctuate this harvest and respond to ‘nearby’ demand –  that is rise and fall with shipping slot exposure or domestic requirements.  Without solid export demand, expect prices to slide.


ABARES has forecast production to increase by 40% year on year, to 3.2 million tonnes, 1% below the 10 year average of 3.3 million tonnes.  The area is forecast to increase by 32% to 2.4mha, 6% below the 10-year average.

Canola may well be the shining light this harvest.  European demand of 6.1mmt is going to consume all of the Ukrainian supplies (all GM) and still leave Europe needing to import from Canada or Australia.  China is also looking to build its edible veg oil stocks.  With Canada banned from exporting to China, Australia is again very well placed to pick up any additional demand.

Note of caution –  China does not pay oil bonification, therefore any sales to China would likely be paid on a flat 42% oil basis.

Have any questions or comments?

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image courtesy Aust Bureau of Meteorology

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Click on graph to expand

Data sources: Mecardo, Reuters, BOM, ABARES

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