Dec. 10 (Bloomberg) -- Wet weather this week in eastern Australia, the fourth-largest wheat exporter, may have cut 60 percent of the crop in three states to feed quality, Australia & New Zealand Banking Group Ltd. estimated.
As much as 12.3 million metric tons in New South Wales, Victoria and South Australia may be classified as feed after rain in the past three days, Melbourne-based ANZ said in a report. The bank estimates output in the states at 20.3 million tons and national production at around 25 million tons.
Wheat futures have gained 45 percent this year on drought in Russia and concern that high-quality grain will be in short supply. Much of the downgraded crop from eastern Australia’s record harvest would go into ending stocks while in the west and south supplies from last harvest would help boost milling-grade shipments, ANZ Agricultural Economist Paul Deane said.
“East coast exports were always going to be constrained by logistics,” Deane said by phone today. “We were always going to have a reasonably large stock of wheat at the end of this season on the east coast, so what this means is we are going to switch it from milling quality to feed.” Some 700,000 tons of Queensland output of 1.3 million tons may also be feed, he said.
Wheat for March delivery on the Chicago Board of Trade fell 0.4 percent to $7.85 a bushel at 6:14 p.m. Melbourne time.
Australia’s wheat exports this marketing year may total 14.6 million tons, with shipments from Western Australia and South Australia likely to include stockpiled milling wheat, Deane said. Total milling quality shipments could reach around 12 million tons, he said.
Prices for feed what at Newcastle in New South Wales were quoted at an average of around A$220 ($217) a ton compared with A$334 for milling quality Australian standard white wheat and A$400 a ton for prime hard, Rabobank analyst Wayne Gordon said.
The bank forecasts production of 22.5 million to 23 million tons and exports of 14.3 million tons. Feed could represent at least 25 percent to 30 percent of exports, Gordon said.
The rains may help output next season reach 25 million tons as soil moisture levels in New South Wales and Queensland underpin preliminary production estimates, he said.
This week’s rain may have cut as much as 40 percent of the New South Wales state wheat crop to feed, Peter Matthews, a cereals technical specialist at Industry & Investment NSW in Temora said by phone today. That compares with 20 percent to 30 percent estimated at the end of November. Production is forecast by the state at 9.2 million tons.
“Up until the last rain event we still had about 55 percent of the crop in the paddock, so I suspect we are going to be looking at a 40 percent damage level depending on how fast this weather front moves through and what we find out in the next few days from growers,” Matthews said.
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