Australia may ship a record amount of wheat in the coming year, displacing the European Union as the world’s second-biggest supplier, and helping cap gains in global prices.
The country may export 20.4 million metric tons in the year starting Oct. 1, the Australian Bureau of Agricultural and Resource Economics and Sciences said today. That’s 1.5 percent more than predicted on June 15 and 9.4 percent higher than the previous year, the bureau said. Production was forecast at 26.2 million tons, unchanged from its previous estimate and just short of the record 26.3 million tons in 2010-2011, it said.
Increased sales would add to global supplies, potentially curbing prices that surged 19 percent since July 1 when Russia resumed exports after an almost yearlong ban and drought wilted crops across the Great Plains in the U.S. Global inventories may total 194.59 million tons by May 31, 3 percent more than estimated in August, as production in Russia and Canada climbs, the U.S. Department of Agriculture said yesterday.
“Consistent monthly winter rainfall of between 25 and 100 millimeters was received across Western Australia’s cropping regions, which is a stark turnaround from last season’s dry conditions,” Terry Sheales, acting deputy executive director at the bureau, said in a statement. “South Australia, Victoria and southern New South Wales recorded average August rainfall and crops in these regions look promising.”
Wheat exports from the European Union may slump 29 percent to 16 million tons in 2011-2012, according to USDA data. That would lift Australia into second place globally behind the U.S.
Wheat for December delivery on the Chicago Board of Trade gained as much as 0.7 percent to $7.32 a bushel and traded at $7.29 at 4 p.m. in Melbourne. Futures slumped 5.9 percent last week after climbing 11 percent in August.
The area sown to wheat may decline to 14.1 million hectares (35 million acres) from 14.3 million hectares estimated in June, the bureau said. Plantings in Western Australia, set to be the biggest producer, may total 5.1 million hectares, it said.
“Northwest New South Wales and southwest Queensland have experienced below-average winter rainfall and rain will be needed soon to achieve average yields,” Sheales said.
Recent dry weather has spurred concerns that lower yields on the east coast may offset optimism that output in Western Australia will boost the harvest. The Murray-Darling Basin, which extends from southern Queensland to South Australia, had the driest June since 1986, according to the Bureau of Meteorology. New South Wales, the biggest wheat producer in 2010-2011, had below-average rainfall in July, it said.
Analysts at Australia & New Zealand Banking Group Ltd., National Australia Bank Ltd. and Commonwealth Bank of Australia all cut their harvest estimates in August, citing dry conditions on the east coast. ANZ lowered its forecast again this month.
“Abares wheat production forecast is simply too high,” Luke Mathews, a strategist at the Commonwealth Bank of Australia, said in an e-mailed report. “In order to achieve Abares production forecast, seasonal conditions over the next few months need to be perfect. Perfect conditions rarely occur in agriculture.”
Wheat production in Western Australia may total 9 million tons in 2011-2012, 3 percent more than the June forecast and almost double last year’s drought-affected harvest, the bureau said. The Grain Industry Association of Western Australia said Aug. 22 output may surge 76 percent to 8.05 million tons.
Australia’s total winter-crop production, including wheat, barley and canola, may be 41 million tons in 2011-2012, the fourth-largest on record, according to the bureau. That compares with a June forecast of 40.8 million tons, the bureau said. Last year’s total was estimated at 42 million tons, it said.
Cotton production in Australia, the fourth-largest exporter, may reach a record 1.1 million tons this year, in line with June’s forecast, according to the report. Production may have reached 898,000 tons in 2010-2011, buoyed by rainfall, the bureau said.
La Nina-linked wet weather brought record rainfall to parts of eastern Australia last year, ending drought and replenishing dams used for irrigating cotton, which is planted around November and mostly harvested from April.
Canola production is expected at 2.29 million tons in 2011-2012, compared with the 2.27 million tons predicted in June. Output may reach about 2.5 million tons, the Australian Oilseeds Federation said Aug. 16.
The bureau raised its forecast for barley production to 8.3 million tons from 8.09 million tons in June and compared with 9.3 million tons in the previous year.
Production of summer crops, planted in the next few months and harvested next year, may increase to total 4.8 million tons from 4.7 million in 2010-2011, according to the bureau.