Australia, the world’s fourth-biggest wheat exporter, will expand production after rains improved soil moisture, adding to global supply and increasing pressure on the bear market.
Farmers will harvest 25.4 million metric tons in 2013-2014 from 24.9 million tons predicted in March and 22.1 million tons a year earlier, the Australian Bureau of Agricultural and Resource Economics and Sciences said today. Exports may be 19.6 million tons in the 12 months starting Oct. 1 from 20.1 million tons this year when sales from stockpiles boosted shipments.
Global wheat prices tumbled into a bear market in January on expectations that world production will climb to a record as expanding harvests in Canada and Russia counter a smaller U.S. crop. Goldman Sachs Group Inc. sees potential for significant declines in farm prices in the second half, it said today. Corn and soybeans are also in bear markets, curbing gains in global food costs that are up 5 percent in the past year.
“Seasonal conditions since the second half of May have improved markedly, particularly on the east coast,” said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia. “The tight carry-in that we’re going to have coming into the harvest is the reason for the weaker export estimate.”
Farmers worldwide will harvest 6.9 percent more wheat in the year from June 1, boosting output to 701.1 million tons, the USDA said May 10. The gain exceeds the 3 percent expansion in demand to 694.1 million tons, it said. A 6.6 percent increase from Canada and gains of 48 percent in Russia and 40 percent in Ukraine counter a 9.4 percent drop in the U.S. The agency updates its estimates at 12 p.m. in Washington today.
The rebound follows drought last year that hurt harvests from the U.S. to Russia and pushed prices to $9.4725 a bushel on July 23, the highest level since 2008. Wheat for July delivery fell as much as 0.8 percent to $6.91 on the Chicago Board of Trade and was at $6.9175 at 5:05 p.m. in Singapore today. The U.S. was the biggest exporter in 2012-2013 followed by the European Union and Canada.
“Big crops are forecast in key exporting regions, in particular Canada, the Black Sea and Australia,” Mathews said by phone from Sydney today. “When there are large crops in the Black Sea region, we tend to observe weak global prices because of the strong export competition.”
Eastern regions of Australia are set for a wetter-than-normal winter, boosting the harvest after some farmers started sowing crops into dry soil, said Abares.
New South Wales
Growers in Western Australia will harvest 8.8 million tons in 2013-2014 from 6.9 million tons a year earlier as farmers increase area, the bureau said. That will put the state ahead of last year’s biggest grower New South Wales, which will boost output by 7 percent to 7.6 million tons, it said.
“Although mixed, the seasonal conditions over autumn maintained favorable levels of soil moisture over April and May” in Western Australia, said Abares. In New South Wales, “widespread rainfall in late May and the first weekend in June was timely and favorable for sowing winter crops,” it said.
The bureau lowered its area planted to wheat to 13.7 million hectares (33.8 million acres) from 13.8 million hectares estimated in March. Australia’s canola production is forecast at 3.2 million tons, up from 2.9 million tons predicted in March, Abares said. Barley output will be 7.4 million tons from a March estimate of 7.8 million tons.
Total winter-crop output, including wheat, barley and canola, may total 40 million tons in 2013-2014, compared with 36 million tons a year earlier, the bureau said.
Cotton production in Australia, the third-biggest exporter, may reach 995,000 tons compared with 905,000 tons forecast in March, according to Abares.