Wheat-growing regions in Australia are set for a drier winter amid a looming El Nino event, which can bring below-average rain to the country’s east and south.
The odds for below-average rainfall is more than 60 percent from June to August in parts of southern Western Australia, most of South Australia, southern Queensland, New South Wales and northern Victoria, the Bureau of Meteorology said today. The bureau in April saw a 60 percent probability of a wetter May to July in southern Western Australia and equal chances of a wetter or drier-than-normal three months for most of the country.
Australia remains on El Nino watch and the pattern may develop by August, the bureau said this month. Futures in Chicago have tumbled 12 percent in May after the U.S. government said global reserves will rise to a three-year high. While favorable rains before and after planting across a majority of southern Australia resulted in a promising start to the growing season, parts of southeast Queensland and northern New South Wales require more rain, says Rabobank International.
“The crop has got quite a good start and there’d be reasonable subsoil moisture levels around,” said Tom Howard, group general manager of origination and communications at Emerald Grain Pty, a Melbourne-based trader. “We’re keeping one eye on what those forward weather maps are looking like.”
Wheat output may drop 8.2 percent to 24.8 million metric tons in 2014-2015, the government estimated in March. World stockpiles may climb to 187.4 million tons by the end of the 2014-2015 season, the U.S. Department of Agriculture said May 9.
Australia is the world’s fourth-biggest shipper in 2013-2014 and is set to rank fifth in 2014-2015 as Russia boosts exports, according to the USDA.