Wheat-growing regions in Australia, the world’s fifth-biggest exporter, are set for wetter-than-normal weather in the next three months even as the risk of an El Nino increases, according to the Bureau of Meteorology.
Grain regions in southwest Western Australia, the country’s top wheat producer, are set to receive above-median rainfall between May and July, the weather bureau said on Thursday. Most of New South Wales, South Australia, northern Victoria and southern parts of Queensland are also set for a wetter-than-normal period, the bureau said on its website.
Wheat output may rise 3.3 percent this year to 24.4 million metric tons, the Australian Bureau of Agricultural and Resource Economics and Sciences estimates. Farmers began planting this month. The outlook for winter grains including wheat will be dependent on receiving decent rainfall through autumn, National Australia Bank Ltd. said this week. Optimism may be pared on forecasts for an El Nino, which brings below-average winter and spring rainfall to eastern Australia.
“It’s a balanced risk scenario right now,” Wayne Gordon, an analyst at UBS Group AG in Singapore, said by phone. “You have them forecasting good rain at the start of the season, which is great for crop planting and crops developing. But they’re still raising the alert risk on the El Nino side, which means you could end up with a short finish which then means lower yields.”
The weather bureau raised its El Nino outlook to alert from watch on April 14, citing warmer ocean temperatures in the tropical Pacific Ocean and weaker trade winds. There’s a 70 percent chance of the event occurring this year, it said.
The Australian crop will add to global production, set to climb to a record in 2014-2015, according to the U.S. Department of Agriculture. Wheat on the Chicago Board of Trade, the global benchmark, has dropped 15 percent this year to $5.0125 a bushel on Thursday.