The wheat crop in Australia, the world’s fifth-biggest exporter, is holding up better-than-expected as recent rainfall helped ease concern a strengthening El Nino may curb production.
Output is set to be 23.5 million metric tons this season, according to the median estimate of six analysts and traders compiled by Bloomberg. That compares with 23.6 million tons estimated by the government in June and 23.7 million last year.
El Nino can disrupt harvests worldwide by bringing drought to Asia and eastern Australia and altering rainfall in South America. The Pacific Ocean weather event is strengthening, with some data patterns exceeding the 1997 record, according to Australia’s Bureau of Meteorology. The inflation-boosting effect of the first El Nino since 2010 poses a risk to the global economy, Citigroup Inc. has said.
“You’ve certainly got good rainfall in recent months in New South Wales and southern Queensland, so the crops through there are looking quite good,” while parts of Victoria are dry, said Paul Deane, an analyst at Australia & New Zealand Banking Group Ltd. in Melbourne. “In Western Australia, a little bit dry in places. But again, rainfall in the last few days has probably helped shore up that crop.”
Wheat for September delivery fell 0.5 percent to $4.96 3/4 a bushel on the Chicago Board of Trade at 1:39 p.m. in Singapore. Prices slumped 19 percent in July, the biggest monthly drop since September 2011.
Parts of western and northern New South Wales had above-average rainfall in June, including in some drought-hit areas, according to the weather bureau. El Nino is building strength and is set to last into next year, the bureau said July 21.
The weather pattern often brings a drier winter and spring to Australia’s east and crops there will need rain in the next couple of months to bolster production ahead of harvesting that begins in October.
Central and southern Western Australia, the top wheat producer, has an increased chance of a wetter-than-average August to October, the weather bureau said Thursday. Most of eastern Australia has a roughly equal chance of a wetter or drier three months, it said.
“We’re in a better position than what we would’ve thought we would have been in, considering we’re in El Nino,” Mark Palmquist, Chief Executive Officer of GrainCorp Ltd., said in an interview last week. “Australian crops are made in August in September.”