Australian Wheat Output Wilts as Drought Persists

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Persistent drought conditions in southeastern Australia have pushed wheat-production forecasts lower for the 2018/19 marketing year. The USDA Foreign Agricultural Service says it now expects output of 18 million tonnes of wheat, Australia’s major winter crop, down from its previous forecast of 18.5 million tonnes. Wheat production was 21.3 million tonnes in 2017 and 31.8 million tonnes in 2016. Declines in expected production in the states of New South Wales, South Australia, Victoria, and Queensland are expected to more than offset higher production in Western Australia, which has had more favorable seasonal conditions. Lower output will mean more wheat will be dedicated for feed markets than normal. FAS has increased the Australian feed projection to 6 million tonnes for 2018/19, compared with a reported 4 million tonnes in the previous market year. Meanwhile, wheat exports are expected to decline to 12 million tonnes for 2018/19.

Typically, 60 percent of Australia’s wheat exports are sourced from eastern and central Australia. This percentage is set to drop to 30 percent as more volume produced in the southeast is deemed unsuitable for export markets and domestic feed grain prices rise. October 2018 wheat feed prices across New South Wales averaged US$314 per tonne, up US$3.50 over September according to Dairy Australia. Gro Intelligence subscribers can keep up with Australia’s wheat market shifts through up-to-date data and analytics.

The chart at left shows the evapotranspiration anomalies recorded across Australia through September 2018, with the orange and red zones in the southeast indicating the persistent drought conditions.. The right chart shows sharp declines in production quantity (blue line) and export volume (green bars) of Australian wheat.

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