Australia. Grain and Feed Update. Oct 2014 Nov. 11, 2014
Australian wheat production for 2014-15 is expected to fall to 24 million tons due to lower than expected rainfall and declining yields. Wheat exports are forecast to fall to 18 million tons. Barley production is anticipated to decline by one fifth to 7.5 million tons, as some growers shift to wheat and canola crops and yields decline due to below average rainfall. Production of grain sorghum in 2014-15 is likely to increase to 1.8 million tons and the area planted to expand by 27 per cent. Rice production is predicted to rise 7.5 per cent to 644,000 tons due to higher acreage planted with yields to fall. As usual, the weather outlook is crucial for these estimates and below average September rains have impacted on crops.
Adverse seasonal conditions across Australia have led to an 8 per cent downgrade in expected wheat production for 2014-15 to 24 million tons. The harvested area is expected to increase by two per cent to 13.8 million hectares. Low soil moisture levels in northern NSW and Queensland could reduce yields and output without average winter rainfall, while higher than average rainfall could boost output.
Wheat is the major winter crop in Australia, with sowing starting in autumn and harvesting, in spring and summer. Harvesting starts in central Queensland during August and progresses down the east coast to Victoria, finishing during January. On the west coast, the wheat harvest starts during October and is completed during January. The main producing states are Western Australia, NSW, South Australia, Victoria and Queensland. Major types of wheat include Prime Hard, Hard, Premium White, Standard, Soft and Durum, based on protein, grain size and moisture content and each grain has different end-uses.
Exports in 2014–15 are forecast at 18.5 million tons, down from the previous expectation of 19 million tons and after a 14 per cent fall in 2013–14. Australia is the seventh largest wheat producer in the world and the fourth largest exporter. Around 80 per cent of Australian wheat production is exported, with WA the leading State. The major export markets are in the Asian and Middle East regions and include Indonesia, Japan, South Korea, Malaysia, Vietnam and Sudan. Japan purchases around 900,000 tons of ASW blend noodle wheat from Australia each year, mainly for the production of udon noodles. In 2013-14, China became the third most significant destination for Australian wheat exports, increasing by 36 per cent due to higher demand for milling grade wheat to blend with domestic supplies.
Australia has the capacity to export wheat in the December to May marketing window when the northern hemisphere season is ending. During this period, seasonal demand for grain, rail and port services and shipping slots increases significantly and a queuing system is used for bulk grain exporters. Around half of wheat grown in eastern Australia is consumed locally, while 90 per cent of grain produced in Western Australia and South Australia is exported. Australia is a strong supplier of noodle wheat into Asia, but is unable to compete with the US hard varieties in the production of Asian breads.
Wheat is Australia’s major grain crop and is used for human consumption in the production of breads, noodles and pastas. Lower quality wheat is used as stock feed while some waste wheat starch is used to manufacture biofuel. Australia typically consumes 5 million tons of wheat annually, with the remainder exported. Around 2.5 million tons are used to produce flour, whole grain products and beverages for human consumption, as well as to produce gluten and starch for industrial uses. A further 3.5 million tons is used annually as stock feed and half a million tons is used as seed.
Wheat consumption in Australia has been stable at 70 kg of flour per capita consumed on average over the past decade. Flour producers face a mature domestic market with growth dependent on product innovations or to meet dietary needs for gluten free products. The biggest milling companies in Australia are Allied Mills, George Weston Foods and Manildra. The NSW complex of Manildra is one of the ten largest flour mills in the world and the company is also the leading Australian biofuels producer, using waste wheat starch for its feedstock.
In 2014-15, barley production is projected to decline by one fifth to 7.5 million tons. The area planted to barley is forecast to fall by 4 per cent to 3.8 million hectares, as some growers shift to wheat and canola crops. Due to below average rainfall in the growing season, the average yield is expected to fall by around one fifth to 2 tons a hectare. Barley is generally harvested from October to late November. It is Australia’s second largest cereal crop, with two thirds crushed into meal for animal food while one third is used to produce malt for the brewing and food industries.
Malt barley is for human consumption, while feed barley is for animal feed. Malt from barley is a key ingredient in beer production. Consumption of beer in Australia has more than halved since the 1970s, so that barley producers have focused on markets in Asia where beer production is increasing. Malt is also used in baking, confectionery, breakfast cereals, malt beverages, dairy products, condiments and as a caramel substitute. Processed barley grain products are used as components of consumer products in the form of thickeners, binders or extenders. Examples include pearled barley, barley flakes and barley flour. Consumer products which would include these are malt drinks, malt chocolate confectionary, and various bakery items, soups, bread and cereals.
Australia was the second largest barley exporter in 2013–14, with 30 per cent of world barley exports. In 2014-15, exports are likely to fall by two thirds to 4.3 million tons, comprised of both feed barley and malting barley. The decline in barley exports reflects lower domestic production and falling demand for feed barley, as corn is substituted for barley in livestock feed due to lower world corn prices.
Over 800,000 tons of malting barley are produced annually, of which around three quarters is exported. China is the largest importer of Australian malt from barley, which meets 60 per cent of the Chinese demand. Australia has become more important as a source for Asian breweries as international supplies of malt from quality barley are declining. Around 200,000 tons of barley is exported annually to the Japanese market to be used in the manufacture of Shochu, a distilled spirit.
In August 2013, Cargill acquired Joe White Maltings to make it the largest malt producer in Australia. The larger company has an annual capacity of 550,000 tons and is the world’s third largest malt producer behind Malteurop and Soufflet. In October 2014, Cargill claimed that premium grade malt production at its new subsidiary was falling below expectations and took legal action against the previous owner. It is unclear how this development will significantly affect Australian malt production and exports in 2014-15.
In 2014-15, Australian production of grain sorghum is forecast to increase by over 70 per cent to 1.8 million tons. The area planted is expected to rise by 27 per cent in 2014-15 to 625,000 hectares, after shrinking in the previous year due to unfavorable seasonal conditions. This expansion, though revised down from the previous Post forecast, reflects favorable grain sorghum prices and hopes for average rainfall in growing regions. There is uncertainty forecasting sorghum export because harvesting and export occurs at the end of the financial year. Post expects exports will be 500,000 tons in 2014-15. Sorghum yields are expected to recover from two to three tons per hectare if more normal seasonal rains occur over the growing period.
Sorghum is a summer crop used mainly for livestock feed. Australia produces around two to three per cent of global sorghum, but accounts for over five per cent of global exports. Approximately 60 per cent of the Australian crop is grown in Queensland and the remainder in northern NSW. Planting times are from September to January and sorghum is classified as either grain sorghum or forage sorghum according to the tannin content. Grain sorghum is often used for feed grain for the beef, dairy, pig and poultry industries and is the main summer grain crop in most regions of Queensland. The grain, stalks and leaves are all used for animal feeding products.
In 2014-15, Australian rice production is expected to increase by 7 per cent to 890,000 tons, provided that irrigation water is available. Milled production in 2014-15 is projected to increase by 7.5 per cent to 644,000 tons due to higher acreage planted and expected favorable returns to growers. In 2014-15, yields are forecast to fall to 9.5 tons per hectare. The industry averages a yield of 9.7 tons per hectare. The 2013-14 crop averaging 11 tons per hectare, the highest in the world. Eighty five per cent of rice is exported and the rest is consumed domestically.
Rice is grown from October until March mainly in the Murrumbidgee and Murray River valleys of NSW. The average size of an Australian rice farm is 400 hectares and water use is tightly regulated. Murrumbidgee and Murray River allocations have been announced at 40 per cent in 2014, although some farms have a 30 per cent carryover available from the previous year. The sole Australian producer markets over 1 million tonnes of rice but only two thirds are from domestic production. By–products from the processing of rice include rice husks, rice stubble, rice bran, broken rice and rice straw, which are used by the horticultural, livestock and building and food industries