Report Highlights:

Australian wheat production for 2013/14 is estimated at 27 MMT, representing an upward revision of 3 percent from Post’s previous forecast of 26.2 MMT. Wheat export estimates remain at 18.6 MMT despite the higher production, due to lower carry-over stocks from 2012/13. Post’s forecast for barely production is expected to decline in 2014/15 to 7.7 MMT. Barley production estimates for 2013/14 have been revised to 9.6 MMT, in line with USDA official estimates. Sorghum estimates for 2013/14 have been further reduced from Post’s previous estimate to 1.27 MMT to reflect smaller final planting areas and continuing adverse seasonal conditions.

Seasonal conditions 

Since the last Grain and Feed Update seasonal conditions across Australia have remained variable with persistent drought conditions marked by periods of heavy rains, with some areas in the west and along the east coast receiving very high rainfall while other areas have remained very dry. The 2013/14 Australian summer is one of the hottest on record with extreme temperature records set in several states and territories. 

This trend has continued with production in Western Australia, South Australia and Victoria forecast to increase in 2013/14 due to favorable conditions and above-average rainfall, especially in the central and southern regions of Western Australia. In contrast, hot and dry seasonal conditions in New South Wales and Queensland during Spring (September to November) were followed by unfavorable seasonal winter growing conditions (June to August). Late frosts in October last year also adversely affected crops in central and southern New South Wales. Yields in both Queensland and New South Wales are expected to be lower compared to the 2012/13 season, while average yields in Victoria are forecast to rise slightly. When combined with an estimated increase in planted area for 2013/14 of 2 per cent, total production in Victoria is expected to be up by 3 per cent. 

The Bureau of Meteorology’s latest seasonal rainfall outlook indicates a drier than normal 2014 Australian autumn (March to May) more likely for cropping areas across Queensland, central and southern New South Wales, Victoria and southeastern part of the Northern Territory, with a 60 percent chance of below-average rainfall for these areas. A wetter than normal autumn is likely for the southern and western cropping areas of Western Australia.

Winter crops

Wheat

The 2013/14 wheat harvest is complete and final numbers indicate total production of 27 MMT, a slight upward revision of Post’s previous estimate. The final harvested area was 13.5 million hectares with an average yield of 2 t/ha. As discussed in the January update, late frosts in October last year also adversely affected crops in central and southern New South Wales. 

Planting of the 2014/15 crop is still at least six weeks away and while eastern parts of New South Wales and Queensland have received good rain in recent weeks, soil moisture levels in western and southern New South Wales and in Victoria are well below average. However, the majority of the Western Australian wheat belt has also received reasonable rain. Assuming overall an increase in planting area to 13.6 million hectares and improved yields compared to 2012/13 (1.76t/ha), total wheat production for 2013/14 is likely to be in the order of 27MMT. 

Australian wheat exports for 2013/14 (July/June) are forecast to decline by 13 per cent to around 18.5 MMT. Although Australian wheat production is forecast up from 2012/13, the supply for exports in 2013/14 is expected to decline because of lower carry-over stocks from the previous season. 

Bulk export terminals in Australia are owned by six large companies but as the wheat export industry is now fully deregulated these companies are required to provide access to their port facilities for other grain exporters. In Western Australia (which is predominately export oriented) and South Australia an auction system has been designed in which grain exporters bid to secure terminal space for a particular period. The exporter must then purchase grain to fill the allotted ‘slot’ or pay a penalty fee. However the auction process has proven to be cumbersome and time consuming. In Western Australia the auction was only resolved after several delays while the South Australian system collapsed altogether and reverted to a ‘first-come, first served’ basis. In the eastern states Graincorp also allocates the majority of space on a ‘first-come, first-served’ basis but does sell some capacity up to three years in advance. The cost and risk of reserving this space is seen by some as a barrier to smaller exporters. 

Under the Wheat Export Marketing Amendment Act 2012 which finalized deregulation of the Australian wheat export industry a voluntary code of conduct for allocating export capacity is to be developed. However there is still disagreement amongst industry as to the best way to achieve this and recommendations from the appointed committee are not due until July 2014.

Barley

Higher than previously forecast yields due to favorable weather conditions, combined with an increase in area planted to barley, have caused Post to revise upward the total barley crop for 2013/14 to 9.6 MMT in line with USDA official estimates. Yield quality was also reasonably high with approximately 60 percent making malting grade. 

Exports for 2013/14 are estimated at 6.5 MMT, an upward revision 1 million tons and 45 per cent increase from exports in 2012/13. The upward revisions reflect excellent yields and an increase in planted area for Australian barley, especially in the states of Western and South Australia where production tends to be exported. 

Barley suffers from the same forecasting constraints as wheat at this time with planting of the 2014/15 crop still some weeks off. Assuming normal weather patterns and trend yields it is expected that production will decline in 2014/15 to 7.7 MMT. However, with seasonal conditions still variable and low soil moisture levels in several key cropping areas many growers will hold off on making planting decisions until closer to the planting window.

Summer crops

Sorghum

A severe lack of summer rainfall reduced the harvested area for the 2013/14 sorghum crop to 493,000 hectares, a 17 percent decline from harvested area in 2012/13. Extreme temperatures early in the season affected early sown crops, some of which were then impacted by flooding. These events have caused some complete losses but the greater impact is expected to be quality downgrades from the late rain and a delayed harvest which also increases the risk of disease. 

As a result of the smaller area and weather affected yields, total production for 2013/14 is expected to be only 1.27 MMT, up from USDA official estimates. 

Prior to harvest 2013/14 beginning, forecasters were expecting an average yield of 2.9t/ha for sorghum across the growing area. Extreme temperatures early in the season affected early sown crops, some of which were then impacted by flooding. These events have caused some complete losses but the greater impact is expected to be quality downgrades from the late rain and a delayed harvest which also increases the risk of disease.

Rice

Australian rice production for MY 2013/14 (year begin March 2014) is forecast to decline 22 percent to 907 TMT, assuming a return to average yields of 8.98 t/ha from the above-average 10.23t/ha reached in 2012/13