Australia. Rabobank warns of more grain pain this winter

Rabobank estimates the total area planted for crops will increase about 1 per cent to 18.3 million hectares from last year but remain about 13 per cent down on the five-year average.

Official figures from federal government forecaster ABARES show Australian grain production dropped 20 per cent to 30 million tonnes last year, despite a 21 per cent jump in production to 17.1 million tonnes in WA.

Australia is coming off a 10-year low of 17.3 million tonnes in wheat production despite the near-record crop in the west. However, there are now concerns about this year in the west, following a dry autumn.

Rabobank warns wheat production is unlikely to top 18 million tonnes this year based on the rainfall outlook.

With Australian grain stocks diminished, Rabobank expects competitors in key export  markets to gain more ground.

It forecasts wheat exports of 11 million-12 million tonnes, up 18 per cent year on year but still down more than 30 per cent on the five-year average.

Dr Kalisch Gordon said low crop production and strong local prices again would curtail Australia’s export competitiveness.

“And the increased use of Black Sea and Argentinian-origin wheat in our export markets in south-east Asia is expected to present a disruption to Australia’s market positioning when our exportable surpluses do return to average,” she said.

Third in a row

Dr Kalisch Gordon said the dry start to the 2019-20 season was the third in a row for some of the most important cropping regions in the eastern states.

“The hottest summer on record and below-average rainfall – on top of two years of below-average rainfall – means large areas are experiencing [from] well below to the lowest-on-record root-zone soil moisture and there has been no widespread autumn break in most areas,” she said.

South Australia has had its driest start to the cropping season in 150 years and Western Australia's vast wheat belt is holding out for rain forecast for later this week.

However, Victoria and parts of southern NSW are looking at the best start to a winter crop since 2016-17.

Rabobank said these areas offered the best prospects of Australia getting back on track towards an average production season.

Dr Kalisch Gordon said this year’s plantings represented a “rebalancing between east and west” after WA did “most of the heavy lifting" in grain production last year.

“Any increases we are seeing in planted areas in the other states are expected to be almost netted out by the exception of WA, where we expect a 5  per cent year-on-year decline in area planted,” she said.

“In the wake of WA’s most valuable harvest in history – due to high yields and elevated prices – we expect WA farmers to take a conservative approach to winter planting, given the dry conditions and uncertain outlook there.”