Australia: Large Wheat Export Fall Is Forecast
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Australian Wheat production is projected to decline significantly to 29 million metric tons (MMT) in MY 2023/24, but if realized would still be a relatively large crop. This follows a record-breaking 39.2 MMT crop in MY 2022/23 and a 36.2 MMT crop in MY 2021/22. Soil moisture conditions in the Wheat-growing regions are generally good, and most regions have had an excellent start to autumn rains. A further encouragement for farmers is that nitrogenous fertilizer prices have fallen substantially since the peaks around planting for the MY 2022/23 season. Despite these positive factors, some negative factors will pressure production.
The last two years of exceptional rains and excellent commodity prices have resulted in farmers planting practically every available hectare for winter crops. This included using areas that were earmarked for fallow and many foregoing their crop rotation plans to optimize planted areas of winter crops, mainly Wheat, barley, and canola. This, combined with Wheat prices falling by 18 percent from the recent peak in June 2022 and back toward longer-term average levels, is resulting in farmers deciding to reduce their planted area of Wheat and even more so of barley and canola.
Furthermore, the Australian Bureau of Meteorology forecasts a far-below-average chance of achieving median rainfall in the coming months. If realized, this will impact crop yields, and this expected dryness has been considered for the forecast yield and production. The recent autumn rains and sub-surface moisture should carry the Wheat crop well into the season, but the critical period for rainfall will be in the late winter and early spring months (August and September 2023) when crop moisture demand is at its highest. If there is average rainfall during this period, it should still yield slightly above average after the strong start.
The harvested area of Wheat is forecast to decline by two percent in MY 2023/24 to 12.8 million hectares (Ha), which would still be the second largest planting over the last ten years and eight percent above the previous 10-year average. This fall is due to farmers having less suitable areas in their crop rotations after the previous two big-planted-area years. But farmers are expected to favor maintaining high Wheat planted areas at the expense of canola and barley areas, particularly after a steeper drop in canola prices since mid-2022.
Wheat requires substantial nitrogen inputs, and a critical positive for growers is that the price of imported nitrogen-based fertilizers has fallen from the peak of US$770 per metric ton (MT) in May 2022 to below US$500 at the start of 2023. The big spike in prices was attributed to the rising energy costs, which commenced in 2021 and was further exacerbated by the Russian invasion of Ukraine war and the restriction of supply from China in 2021.
Wheat yields are forecast to be 2.27 MT/Ha, three percent above the previous 10-year average, but this is a 24-percent decline from the estimated MY 2022/23 season record of 3.0 MT/Ha. This forecast decline is due to expected dryness in the coming months. However, the still above-average yield forecast is based on promising early rainfalls in the autumn and generally good sub-surface soil moisture available, which mostly remains from the abundant rains experienced in the previous winter cropping season.
Australian Wheat Export
FAS/Canberra’s forecast for Wheat exports for MY 2023/24 is 23 MMT, a 7-MMT decline from the record MY 2022/23 estimate of 30 MMT. Despite this significant fall, if realized, this would still be the fifth-largest Wheat export program on record. According to the AgFlow data, Australia exported 5.1 million tons of Wheat in Q1 2023. In March, the key markets were China (180,000 tons), the Philippines (95,000 tons), Singapore (75,000 tons), and Vietnam (60,000 tons).
Other sources: USDA
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