Rabobank forecasts Australia’s total grain exports to increase again this year – by five per cent year on year (YOY) and to include 24.5 million tonnes of wheat, 7.8 million tonnes of barley and 4.3 million tonnes of canola.
Australia is set for a second consecutive bumper winter harvest, with total production forecast to come in just five per cent shy of last year’s near-record crop, according to Rabobank.
In its just-released Australian Winter Crop 2021/22 Production, Price and Inputs Forecast, the specialist agribusiness bank estimates the nation will harvest 52.87 million tonnes of winter grains, oilseeds and pulses this season. While down five per cent on last year’s crop, this is still a hefty 25 per cent above the five-year average.
Canola is the stand-out mover, with production estimated to reach a new record of 5.16 million tonnes (up 14 per cent on last year and a stellar 48 per cent above the five-year average), driven by increased planting and favourable growing conditions in many regions.
Australia’s wheat production is expected to come in at 31.9 million tonnes (down four per cent on last year, but still 35 per cent above the five-year average). Barley production is forecast to be down 10 per cent on last year to 11.7 million tonnes, though also still up on the five-year average (by seven per cent).
Report co-author, Rabobank agriculture analyst Dennis Voznesenski said Australia’s second consecutive very large winter crop “comes at an opportune time for local growers, with global shortages and high prices for grains and oilseeds”.
“Short global supplies of grains and oilseeds will continue to support Australian prices over the year ahead,” he said. “And although global prices can be expected to soften as new crops in different regions around the world come into play, the uncertainty that exists around seasonal conditions in grain-growing areas and the process of global grain stocks re-building will keep prices at least above the range of the last six to seven years.”
The report notes favourable growing conditions in Australia have seen expectations of increased amounts of high-protein wheat in Queensland, South Australia and Western Australia this harvest – “timed perfectly” with a current global shortage of high-protein wheat, due to drought in North America.
Other factors of note for this year’s winter crop include a lower supply of malt-quality barley – due to a reduction in barley planting, and particularly malt varieties – and less grain baled for hay because of export concerns due to a largely-closed Chinese hay market.
“There is also a proportion of last year’s record east coast harvest – 10 to 15 per cent – that remains on farm,” Mr Voznesenski said. “And this will compete with the coming crop for storage space and mean more delivery and price pressure during harvest.”
Exports
Rabobank forecasts Australia’s total grain exports to increase again this year – by five per cent year on year (YOY) and to include 24.5 million tonnes of wheat, 7.8 million tonnes of barley and 4.3 million tonnes of canola.
“A second very large harvest means that Australia’s stocks will now be replenished after the drought so we will be able to lift exports in 2021/22 despite production coming in lower than last year,” Mr Voznesenski said.
“We expect Australia will again be able to deliver a strong export performance into South East Asia, with Australian wheat continuing to be the price setter across the region. This is due to lower prices in Australia as a result of the substantial surplus that will be available, but also favourable freight costs compared with grain from further afield – an advantage that increases in times of high-cost freight like we currently have and expect to continue in 2022.”
States
Rabobank forecasts 2021/22 winter crop production to be up by 18 per cent in both Western Australia and Queensland – off the back of improved rainfall over the growing season in both states.
New South Wales production is expected to be down 14 per cent on last year’s record harvest in the state, but still nearly 70 per cent above the five-year average.
South Australia’s crop is forecast to decline 10 per cent YOY, due to less favourable planting conditions and patchy rainfall, while Victoria is set to record the largest decline in production – down 24 per cent on last year, primarily due to drier conditions in the western part of the state.
Wheat outlook
For wheat, the Rabobank report says, low world stocks will keep global prices at high levels.
Report co-author, Rabobank senior commodities analyst Cheryl Kalisch Gordon says global wheat stocks have fallen, particularly in exporting nations, and are on track to decline materially over the next nine months, exerting upward pressure on Chicago Board of Trade (CBOT) wheat prices in the year ahead.
“This has been driven by high usage of wheat in animal feed, substituting for corn, which is in low supply, and also due to downgraded wheat quality in the EU relegating it stock feed use,” she said, “while there has also been steady growth in food consumption.”
The bank expects CBOT wheat to trade in the USc725-740/bu range until the second quarter of 2022, when it is forecast to decline as northern hemisphere new crop supply becomes available, but continuing above USc700/bu for the balance of 2022, given the stock rebuilding that will be required.
