December 1: Non-Friendly Rains Threaten Aussie Wheat Crop

There are some rains in the forecast for Australia, but they look more monsoonal than friendly.

What sort of impact might they have?

There are some rains in the forecast for Australia, but they look more monsoonal than friendly.

What sort of impact might they have?

Up to 12 inches of rain is forecasting to fall in parts of southeastern Australia.

With the wheat harvest somewhere between 30 – 50% complete in the region, there are about 4 million tonnes of wheat about to get hit by this massive rainfall (or nearly 147 million bushels, if you converted tonnes into bushels at GrainUnitConverter.com)

It’s one of the worst feelings in the world to see a crop that’s ready to harvest get hit by constant water.

As such, it’s not to say that those 4 million tonnes will be lost, but rather their quality will be downgraded. This could, in turn, support the idea of stronger prices for higher quality/protein wheat.

Already this year the crop has been bit by drought conditions. This rain will come a few days ahead of crop production estimates updates from ABARES, which end up proving ABARES’ estimates irrelevant.

Going into the report, total wheat production in Australia is pegged at 21.6 million tonnes off of 30.73 million acres. Compared to the five-year average, this is a decline of 22% to production despite acres being relatively indifferent to the five-year averaget.

 

Non-Friendly Rains Threaten Aussie Wheat Crop

 

SYDNEY/SINGAPORE, Dec 1 (Reuters) — Heavy rains in eastern Australia forecast to intensify over the weekend are threatening to wipe out or damage up to four million tonnes of wheat due to be harvested soon, with many grain storage sites forced to close.

Most of the state of Victoria and parts of the states of South Australia and New South Wales were facing a “major weather event” in coming days from torrential rains, forecasters said.

Intense rain of up to 500 millimetres an hour is possible in some areas and accumulations of as much as 300 mm are expected in some locales.

Australian farmers have had a tough wheat growing season. A severe drought earlier in the year reduced yields, with the world’s fourth-largest wheat exporter now set to harvest its smallest crop in a decade.

Australia’s past winter, which runs from June to September, was the warmest since records began more than a century ago. It was also among the nation’s 10 driest seasons ever.

Globally, there is no shortage of wheat. The U.S. Department of Agriculture estimates world inventories will stand at a record 267.53 million tonnes at the end of the current crop year in June 2018.

Chicago Board of Trade December wheat futures hit a contract low on Tuesday and were trading at $4.09 ¼ per bushel on Friday.

STANDING CROPS

About half of the wheat crop has been harvested in South Australia, but in Victoria and southern parts of New South Wales only about 30 percent of the crop has been gathered, according to analysts.

“The main concern is that these are the areas where crops are still being harvested,” said James Maxwell of Australian Crop Forecasters, which expects to lower its national wheat harvest forecast of 21.7 million tonnes once the damage is assessed.

“At the moment, we estimate that around four million tonnes will be affected,” he said.

Growers were selectively harvesting their highest-quality grains in order to maximize returns on what they could salvage.

Australia’s largest listed bulk grain handler, GrainCorp , said many storage sites across Victoria state remain closed due to the weather.

In some cases, silos were being utilised in-between heavy rains and strong winds to receive grains.

More than 300 mm (11.8 inches) of rain is forecast by the Bureau of Meteorology to fall across all parts of Victoria state on Friday alone.

“GrainCorp is closely monitoring the situation to ensure we resume operations as soon as possible once it is safe to do so,” the handler said in a statement to Reuters.

Victoria state alone could see the loss or damage of up to 1.7 million tonnes, according to Maxwell.

Bureau of Meteorology forecaster Scott Williams said the rain would fall heavy and fast, with the potential of more than 50 mm in just an hour.

Rainfall in excess of 250 mm is forecast by the Bureau of Meteorology for parts of eastern Victoria, with the overall state expected to see more than 60 mm.

Prices for wheat from Australia’s East Coast have risen by about A$10 a tonne to around A$280 (US$212) a tonne this week, reflecting a premium for the risk to crops, said analysts.

“We fear more of a quality downgrade rather yield losses,” said Brett Cooper, Asia head of agricultural commodities at brokerage INTL FCStone in Sydney.

“There could be more feed quality wheat and that will support global high-protein wheat prices.”

H/T: The Western Producer
About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.