ABARES raises Australia’s 2019-20 wheat output forecast despite uncertain weather

Australia’s wheat production in the 2019-20 marketing season (October-September) could see a sharp jump of 38.2% over the current season that was overshadowed by difficult weather conditions, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report Tuesday.

Australia could see its 2019-20 production jump to 23.9 million mt, compared with 17.3 million mt in the 2018-19 season.

Australia saw prolonged drought conditions across its eastern coast, making ABARES cut the 2018-19 production forecast further from an earlier estimate of 16.9 million mt reported in December.

ABARES said the higher wheat production in Australia “will be highly dependent on rainfall.” Adequate and timely rainfall will be required for area planted with wheat to recover from the extremely low soil moisture levels seen during the summer of 2018-19, the agency said.

“According to the latest Bureau of Meteorology three-month rainfall outlook (March to May), issued on February 14, there is no strong tendency for either a wetter or drier autumn across the majority of winter cropping regions,” ABARES added.

ABARES also raised Australia’s wheat exports forecast to 14.2 million mt in the 2019-20 marketing season, compared with 10.1 million mt in the 2018-19 season.

In a recent update, the United States Department of Agriculture cut Australia’s 2018-19 export forecast by 500,000 mt to 10 million mt from a previous estimate, citing the slow pace of exports due to the drought conditions.

Australia is one of the major wheat-exporting countries, and will be competing with Argentina for Asian market share, as the South American country witnessed record wheat output in the 2018-19 season, ABARES said.

“Argentina’s exportable supplies in 2018-19 will be competitively priced due to the depreciation of the Argentine peso. This low-cost wheat from Argentina is likely to compete strongly with Australian wheat exports, particularly in price-conscious Asian markets,” the agency said.
Source: https://www.spglobal.com/platts/en/market-insights/latest-news/agriculture/030519-abares-raises-australias-2019-20-wheat-output-forecast-despite-uncertain-weather