Downgraded wheat production forecasts for Australia

By Jane Byrne

- Last updated on GMT

© GettyImages/ArtistGNDphotography
© GettyImages/ArtistGNDphotography

Related tags oilseeds soybeans Rapeseed

Most of the Northern Hemisphere grain production is harvested or weeks away, says the AHDB in its most recent reviews of global grain and oilseed markets, and so all eyes are now trained on the weather conditions in the Southern Hemisphere.

Although there has been a mixed growing season in the Northern Hemisphere, there is a common theme developing south of the equator - it is dry, said Peter Collier, arable analyst, the UK's Agriculture and Horticulture Development Board (AHDB).

Another year of drought like conditions in Australia have led to downgraded wheat production forecasts, he said. Wheat production has been lowered by 10% from June, to 19.1Mt in the latest September ABARES crop report, added the analyst.

Warm and dry weather in Brazil is forecast to persist, with low soil moisture in both the south and south east regions, found his report​.

With little rainfall forecast, and the planting of the first maize crop imminent, Brazilian weather will become increasingly influential for global grain markets​,” commented the UK based grain and oilseed market specialists.

Continued forecasts for beneficial weather in the US added further pressure to maize markets, find another AHDB outlook​. 

“With maize planted later than usual, owing to the spring rainfall, the potential for frost damage was heightened. However, with long range forecasts pointing toward a warm September, this risk is being reduced.”

The AHDB analysts also noted that the EU Commission has raised its 2019/20 barley production forecast to 60.5Mt, which is an increase of 0.8Mt from last month’s estimate.

“This would be the largest EU barley crop since 2015.”

The next WASDE report from the US Department of Agriculture (WASDE) is due tomorrow, September 12. 

"Most futures markets are bracing for another round of bearish fundamental data,"​ commented Andrew Hecht, commodities analyst, in a pre-WASDE review​.

Oilseeds overview

Soybean prices fell last week despite larger than expected sales of US beans to China, said the AHDB in its oilseeds focus.

“Greater than expected exports in August offered early support for prices. The weight of global supplies and limited new season US soybean export sales have continued to cap the market.”

The area planted to soybeans in Brazil is expected to increase by just 1.1% as per AgRural data, compared with the five-year average increase of 3.5%, the smallest season-on-season increase for 13 years, said the UK body.

“The reduced increase has been driven by the weak price outlook. That said, with the area increasing nonetheless, production is expected to eclipse the previous record of 122Mt (2017/18).”

Meanwhile, on the EU rapeseed front, French analysts, Strategie Grains, are forecasting that production will reach only 17Mt, further compounding rapeseed tightness.  

Paris rapeseed futures (Nov-19) firmed last week to €382.75/t, a rise of €1.75/t, on that forecast.

“With tight production in the EU, supplies from Ukraine, Canada and Australia will be more important this season. So far this season (week ending September 1), EU imports of OSR from Ukraine and Canada totaled 877Kt and 115Kt respectively,”​ said the AHDB.

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