However, production is still expected to be down from last year’s record-breaking wheat crop, and a barley crop that was the second largest on record; wheat production is forecast at 27 million metric tons (MMT) in MY 2021/22 and barley at 10MMT, according to a recent USDA GAINS report.
And, although the overall grain area is anticipated to be large, yields are expected to fall to more typical levels from last year’s exceptionally high yields.
Consumption of wheat and barley in Australia is forecast to remain the same as the prior year, but much lower than the level reached during the drought when the need for supplementary feed was much higher, find the authors.
Due to the price differences there has been a shifting of feed use to barley and away from wheat, they added.
Wheat and barley exports are set to decline in the forecast year from a historically high volume due to the forecast of reduced production. “Although Australian feed barley exports have diversified away from China and into Middle East markets in MY 2020/21, export competition for these markets is expected to intensify.”
The overall area of wheat production in Western Australia is expected to increase according to the Grains Industry Association of Western Australia (GIWA) due to reduction in barley area towards wheat and canola, a development that is associated with grower sentiment relating to the duties placed on barley imports into China of 80.5%.
“This sentiment is likely to extend to growers in South Australia as both states are heavily reliant on the export market for barley. The duty was imposed on May 18, 2020 and at that stage most of the winter crop from last year had already been planted, allowing growers little scope to adjust their planting program. The barley industry is mindful that while in MY 2020/21 exporters were able to diversify feed barley exports away from China, and especially into Middle East markets, some of this shift was benefited by supply issues and policy decisions in competitor countries located nearer to these markets.
“As the Chinese duties are scheduled to be in place for five years, there is expected to be continued disruption to export demand for Australian barley.”
In the eastern states of Australia there is expected to be less impact from the Chinese duties on grower planting programs as the majority of barley grown in these states goes towards domestic malting and livestock feed, reads the review.
Impact from strong world feed grain prices
Another factor encouraging a strong year of wheat planting is continued high world wheat prices. This price is supported by strong world feed grain prices, particularly corn and soybean relating to reduced world feed grain stock.
Australian sorghum production is forecast to decline slightly in MY 2021/22, after making a strong recovery in MY 2020/21 following poor production in the prior drought-impacted year. Sorghum exports, however, are forecast to rise in MY 2021/22 as a result of larger beginning stocks and limited anticipated growth in domestic demand.
Feed use trends
The USDA FAS Canberra’s report sees Australian wheat consumption in MY 2021/22 at 7.5 MMT, in line with the MY 2020/21 estimate.
Changes in livestock feed consumption is the primary driver of overall wheat consumption in Australia with wheat utilized for milling remaining relatively stable from year to year.
In a typical year domestic food consumption of wheat only equates to around one-tenth of overall wheat production in Australia. Feed demand of wheat spiked during the drought in 2018 and 2019 in the eastern states, peaking at 5.7 MMT in MY 2018/19, as a result of strong demand from the livestock industries. This feed demand has since declined to more typical pre-drought levels of around 4 MMT, said the team.
“The recent drought had a major impact on pasture production across Australia. This led to strong demand from beef cattle and dairy producers and to a lesser extend sheep producers, for grains for on-farm livestock feeding. The drought also had a major impact on the number of beef cattle being finished through feedlots and therefore increasing feed demand from this sector.
“Since the drought-breaking rains in early 2020, pasture production conditions have significantly improved to well above average in many areas. This has led to a significant reduction in demand for on-farm grain feeding and a reduction in cattle numbers being finished off in feedlots, therefore also reducing their grain feed requirements.”
Meanwhile, Australia’s poultry and pork farming industries are also significant consumers of wheat and other grains. However, the consumption of grains by those sec remained relatively stable across the drought and subsequent post drought period, commented the authors.
“The official USDA MY 2020/21 feed consumption estimate has been revised downwards from 5 MMT to 4 MMT by FAS/Canberra. This revision is based on the post-drought reduction in livestock feed demand.”