A combination of extreme dry weather and damaging frost will deliver Australia its smallest winter crop in 10 years, according to Rabobank’s 2018/19 winter crop production outlook.
The agribusiness bank forecasts a national harvest of just 29.3 million tonnes, down 23 per cent on last year.
Were it not for the better harvest prospects in Western Australia – the only state where grain production is forecast to increase – the country would be facing its lowest winter crop in the past 20 years, the bank explains.
The reduced 2018/19 harvest will see WA, for the first time in 20 years, contributing more than half of the national winter crop at 52 per cent.
Reduced national production – along with continuing strong demand for feed grain in the drought-afflicted eastern states – is, however, expected to see record Australian grain prices hold well into 2019.
The reduced harvest – combined with strong local demand and prices – also has significant implications for Australia’s export markets, with grains exports to be severely curtailed in 2018/19,” the report indicates.
The bank forecasts total Australian grain exports to be down approximately 50 per cent on last year, at 13.9m tonnes.
Wheat exports are predicted to decline almost 50 per cent on last year, to 8.6m tonnes – the lowest export volume since 2007.
Barley exports are set to be down 48 per cent on last year at 3m tonnes, while Australia looks set to export just 1.5m tonnes of canola – 41 per cent lower than 2017/18.
Report co- author, Rabobank agricultural analyst Wes Lefroy, said the hit to Australia’s export capacity is certainly one of the big concerns emanating from the reduced harvest outlook.
“This will severely pressure our market share in crucial markets in South East Asia, certainly in 2018/19, but also placing our competitors, such as the Black Sea and Argentina, in the box seat to get a greater stronghold on these markets into the future,” said Lefroy.
At a projected 29.3m tonnes (31 per cent below the five-year average), the total national winter crop in 2018/19 would be Australia’s fourth lowest in the past 20 seasons – with lows exceeded only in previous years of severe drought – 2002/03, 2006/07 and 2007/08.
Pulse production has been hardest hit in this year’s winter crop downgrade as it is down 43 per cent on last season and 41 per cent below the five-year average at 1.6m tonnes.
Lefroy said this was the result of a combination of lower planted areas – due to pulse prices coming down from record highs seen in 2016 and 2017 – and poorer seasonal conditions.
“Queensland and northern New South Wales, which are home to Australia’s chickpea production, have also been the worst-affected drought regions, so yields will also be well down,” he said.
Canola production is also significantly impacted, expected to be down 32 per cent on last year and also 32 per cent lower than the five-year average, at 2.5m tonnes.
Australian grain prices are forecast to remain high well into 2019, according to the report.
Mr Lefroy said an increasingly tight east coast feed balance had taken wheat and barley prices progressively higher nationally in 2018.
“Wheat basis is at decade highs across the east coast and SA, while ‘domestic’ exports of grain to the east have taken WA basis to seven-year highs. And grain and train shipments from SA and WA are expected to continue well into 2019,” he said.