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Thursday, September 15, 2016

Record crop forecast, but will rain change that?

By Andrew Whitelaw  |  Source: ABARES

Key points

  • ABARES expect the wheat crop to hit 28.07mmt, 1.8mmt shy of the record crop.
  • A major increase in production of pulses is identified by ABARES.
  • The recent rainfall is likely to have an impact on crop potential, especially pulses.

2016-09-15 Grain Fig 1

2016-09-15 Grain Fig 2

2016-09-15 Grain Fig 3

ABARES released their September Australian crop on Tuesday morning. The report unsurprisingly had some major upward revisions since the prior release in June. It is now forecast that Australia will have its largest winter crop on record.

At the point of ABARES publishing their report the growing season for 2016/17 had been close to excellent across much of Australia, with the exception of some areas of NSW and the Esperance port zone which had water logging issues.

The wheat crop is forecast to reach 28.07mmt, the second highest production in Australia. The largest wheat crop was 29.90mmt in the 2011/12 crop (figure 1). Although not a record crop, it is still a very large crop at nearly 6mmt higher than the ten-year average, meaning at these forecasts you could lose the entire SA crop and still be above average!

The increase in productions comes from large yield increases across the board, with even higher yields than 2011/12 at 2.17mmt versus 2.15mmt (figure 2) on average across the country, although plantings are around 7% lower than in 2011/12.

The overall picture presented by ABARES is pretty promising and this can be clearly seen with the increases in area and production across all major commodities (figure 3). In this chart it is interesting to note that increase in area devoted to niche crops, and the stand out is the 24% increase in chickpea acreage. There are also some major increases in yield estimates for faba beans (+49%) and field peas (+53%).

The unfortunate aspect of creating such a comprehensive report which is reliant on weather, is that shortly after you publish the outlook can drastically change. The recent weather and the new forecasts are pointing to heavy rainfall across much of the east coast, and we would expect an impact to yield potential. The niche nature of some of the pulses, can generate high degrees of volatility when supply issues arise.

What does this mean?

The crop is likely to be large, and growers need to create a marketing plan for the coming months. The grower sold percentage is well below average, and if growers sell in large tranches at harvest there will be pressure on basis levels.

Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 

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