Australian wheat crop estimate revised down even further

The US Department of Agriculture has just revised its Australian wheat crop production estimate down even further.

CONTINUING dry conditions have pushed Australia’s wheat crop production estimates down another one million tonnes.

The US Department of Agriculture World Agricultural Supply and Demand Estimates December report forecast production to be 16.1 million tonnes, a drop from 17.2 million tonnes in last month’s report.

Mecardo grains analyst Andrew Whitelaw said the findings did not come as a surprise.

“I am not really surprised with the December findings — the small crop has been factored in by many,” Mr Whitelaw said.

“More importantly, coming into the new year, we are waiting for more oversight of next year’s crop.”

In global wheat outlooks, the USDA forecast wheat production in Argentina and Canada to also drop, however a production increase of 1.6 million tonnes in China was “partly offsetting” this.

WASDE estimated 2019-20 global exports to be reduced by 0.9 million tonnes, with reductions in Argentina, Australia and Canada offset by increases from Russia and the US.

Mr Whitelaw said while Australia and Argentina were the only countries left to harvest – they were not “huge contributors” on the global market.

He said the global market saw the US trading “downward” for most of last week – however, it saw a “substantial” lift on Friday.

“This has been driven by comments from US President Donald Trump, related to positive trade talks with China,” he said.

“At present, a limited agreement is on the cards which will prevent new tariffs which were due to be implemented on Sunday.

“I believe that it will be a while until trade with China is back to normal, and that these negotiations will likely continue for some time.”

He said future wheat prices also lifted in Australia in the past week as harvest “advanced”.

According to Mr Whitelaw the ASX east January ’20 average price for this week was sitting at $352.

A few weeks ago the average weekly price was trading at $344.

“There are some concerns from feed consumers related to the slow pace of harvest in Victoria which has driven both physical and future levels higher,” Mr Whitelaw said.