Australia’s global wheat competitiveness drops

Australia’s export volumes have dropped as drought intensifies demand for wheat on the east coast.

Productions lows: During the past two seasons, domestic demand for wheat has exceeded export volumes.

AUSTRALIA’S competitiveness in wheat export markets has declined as domestic demand exceeds export volumes.

According to Mecardo’s recent rural quarterly market update, two years of “sub-par” wheat production resulted in the decline as Australia’s prices rise compared to other export origins.

The report showed Australian wheat volumes would decline 1.4 million tonnes for 2019, with levels not dropping to these lows since the millennial drought in 2007.

Mecardo put wheat production for 2019-20 at 15.8 million tonnes. This compares with about 30 million tonnes in 2016.

“The proportion of wheat produced in Australia has skewed towards the east coast this year, where most domestic demand is situated,” the report said.

“Predominantly, Australia is an exporter, however, during the past two seasons, domestic demand has exceeded export volumes.”

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Mecardo indicated wheat exports for 2018 reached about eight million tonnes, with domestic consumption at about 8.5 million tonnes.

In 2016, wheat exports were at about 23 million tonnes, with domestic demand reaching seven million tonnes.

According to the report, a drop in export competitiveness has provided an “inroad” for major exporters in South America and the Black Sea region.

“As Australia recovers from drought, our traditional customers might have a more elastic demand profile which will put on pressure on a long-term basis,” the report said.

GrainGrowers president Brett Hosking said these were the challenges industry continually faced in leaner production years.

“There is pressure on the industry to ensure domestic demand is met,” he said.

“We need livestock feed during drought but we also need to balance out export markets in the long term.”

Mr Hosking called for more transparency for stocks, and also for the quality of wheat available.

“We need to know, is the quality for livestock feed or for export,” he said. “Drought definitely highlights that there is action needed.”

Mr Hosking said industry had been in talks about more transparency in the market.

Bushfires and drought made an effective market a pressing issue, he said.