WASDE report: Australian wheat production lifts

Australia’s wheat production forecast has been given a boost this month.

Bigger harvest: US estimates of global wheat output have been lifted in line with higher official Australian production forecasts.

AUSTRALIA’S wheat prospects remain strong after an international report lifted production estimates over two million tonnes this month compared to last.

This month’s US Department of Agriculture World Agricultural Supply and Demand Estimates report put Australian wheat production forecasts at 28.5 million tonnes, in comparison to 26 million tonnes in August.

According to the report, the lift was predominantly based on the Australian Bureau of Agricultural and Resource Economics report – released earlier this month – which put production at 28.9 million tonnes.

Canada’s production was also increased two million tonnes to 36 million tonnes, the report found.

“This is the second and third-highest wheat production on record for Canada and Australia, respectively,” USDA said.

Continued dry conditions and possible frost damage caused the USDA to lower Argentina’s production one million tonnes to 19.5 million tonnes.

Supplies were raised 3.3 million tonnes to about 1070 million — mostly on higher production in Australia and Canada — which was offsetting Argentina’s small crop.

The report increased world consumption this month by 800,000 tonnes to 750.9 million tonnes, primarily on higher feed and residual usage for Australia and Canada.

For 2020-21 global trade, estimates are raised 1.5 million tonnes to 189.4 million tonnes on higher exports for Australia and Canada.

China showed the biggest import change for the month, with the report lifting imports by one million tonnes to seven million tonnes. According to the report, this is on an “early strong pace” of US sales and shipments to China and increased exportable supplies from Australia and Canada.

“If realised, these would be the largest China wheat imports since 1995-96,” USDA said.

In terms of coarse grains, this month’s 2020-21 foreign outlook is for larger production, slightly higher trade and lower stocks compared with last month.

Barley production is raised for Russia, Europe and Australia.

Australia’s coarse grain production outlook climbed about one million tonnes from 13.66 million tonnes in August to 14.26 million tonnes this month.

Global wheat prices initially weakened off the back of report, but have since regained.

Chicago Board of Trade December ’20 price closed trading on Monday at $275 a tonne.

This is compared to $273 a tonne on Friday.

“The market did not like the USDA bumping up their global inventory estimates,” Commonwealth Bank market analyst Tobin Gorey said.

“But we are not sure that would have been ‘news’ to everyone. Other things will have helped the market fall.”

For Australian prices, ASX east wheat futures also dropped on Monday, with January ’21 prices falling $1 from Friday to close at $287.

“Australian wheat continues to be very competitive, and trade seems very keen on keeping it that way,” Mr Gorey said.

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