28 March 2012
The estimate for 2011/12 wheat exports was also increased, to a record 20.5 MMT. Barley production for 2012/13 is forecast at 8.0 MMT, down on the estimate of 8.5 MMT for 2011/12, with exports forecast at 3.75 MMT, slightly below the revised estimate of 4.0 MMT for 2011/12. Sorghum production in 2012/13 is forecast at 2.5 MMT, down from the 2011/12 estimate of 2.65 MMT. Rice production for 2012/13 is forecast 1.0 MMT, up on the previous year’s estimate of 924,000 MT, with exports for 2011/12 estimated at 450,000 MT, and forecast at 500,000 in 2012/13.
In the lead-up to the 2012/13 winter cereal (wheat and barley) cropping season, Australia has experienced widespread rainfall, and in the case of key eastern Australian cropping areas, record flooding. Consequently, growers in eastern Australia are expecting a full profile of moisture at the time of planting for the 2012/13 winter cereal crop. 2012/13 production of wheat is forecast at 27.0 million metric tons (MMT) and barley production at 8.0 MMT.
Prospects for planting the 2012/13 summer crop (year begin in March 2013) are also excellent as irrigation water storages are currently full, with enough “carryover” water in the system for the next summer crop (sorghum and rice). At the time of the writing of this report, excellent soil moisture and irrigation water outlook should more than adequately offset the poorer price outlook for grains. 2012/13 production of sorghum is forecast at 2.5 MMT and rice production at 1.0 MMT.
As was the case during the harvest of the 2011/12 winter cereal (wheat and barley), harvest of the 2011/12 summer crop (sorghum and rice) is expected to be somewhat tempered by wet weather conditions. Despite a wet growing season up to the time of harvest, and potential difficulties at harvest, 2011/12 production of summer crops is projected to be up relative to last year, with sorghum production estimated at 2.65 MMT and rice at 924,000 MT.
The outlook for the forecast period looks excellent for all crops; however there are challenges in determining which crops growers will choose to plant. Planted area for wheat and barley are projected to decline somewhat while area planted to sorghum and rice is forecast to increase. Canola and cotton are not covered by this report however increased canola planting will likely displace some winter cereal planting, while another large cotton crop will likely limit planting in sorghum and, to a lesser extent, rice.
Recent declines in feed grain prices have eroded returns received by growers. This is true for all grains, but more so for feed quality grain, where the situation is exacerbated by a larger proportion of feed quality grain currently in domestic storage. Recent trade data suggest, however, that export tonnages for the period December to January 2011 are running at or near record levels, and this (aided by an upward revision in supply) has led Post to revise our export estimates for some crops upwards. Post will continue to monitor the trade situation with interest.
Total area planted to wheat in 2012/13 (market year beginning October 2012) is forecast at 13.5 million hectares. This represents a significant decline on the previous year’s estimated record area of 14.1 million hectares, but remains in keeping with the ten-year average of 13.21 million hectares (according to ABARES historical data).
Australian Wheat Area (million hectares)
Record wheat plantings in 2011/12, which followed a near record planting in 2010/11, has put pressure on some growers to rotate land out of wheat production and back into break crops such as canola and pulses. Furthermore, a sharp decline in domestic wheat prices compared with more remunerative canola prices is likely to see increased plantings of canola at the expense of wheat and barley.
Planting traditionally begins around mid to late April and continues through to June. However, soil moisture levels in the lead up to planting are considered to be excellent (particularly in eastern Australia) and this will likely to allow for an earlier and more orderly planting regime, as opposed to the late and frantic planting conditions experienced during much of the drought years (2002/03-2009/10). Early planting conditions favor wheat over barley but, conversely, favor canola over both of the winter cereals.
At this stage, the outlook for winter cereal crop planting conditions in both Western Australia and South Australia is not reportedly as good as in eastern Australia. Neither of these states received the heavy rainfall that eastern Australia has received, and both are expected to experience planting conditions closer to the longer term average.
Post has assumed an average yield of 2.0 MT per hectare for 2012/13, representing a slight decline on the yields recorded in 2011/12 and 2010/11. Despite this decline, a yield of 2.0 MT per hectare is considered to be well above-average.
Much of the 2012/13 wheat crop is expected to be planted early and with excellent subsoil moisture. Perhaps the greatest constraint to planting and yield is the possibility that, with further heavy rainfall, the worst affected areas may be too wet to plant or may suffer a yield decline from water logging. The states of Western Australia and South Australia are expected to experience planting conditions and yields closer to the long term average.
Total wheat production for 2012/13 is forecast at 27.0 MMT, down on the revised estimate of 28.9 MMT for the previous year. Despite the projected year-to-year decline in production, a projected crop of 27.0 MMT still remains well-above the long-term average.
Australian Wheat Production (MMT)
A poorer price outlook for wheat is expected to limit 2012 planted area to a level lower than the area harvested in the previous year. Taking into account near ideal moisture conditions at the time of planting, Post has employed a near record yield of 2.0 MT/hectare in projecting the 2012/12 wheat harvest.
Total export of wheat in 2012/13 is forecast at 19.5 MMT, representing a decline on the revised estimate for the previous year of 20.5 MMT which is considered to be an all-time record. A decline in production and a poorer outlook, driven in part by a near record high Australian dollar, is expected to see exports decline from record high levels.
Carry out stocks for 2012/13 are expected to be historically high. Should world demand improve beyond Post’s current expectations, sufficient supplies exist to support exports similar to last year’s record export level.
Total area planted to barley in 2012/13 is forecast at 3.8 million hectares, down on the estimate for the previous year. Low feed grain prices and increased competition from canola are expected to limit planted area for barley in 2012/13. This forecast area would be considered below average according to ABARES historic data.
Barley is a shorter season crop and is traditionally the last winter crop planted in a mixed cropping enterprise. Barley plantings often benefit from “late breaking” rains in seasons affected by drought such as 2007/08 and 2008/09. In 2012/13 however, planting is expected to take place earlier and in a more orderly fashion than was experienced during the drought and this will likely constrain barley planting to the benefit of earlier sown crops such as wheat, canola and some pulse crops.
Post has assumed a yield of 2.1 MT per hectare for the 2012/13 crop, the highest forecasted yield for over a decade. As with Post’s wheat forecast, excellent planting conditions in eastern Australia will likely be only partially tempered by closer to average yield expected for Western Australia and South Australia.
Barley production for 2012/13 is forecast at 8.0 MMT, down on the estimate of 8.5 MMT for the previous year.
Total exports of barley for 2012/13 are forecast at 3.75 MMT, slightly below the revised estimate of 4.0 MMT for the previous year. Lower production and a historically high Australian dollar are expected to see exports decline in CY 2012/13.
Total sorghum production in 2012/13 (year begin March 2013) is forecast at 2.5 MMT. This would be considered a large crop, well above the 10 year average of 2.18 MMT. Planting for this crop is not likely to commence until November 2012 however, with average weather conditions, soil moisture and irrigation water reserves should be excellent.
Domestic feed grain prices at time of writing this report have fallen significantly since planting of the 2011/12 which commenced in November 2011. However, as sorghum is mostly considered an “opportunity crop”, the prospect of good soil moisture is expected to support an historically high area planted for the 2012/13 crop, despite current low prices for feedgrains.
Post estimates the 2011/12 crop (market year begin March 2012) at 2.65 MMT, unchanged from the previous report. The harvesting of this crop is scheduled to begin in earnest shortly. This forecast remains well above other sorghum forecasts and is supported by “once in a lifetime” growing conditions in northern NSW and southern Queensland. Despite significant flood damage, above average rainfall should see yield and production surpass many expectations. Rainfall will need to abate for the months of April and May if this forecast is to be achieved.
Sorghum exports for 2012/13 are forecast at 1.1 MMT, which would be considered historically high. Sorghum exports for 2011/12 are estimated at 1.2 MMT and, although exports of this crop have only just begun, early indications are showing strong export supply levels.
Australian Sorghum Exports (MT)
Total rice production for 2012/13 (year begin March 2013) is forecast 1.0 MMT, up on the previous year’s estimate of 924,000 MT. Irrigation water supply is expected to be running at full capacity and this will likely allow planted area to increase to 110,000 hectares, the highest level since 2001/02. A potential downside for this crop is the prospect of increased competition from cotton planting in southern NSW. Post has allowed for some increase in cotton planting however should cotton plantings surpass Posts expectations, rice area may have to be revised downwards.
Post has lowered its estimate for rice production for 2011/12 (year begin March 2012) slightly to 924,000 MT. The commencement of harvest of this crop has been delayed due to recent flooding. There are reports that small amounts of rice have been completely destroyed; however a bigger threat is how much rice is yet to be downgraded and not milled as a result of the recent floods. Industry sources suggest that up to 35,000 MT may have been affected but at this stage are unable to say if this rice can be milled or not.
Total exports of rice are forecast to increase to 500,000 MT in 2012/13 (market year begin March 2013). Increased production is expected to see exports increase over the previous year. Estimated exports for 2011/12 remain unchanged at 450,000 MT.
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