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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


07 November 2013

USDA GAIN: Australia Grain and Feed Update October 2013USDA GAIN: Australia Grain and Feed Update October 2013

Drier than expected growing conditions have lowered the 2013-14 forecast for wheat production in eastern Australia while a good finish to the season in Western and South Australia has increased the forecasted harvest for a total national crop of 23.5MT. Australian barley production has been similarly affected thus total production forecast for 2013-14 has been reduced by three percent to 7.2MT.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

The dry conditions have delayed the start of the summer cropping period and with less than positive long term rainfall predictions the total area planted to sorghum is expected to fall to 600,000ha for the 2013-14 season. Conservative estimates of yields based on likely seasonal conditions put the forecast total sorghum production at 1.8MMT for 2013-14.

A combination of below 100 percent water allocations and relatively low prices is expected to reduce rice plantings for 2013014 to 105,000 ha. If average yields are achieved total rice production for 2013-14 will reach 917,000MT.

Post:

Canberra

Commodities:

Wheat
Barley
Sorghum
Rice, Milled

Seasonal conditions

The Australian winter crop harvest has begun across all grain producing states except Tasmania. The extreme variability in rainfall across cropping areas is expected to cause significant variation in final crop yields even at the regional level. In eastern Australian, particularly Queensland and the northern part of New South Wales, winter rainfall has been well below average with some areas receiving almost no in-crop rainfall. Combined with the warmer temperatures over the growing season means that most crops have finished early and while quality is generally good with low levels of pest or disease damage, yields and proteins levels are well below average. Despite the generally warmer temperatures some areas have also been affected by late frosts however the extent of the damage will be difficult to estimate until harvest commences in those areas.

Despite a very dry start to the season Western Australia received much greater than average rainfall during August and September which increased expected crop yields to at least or slightly above the long term average. In Western Australia the majority of grain delivered to bulk-handlers and storage facilities by mid-October was canola with some smaller quantities of barley, both of which are recording good quality and yields per hectare.

The extent of the dry conditions is shown clearly in Figure 1. The large orange and brown areas in the north-eastern quarter of the continent demonstrate the extent of drought which is affecting the extensive cattle production industry and driving up demand for feed lot space and grain.


Figure 1 Australian winter rainfall 2013

The rainfall outlook for Australia for November 2013 to January 2014 is for generally below average rainfall, with up to 70 percent chance of below average rainfall in some areas of Queensland (see Figure 2). As a result of the ongoing dry conditions planting of summer grain crops has not started with the exception of those farmers with access to irrigation. These areas are generally planted to cotton rather than sorghum or other grain. Further planting of dryland sorghum will be delayed until significant rainfall is received (at least 100mm).


Figure 2 Australian rainfall outlook November 2013 - January 2014

Wheat

Early reports from the 2013-14 Australian wheat harvest indicate that yields are very variable and in most areas will be below average. Based on the generally dry conditions and reports from industry contacts the total wheat forecast for 2013-14 has been revised down to 23.5 MMT.
As a result of the reduction in the Australian dollar and continuing strong wheat global demand, estimated total wheat exports for the 2012-13 market year (ending September 2013) have been revised upwards from 19 MMT to 19.5MMT. Strong demand for feed grain from the grain-fed cattle industry due to dry conditions in the extensive rangeland areas combined with the strong export demand is expected to reduce closing stock levels for 2012-13 to near record lows. This trend is expected to continue into 2013-14 and even with production nearly nine percent higher than 2012-13, stocks are expected to be further depleted. The extent of the grain stock depletion has been demonstrated by the increased demand from the feedlot sector for alternative feed sources including chickpeas which have been shown to be an efficient source of protein at current prices.

Barley

The 2013-14 Australian barley crop has been affected by the same lack of rainfall as the wheat crop. However, a greater proportion of the Australian barley crop is grown in areas that have received good rainfall compared to the wheat crop. In South and Western Australian early receival data from bulk grain handlers indicates that grain quality is very good with little pest or disease impacts. At this stage forecast total barley production for 2013-14 has been revised down by just three percent from the previous estimate to 7.2MMT.

Similar to wheat, Australian barley exports in the second half of the 2012-13 market year were stronger than previously forecast with the total estimate for the year revised upwards by 200,000MT to 4MMT. Export demand, particularly from China is expected to continue in 2013-14 with early forecasts that exports could increase by a further 2.5 percent to 4.1MMT. As a result of the higher than expected export demand domestic consumption of barley for feedgrain in 2012-13 has been revised down to 1.8MMT.

Sorghum

Planting of the 2013-14 Australian sorghum crop has barely begun and in almost all areas will not begin until at least 100mm of rain is received. Based on long term rainfall predictions this may not occur until January 2014 which would mean that growers in some sorghum production areas may miss the planting window altogether. As a result forecast harvested area for 2013-14 has been reduced to 600,000hectares. Assuming a long term average yield of 3 tons per hectare would give total production of 1.8MMT. To account for the reduction in production compared to the previous estimates forecast exports for 2013-14 have been reduced by five percent to 900,000MT. Even with this reduction in exports, forecast ending stocks are expected to be extremely tight which may reduce sorghum consumption for feed further. It should be noted that these estimates are based on receiving close to average rainfall across sorghum production areas and significant differences either side of this rainfall estimate would change production significantly.

Rice

The lack of winter rainfall across rice production areas has failed to top up irrigation water storages with the result that some irrigation areas have less than 50 percent allocation available between November and January. Long term weather predictions are for less than average rainfall and higher than average temperatures over the Australian summer which is likely to reduce rice plantings as growers are discouraged by potentially high water prices. Based on current and forecast seasonal conditions estimated rice production for 2013-14 has been reduced from just over 1MMT to 917,000MT.

Updated trade data indicates that rice imports for 2012-13 have been higher than previously forecast. As a result total imports for 2012-13 have been revised up by 40 percent to 140,000MT. Domestic consumption is expected to remain stable in 2013-14 thus imports for 2013-14 have also been revised upwards to similar levels. In line with the reduced production, rice exports for 2013-14 have been revised down by four percent to 500,000MT.

November 2013

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