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El Nino causes downgrade in Australia's winter wheat crop

Xinhua, December 14, 2015 Adjust font size:

Record temperatures and prolonged hot weather from the pacific El Nino have caused a two million tonne downgrade in Australia's winter wheat crop, agribusiness bank Rabobank said on Monday.

As the harvest for the world's fifth largest wheat exporter comes to a close, Rabobank expects the wheat crop to come in at 23.3 million tonnes after Victoria state was hard hit by unseasonal weather patterns forcing much of the crop to be cut for hay. Barely production will be above average however Canola will fall 12 percent on 2014/15 levels.

The current El Nino pattern, ranked third strongest in the past 50 years, has brought drier spring weather to eastern Australia, while farmers also had to contend with unseasonal heavy rain and wind in November as well as bushfires in the country's south and west.

"Farmers are reflecting on what promised to be a bumper crop, with yields downgraded across the country on the back of the hot, dry spring," Rabobank grains and oilseeds analyst Ben Larkin told local media on Monday.

Western Australia - Australia's largest wheat region - is expected to harvest 9 million tonnes of wheat while New South Wales state and South Australia state will have above average results, Larkin said.

Queensland production that suffered from a prolonged dry spell has been slightly offset by a "reasonable" season in areas in the northwest of the state.

Rabobank's projection is lower than Australian Bureau of Agricultural & Resource Economics & Sciences (ABARES) recent downgraded forecast of 24 million tonnes from the 25.3 million tonne forecast in September, and just less than the 23.7 million tonnes harvested for the same period in 2014.

Larkin however was optimistic that local producers would benefit from a weakening Australian dollar against the greenback, though prices would be range bound as global stocks for agriculture commodities are at near-record levels.

Wheat futures in Chicago have dropped 19 percent this year while Singapore futures are headed for their third straight annual decline, the longest slump since 1999, according to Bloomberg.

The U.S. Department of Agriculture in November said global wheat production is set to reach a record of 732.98 million tons in 2015-16, pushing reserves to an all-time high. Enditem