Home > Rabobank Australian Crops Update: Production key to profits as prices remain high

Rabobank Australian Crops Update: Production key to profits as prices remain high

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article image Rabobank senior grains and oilseeds analyst Graydon Chong
Agribusiness banking specialist Rabobank says in its latest Australian Crops Update that wheat production in the country is forecast to reach 22.79 million tonnes, with dry conditions in Western Australia eroding yield potential.

With global grain and oilseed prices rallying to record levels, all eyes are now on Australian wheat production to determine the benefits accrued to local growers.

Rabobank senior grains and oilseeds analyst Graydon Chong says spring rain will be crucial in the south and east of the country to maximise yield potential of the Australian crop this year. A warm to drier-than-normal spring is expected across southern South Australia, Victoria and southern New South Wales, which may constrain yields in the back end of the season.

Significant stress has been put on crops throughout Western Australia due to the dry weather being experienced in parts of the state.

According to the Rabobank report, local prices are benefiting from the significant supply shocks this year in key grains and oilseeds producing regions, although the strength of the Australian dollar will remain a headwind for local producers and exporters. Additionally, negative weather impacts and growing global demand will keep grain prices at high levels into 2013 with record prices for corn and soybeans very possible in Q4 2012.

Australian feed wheat is expected to be high in demand in 2013 with a possible 2-3 million tonnes likely to be exported to China. Rabobank also expects a severe reduction in global soybean stocks, which will likely keep supporting Australian canola prices in 2013.

Highlights of Rabobank Australian Crops Update

  • Australian wheat, barley and canola production expected to reach 33.01 million tonnes for the 2013 season
  • Australian wheat production to be 20% down to 22.79 million tonnes due to cold and dry conditions across parts of the east coast and much of Western Australia
  • Favourable east coast crop conditions
  • Summer crop area will be contested during 2012/13 as cotton growing margins shrink while global grains and oilseeds rally
  • Cotton lint and seed exports will reach record volumes in 2012/13
  • Oversupply in global cotton market with record beginning stocks of 66.5 million bales in 2012-2013
  • 30% decline in Australian dryland cotton area due to competition from alternative crops
  • Australian dollar remains well supported at around USD 1.04, eroding export values
  • Australian wheat exports to remain strong in response to the shortfall caused by reduced Northern Hemisphere production

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