(Reuters) – Australia’s record wheat harvest is forecast to leave the country with 10 million tonnes in closing stocks at the end of the marketing season in September, up 25 percent year-on-year, providing stiff competition to U.S. and Black Sea exporters.
With estimates of another large crop in 2012/13 (July-June), the nations’ grain storage capacity and infrastructure is likely to come under pressure, industry officials and analysts said on the sidelines of an agriculture conference in Canberra on Wednesday.
“There will be exports going into the next financial year when the next harvest comes in,” said Jammie Penm, chief commodity analyst with Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
Australia, the world’s fourth-largest wheat exporter, is expected to produce an above-average crop even though farmers will reduce wheat plantings in the year to the end of June 2013 due to lower prices, the ABARES said.
U.S. wheat futures have shed 1.5 percent so far this month, after plunging almost 18 percent last year. On Wednesday, May wheat was trading at $6.58-1/2 a bushel.
Australia’s wheat output is estimated to have hit an all-time high of 29.5 million tonnes in 2011/12.
Typically, Australia is finished with the bulk of its exports by October, just when supplies from the northern hemisphere suppliers such as the Black Sea region and United States pick up.
Last year, Australia held some 8 million tonnes of wheat on Sept. 30, versus a more typical 2 to 3 million tonnes.
“In the past, we have had just a couple of million tonnes in our stocks due to drought or lower output,” said Tim Glass, a director for commodities at National Australia Bank. “This year it will be around 10 million tonnes.”
CHALLENGE TO INFRASTRUCTURE
With large carryover stocks and estimates of a bumper crop next year, Australia’s infrastructure could be challenged.
“Australia needs to maintain a very strong export profile and if we get a bumper crop for a fourth year running, it will be a real squeeze on logistics and infrastructure,” Glass said.
“There have been investments in storage capacity but another large crop will test the system.”
Australia’s wheat output is expected to drop 13 percent in 2012/13, ABARES said. A Reuters poll predicts a more than 15 percent fall to 25 million tonnes, which, analysts said, still constitutes a better-than-average crop.
While total planted area is set to decline, output will be supported by near-perfect planting conditions in Australia due to widespread late summer rains.
Source: Reuters
Posted by Haylie Shipp
