AUSTRLIAN wheat production will edge lower by 0.9 per cent this crop year to 21.2 million metric tons from an actual 21.4 million tons last crop year ended March 31, 2009, National Australia Bank Ltd. forecast yesterday.
Nationally, an expected 5% fall in the area planted to wheat this crop year offsets a forecast increase in yields, it said."The area planted to winter crops in southeastern Australia is forecast to fall considerably in 2009-10, underpinned by depleted soil moisture profiles and farmers' reluctance to increase debt levels to fund winter cropping programs, given the poor seasonal outlook," Frank Drum, the bank's agribusiness economist, said in a monthly review.
In contrast, good subsoil moisture in northern New South Wales and Queensland is expected to result in producers planting similar areas to last crop year, while the area planted in Western Australia isn't expected to change much this crop year, following a strong recovery in grain production last year, he said.
The bank's forecast compares with a new crop projection in March of 22.1 million tons by the government's Australian Bureau of Agricultural and Research Economics.
After annual domestic demand of up to 7 million tons is met, the balance of production is available for export, potentially making Australia a major global supplier of traded wheat.
Australia's new barley crop is forecast to fall 4.4% on year to 6.5 million tons, reflecting an anticipated decline in the area planted across all states, the bank forecast, down from Abare's projection of 7.3 million tons.
National new crop canola production is forecast to fall 22% on year to 1.3 million tons, down from Abare's forecast of 1.4 million tons, as variable yields in recent seasons combined with high production costs limit farmers' willingness to plant canola this season, it forecast.
The area planted to canola also could fall further should the start of planting in eastern states be delayed, it reported.
As for global wheat prices, the bank reported a significant recovery in global production in 2008-09, particularly in the Black Sea region and Europe, which saw the global demand/supply situation weaken significantly in recent months, the bank reported.
Fund liquidation and strength in the U.S. dollar since the start of 2009 have resulted in wheat futures on the Chicago Board of Trade remaining under pressure, which likely will continue in the short term, it said.
"At this stage, any major rally in prices will be contingent on two key factors: an improvement in the global economic outlook; or significant production disruptions to the 2009-10 global grain crop," Drum said.
