December 2, 2014

Australia, the largest wheat producer in the Southern Hemisphere, has cut its estimate for its wheat harvest in late 2014 from a March estimate of 24.8 million tons to 24.59 million tons.  The estimate by Abares, the country’s official crop forecasting agency, is far below the 27 million tons produced last year even accounting for a forecasted 2% increase in planted area to 13.81 million hectares.  The expansion in planting is a result of grower expectations of profitable gross margins which is expected to also increase the sowing of canola by 300,000 hectares above previous estimates to 2.74 million hectares.  Dryness and low soil moisture in New South Wales and Queensland growing regions, as well as the expectation of an oncoming El Nino weather system are the causes of the downgraded forecasts.  The dryness has already affected the country’s summer crops like sorghum which has suffered low quality and has seen output cut in half to a 16 year low of 1.1 million tons – falling below estimates of 1.28 million tons. Cotton output has also been hit by dry weather with forecasts of production being cut by 30,000 tons to 910,000 tons despite planting being mostly contained to irrigated areas.

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