As the Australian harvest wraps up, 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.
In its latest Australian Crop Update, agribusiness banking specialist Rabobank says the adverse weather conditions have slashed around two million tonnes off earlier season forecasts, with the 2015/16 Australian wheat crop expected to come in at 23.3 million tonnes.
Rabobank grains and oilseeds analyst Ben Larkin said despite the very dry start to spring, and hot weather conditions – with the warmest October on record across much of the country – a slightly above-average result was still expected, with the national wheat crop only pegged to be 650,000 tonnes smaller than last season.
“Largely underpinning this result is Western Australia, with the west expecting to bin a nine million tonne wheat crop, while an above-average result is also anticipated in New South Wales and South Australia,” he said.
“Victoria has been the hardest hit, with much of the wheat crop in the western regions cut for hay, while the prevailing dry in Queensland has been offset somewhat by a reasonable season in the areas west of Dalby.”
Mr Larkin said the national barley crop is also expected to come in at above-average levels, while canola is forecast to drop by 12 per cent on 2014/15.
“This season we saw an increase in barley plantings at the expense of canola, with an 8.25 million tonne barley crop expected,” he said. “But we are seeing a greater incidence of feed barley on the back of hot weather and then late season rainfall, with reports of higher screening and protein levels.”
The Australian canola crop is forecast to reach 3.06 million tonnes, Mr Larkin said, with production in Victoria down by 33 per cent.
The Crop Update also included projections for cotton, with the 2015/16 cotton crop forecast to reach 2.35 million bales – a seven per cent increase on last season’s crop – but well down on the bumper crops harvested in 2010/11 through to 2013/14.
“Similar to last year, low water allocations have greatly restricted irrigated plantings in northern New South Wales, with virtually no allocations available in the Gwydir and Lower Namoi,” Mr Larkin said.
“But we have seen strong expansion in cotton plantings in southern New South Wales, which is expected to continue, pending water availability in the Murrumbidgee valley.”
In contrast to irrigated production, dryland cotton planting is expected to be at its highest level since 2011/12.
“Some timely rain in October and November has spurred plantings, with some industry estimates indicating dryland production could account for 20 per cent of this season’s total cotton crop, with areas such as the Darling Downs in Queensland reporting a significant increase in dryland planting,” Mr Larkin said.
In positive news for Australian producers, the Rabobank Crop Update says the Australian dollar is expected to weaken over the coming year, with the AUD/USD expected to trade at 66US cents by the end of 2016 and further weakening expected if US interest rates increase or there is continued downward pressure on broader commodity prices.
Mr Larkin said the lower currency was supporting domestic commodity values, although global stocks of most agri commodities were at record or near-record levels, which was likely to keep prices range-bound over the coming year.
“That said, climatic and macro-economic risks will persist in 2016, and we will see upside to prices if adverse weather cuts the harvest in key producing regions,” he said.
“In particular, we are closely monitoring the strong El Nino weather pattern, with modelling suggesting it will persist until the end of the year, before starting to dissipate in early 2016. A breakdown of this weather system earlier in the year would obviously bode well for producers here, as a prolonged dry spell through autumn would impact next season’s crop.”
Rabobank Australia & New Zealand is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 115 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of approximately 8.8 million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand is one of Australasia’s leading rural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 94 branches throughout Australia and New Zealand.
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Rabobank Australia & New Zealand
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Rabobank Australia & New Zealand
Phone: 02 4855 1111 or 0418 216 103