The tough times continue – Rabobank Australian Winter Crop Outlook

The tough times continue – Rabobank Australian Winter Crop Outlook

Australia is facing the prospect of a winter crop of just 27.7 million tonnes – the smallest since 2007/08 – as ongoing severe drought conditions continue to take their toll on many of the nation’s main cropping regions, according to agribusiness specialist Rabobank.

This represents a decline of nine per cent on last year’s already drought-diminished grain harvest and is 31 per cent below the five-year-average for Australia’s winter crop.

In its Australian 2019/20 Winter Crop Production Outlook – Tough Times, Low Tonnes, the specialist agribusiness bank says while the year will see production increases in some cropping regions – most notably in southern Victoria – this “reflects the extent of last year’s decline rather than significant gains over typical production levels”.

Nor will these increases offset a significant downturn in 2019/20 production prospects for last year’s “star player” Western Australia – with less-than-ideal growing conditions set to see that state’s grain crop hobbled at 11.9 million tonnes, 33 per cent down on last year.  While Queensland’s overall grain crop is expected to come in at just below 0.5 million tonnes, down more than 30 per cent on last season and an “eye watering” 72 per cent below the five-year average, the report says.  

“There is no ‘sugar coating’ the fact Australia’s grains industry is suffering the ongoing severe impacts of drought,” says report co-author, Rabobank senior grains analyst Cheryl Kalisch Gordon.

“Conditions this season have proved testing even for Australia’s ‘most valuable player of the year’ last season, WA.  After starting the season on limited soil moisture, the Western Australian crop got a good but late start and then kept up with just-in-time rainfall, only to be pulled back by a widespread and severe frost in early September, in between unseasonably high temperatures and low rainfall,” she says.

“The east coast largely was a repeat of 2018/19 with a few exceptions. Southern Victoria and central Queensland both managed to buck the national trend, with cumulative rainfall and yields reaching near to five-year average levels.”

Dr Kalisch Gordon says for many of Australia’s grain-producing regions, this will be the third consecutive year of severely drought-affected production.

“This means that the tough times are getting tougher and the tail of enduring impacts of the drought is getting longer,” she says.  “And these impacts don’t just apply to cash flow for growers – they also relate to stymied expansion plans, as well as growing soil and resource management challenges.

“Moreover, Australia’s reduced capacity to service international markets over multiple years will severely challenge Australia’s competitiveness in export markets when our exportable surplus grows again.

“This tough time for the Australian grains and oilseeds sector has reached the point where a break in the drought will just be the start of a now long road to recovery.”


The bank is forecasting the nation’s overall wheat crop in 2019/20 to be down eight per cent on last season at 15.84 million tonnes (32 per cent below the five-year average).

Barley production is also set to fall seven per cent on last year to 7.71 million tonnes (21 per cent down on the five-year average), with the canola crop falling 16 per cent year-on-year to 1.83 million tonnes (45 per cent below the five year average).

Trade impact

With a significantly below-average crop, the bank expects another year of limited exports in 2019/20 – the third consecutive year of below-average export volumes, Dr Kalisch Gordon says.

“Exports are likely to be in the order of eight million tonnes of wheat, 3.9 million tonnes of barley and less than a million tonnes of canola,” she says.  “Collectively, this would be 15 per cent below last year’s export program.”

Dr Kalisch Gordon said increased volumes of wheat from the Black Sea region and Argentina had already moved in to make up for Australia’s supply short-fall in key export markets, especially South East Asia.

“Regaining market positioning will be increasingly difficult with every year that Australia does not have a buoyant export surplus,” she says.

With another year of reduced availability of local production, a significant increase in grain imports is also on the cards, the report says, predicting the amount of grain coming into Australia to rise by 52 per cent from last season – taking imports in 2019/20 to 250 per cent above the preceding five-year average.

WA ‘bread basket’ faltering

Only a year after “playing the role of Australia’s bread basket”, lower grain production is on the cards for Western Australia, the report says.  A total crop of just 11.9 million tonnes is expected in the west in 2019/20 – over a third down on last season.

“This is the result of the combined impacts of a dry start to the season, then only hand-to-mouth rainfall during the growing season, coupled with a devastating frost during September,” Dr Kalisch Gordon says.

“The biggest percentage decline will be in the state’s canola crop, which we expect to be just 0.8 million tonnes – only 50 per cent of WA’s five-year average.  Increased barley plantings this year, however, will mean WA’s barley supply will remain close to the five-year average for the state.”

Despite the significantly-reduced WA crop, the state will continue to ‘export to the east’, supplying wheat and barley to the NSW and Queensland markets over the coming year, the report says.

“However, with lower WA supply, fewer livestock on the east coast and higher south eastern Australian grain supply in 2019/20, grain movement from west to east will be down considerably on last year,” Dr Kalisch Gordon said.

Bright spots

With a winter crop forecast to reach 5.9 million tonnes – a year-on-year increase of 58 per cent – Victoria has emerged as one of the few bright spots in this year’s crop outlook.

However, it’s a tale of two parts for the state, the report says, with a noticeable divide having emerged as the season progressed between the rain-graced south and an increasingly dry north.

For New South Wales, despite a third consecutive year of below-average rainfall, crop production is set to increase significantly from “last year’s disaster”, the report says, delivering 3.7 million tonnes.  Although this is a 31 per cent improvement on last season, it is still lagging the five-year average by 61 per cent.

Similarly, South Australian crop production is forecast to be still down on average, but up some nine per cent on last season, at 5.7 million tonnes.


When it comes to prices, the outlook is relatively flat for the coming year, according to the report.

“A continuation of difficult seasonal conditions and still very high feed-grain demand on the east coast is expected to maintain an elevated price floor for wheat and barley, while further international imports of wheat from Canada are expected to put a price ceiling on upside movement in the new season,” Dr Kalisch Gordon says.

Globally, Rabobank forecasts CBOT wheat prices to remain near to the 500 US cents a bushel range into the fourth quarter of 2020, albeit with some limited shorter-term support for prices in coming months.  This marginally-lower year-on-year global price, together with lower year-on-year (but still well-above average basis), is expected to keep domestic prices from surpassing 2018 record highs.

Rabobank Australia & New Zealand Group is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has 120 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 38 countries, servicing the needs of approximately 8.4 million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 93 branches throughout Australia and New Zealand.


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