Australian wheat exports to hit record high, says Abares
Australian wheat production and exports will fall back from record levels next season, the country’s crop forecaster said, as competition from other crops reduces planted area, and conditions return to normal.
But Abares lifted its forecast for exports in the current season, citing brisk demand from India, which is struggling with a domestic shortage.
“Record production is expected to boost export shipments in 2016–17,” Abares said, lifting its export forecast season to a record large 22.8m tonnes, 400,000 tonnes higher than its last forecast, made in December.
The crop body also forecast sluggish markets in 2017-18, with the wheat price at a six-year low in real terms, thanks to heavy world stocks.
Brisk Indian demand
“World import demand is strong, supported by low prices and poor-quality domestic harvests in China and India,” Abares said.
Exports to India were have been heavy, as the Indian government reacted to a domestic wheat shortage but first cutting import duties, then removing them completely in December.
“These changes were driven by a domestic shortage of milling quality wheat following the lower-quality harvest and a drawdown in stocks,”Abares said.
“Milling wheat demand from India is expected to remain strong until at least March 2017, when the Indian domestic harvest will commence.”
Abares forecast Australian wheat sowings for 2017-18, which will start next month, to fall by 1.1%, to 12.92m hectares.
“This is because favourable returns to canola, pulses and sheep are expected to result in increased competition for planting area,” Abares said.
And with yield seen returning to trend levels, after the “exceptional” conditions seen across most of Australia for the harvest just finished, production is seen down 32%, at 24.0m tonnes.
“In 2017–18 the volume of Australian wheat exports is expected to fall but remain relatively high due to ample supplies from the previous season,” abares said.
Exports are expected to fall by 8.4% from this season’s record levels, to 20.9m tonnes.
Heavy stocks will weigh on markets
Abares forecast global wheat prices to remain weak, despite easing production.
“The world wheat indicator price is forecast to average US$190 a tonne in 2017–18, largely unchanged from the forecast average for 2016–17,” Abares said.
“If realised, this will be the lowest annual average price since 2001–02 in real terms.”
Abares ascribed weak prices to “large carry-over stocks and relatively high forecast production”.
“Four consecutive years of record global production have resulted in a significant accumulation of stocks, particularly in exporting countries,” Abares said.