National Australia Bank (NAB) Agribusiness has revised its national wheat crop forecast up to 21.6 million tonnes for this season, with 23 million tonnes possible contingent on good spring rain in key wheat regions.
The July Commodity in Focus report provides state by state forecasts for wheat, based on different rainfall situations. NAB Agribusiness General Manager Khan Horne said the falling AUD will provide important support to wheat prices.
“Overall, our forecast is for prices to increase 5.9 per cent in AUD terms in 2015-16 to average AUD306.70/tonne,” said Mr Horne.
Looking at production, the recent revision to the weather outlook from the Bureau of Meteorology (BOM) still shows an unclear outlook for the impact of El Niño on spring rainfall on the east coast.
“While NAB’s wheat crop forecast is still somewhat more conservative than ABARES’ forecast of 23.6 million tonnes, the impact of El Niño across the states is expected to be mixed.
“El Niño is largely an east coast pattern, and for the largest wheat producing state, Western Australia, the BOM is predicting average or above average spring rainfall after a patchy start to the year.
“This is likely to lead to a solid harvest of 8.50 million tonnes off a planted area of 5.15 million hectares, which is a 4.5 per cent production decline on last year.”
In New South Wales, good winter rainfall has provided a buffer and should push the forecast harvest close to last year’s result. BOM’s latest forecasts suggest that rainfall in southern New South Wales may be around average from August to October. Yields should still be acceptable even if spring rainfall doesn’t eventuate. NAB’s forecast is for a total harvest of 6.05 million tonnes, a 3.7 per cent production decline from last year.
In South Australia and Victoria, forecasts are contingent on spring rainfall and production could be much lower if sufficient spring rainfall doesn’t eventuate. Forecasts are for the crop to be 13.7 per cent and 23.2 per cent down respectively.
Internationally, total global wheat supply is expected to increase in 2015-16 with good seasons in the northern hemisphere, suggesting little upside for prices in US dollar terms for the remainder of this year. NAB is forecasting a price fall for Hard Winter Red of 7.0 per cent in 2015-16 to average USD225/tonne for the year.
Agribusiness View provides the latest insights from NAB Agribusiness. Visit nab.com.au/agriview to sign up as well as to find the contact details for your nearest NAB Agribusiness Manager.
Important Note: Any advice in this editorial has been prepared without taking into account your objectives, financial situation and needs. Before acting on this advice, you should consider its appropriateness to you.
About NAB Agribusiness
National Australia Bank (NAB) Agribusiness is Australia’s leading Agribusiness Bank and has been supporting Australian farmers for more than 150 years. NAB employs more than 600 agribusiness banking specialists in 110 metropolitan and regional locations Australia-wide. With their local and industry knowledge, our Agribusiness team understand the unique financial and environmental needs of farmers and businesses beyond the farm gate – whether they provide inputs into agriculture or process, distribute or market primary produce. NAB also has a specialist Agribusiness Asia Desk to help Australian farmers make the most of the rapid growth in demand for high quality produce in Asia. We deliver a flexible range of agribusiness products and services by listening to and working with our customers, to tailor the best packages and advice for their businesses. For further information please visit www.nab.com.au/agribusiness.