Global Wheat Production Estimates Lowered With Drier Outlook

By Chris Johnson

5th October, 2023 

Looks like September was one for the record books with what might have been the warmest and driest since records began, not to mention Collingwood tying with Essendon and Carlton with 16 grand final wins on the last day of the month. 

Hopefully by the time you have picked up this week’s edition, you will have had the opportunity to tip a few mils out the rain gauge, but after the heat and wind from the start of the week, the crops might not look like they had much of a drink at all. 

The International Grains Council lowered global wheat production by 1mmt to 783mmt this week, with the drier southern hemisphere outlook. Global prices remain under pressure from cheaper Russian competition in recent Egyptian and Algerian tenders and Ukrainian wheat making its way to the market regardless of a Black Sea agreement with Russia. Australian prices remain at $70-100/mt premium to US futures driven by domestic demand. US Corn Futures, fell to 3-year lows pressured by Brazilian export competition and a lack of US export sales as their harvest ramps up. Australian barley prices remain firm supported by east coast feedlots, as our production is priced out of most export destinations by cheaper Black Sea barley. Oilseed markets continue the roller coaster ride, with Canadian canola harvest coming to an end and US soybean harvest picking up pace, seasonal harvest pressure continues to weigh heavily on international soy and vegetable oil prices. With another near 5 million mt of Australian production, new crop prices will remain under pressure if growers start selling of the header to cover cashflow requirements at harvest time.      

Harvest is continuing to pick up pace in Central Queensland, with the quality of wheat and chickpeas being reported so far as good. Harvesting of barley in the Northern and Western Downs has begun around the edges and will likely pick up pace quickly, and wheat is likely to have started in recent days. With little new crop grower selling, Downs markets for both barley and wheat eased back last week.  End users are holding sufficient coverage and are content to watch the harvest unfold and pick off the odd parcel here and there and engaging with those growers happy to sell for delivery in Jan/Feb onwards.  

Harvest is creeping into NSW, with canola around Moree being harvested or windrowed. Lower yields, and a drop in oil quality against the last couple of seasons is being seen, but to be expected given the dry finish, while some cereal and canola crops in the Central West have been cut for hay. A more general start to the harvest is still at least a week away. The southern parts of NSW will receive the most benefit from the forecast rain, hopefully putting a floor in expected yields, which have been sliding under increased heat and a lack of moisture. 

Western Victoria and SA seem likely will miss out on the significant rainfall but have been more fortunate than most in recent times. Expect to see more harvesting around Thevenard and Port Pirie this week with favourable conditions. Record temps forecast for parts of WA will likely see their crops finish quickly.