WHILE National Australia Bank (NAB) has lifted its wheat production national forecast to a near record level this season, it predicts the WA harvest will contribute little to the increase.
With headers rolling across Australia, senior analyst and agribusiness economist Phin Ziebell said on Friday, in NAB's November Rural Commodities Wrap, it had increased its wheat production forecast to 29.4 million tonnes for the 2016-17 season.
"(That is) just shy of the 2011-12 record and 21.7 per cent higher than last season," Mr Ziebell said.
"Last month we noted uncertainty around winter crop production given heavy spring rains across eastern Australia, but more recent information points to the harvest so far bringing in very high yields.
"There is potential for further upside, above 30 million tonnes, although there are reports that quality has taken a hit.
"Much of the increase will come from New South Wales, South Australia and Victoria, with the Western Australian harvest likely to be flat," he said.
Mr Ziebell said prices remaining at 10-year lows on global markets were likely to be "further compounded by quality downgrades", due in part to a wetter than average Eastern States' spring, with widespread late rains and a drier than average WA spring with frosts.
While a steady four-year downward trend in global wheat prices in United States dollar values appeared to have abated, it was "difficult to see an upside with global supplies so plentiful", he said.
"Combined with favourable shipping costs and low production costs in the Black Sea region, Australia will remain under substantial pressure beyond harvest."
While wheat production was tipped to lift 21.7pc, NAB predicted prices would drop 15.4pc this season and wheat's export value would slip 1.4pc.
Of other broadacre crops, canola continued to perform, Mr Ziebell said, with November prices up 1pc, following a 6.9pc jump in October.
"With canola remaining in the high A$400s to low $500s (a tonne) over the past several months, those who planted canola should see a strong premium compared to wheat this season," he said.
Steep declines in chick pea and lentil prices, foreshadowed by NAB earlier in the year in response to higher plantings and yields in India after two poor seasons, had come "faster than expected".
He said chick peas were trading in the $600-800/t range, after reaching more than $1200/t in July.
With new crop starting to become available in November, sorghum prices were up 4.2pc but barley, oats and rice prices fell 7.2, 5.7 and 3.7pc, Mr Ziebell said.
After rising for much of the year, the NAB Rural Commodities Index looks to have peaked in September and fell 4.4pc in November after a 1.1pc slip in October, he said.
The index includes feed wheat, barley, oats and sorghum with three quarters of the indicator made up of feed wheat and barley.
"These falls reflect generally lower grain, pulses, beef, lamb and mango prices and volatile sugar prices which have not been fully offset by a continuing resurgence in dairy.
"While some of these falls, such as for lamb, mangos and to some extent beef are seasonal, there is ongoing weakness in grains and we have some concern for beef in 2017."
Mr Ziebell said forecasts of a hot dry start to 2017 may have more impact than global factors on cattle prices by dampening domestic restocker interest.
On other factors effecting agricultural trade, Mr Ziebell said financial markets had not yet "priced in" Donald Trump's presidential election victory.
"We are now working through what it means for likely US fiscal, tax, monetary and trade policy," he said.
"We are still assessing the quantum and timing of such aspects of Mr Trump's pre-election policy of business and personal tax cuts as well as increased infrastructure spending.
"We are reviewing how suggested trade measures such as moves against 'unfair' Chinese trade and the re-negotiation of existing free trade deals will proceed.
"The next few weeks should hopefully deliver more clarity," he said.
Mr Ziebell said NAB had also adjusted its Gross Domestic Product (GDP) forecast for next year, mainly due to a lower than predicted starting point.
"We now expect real GDP growth of 2.8pc in 2016, 2.7pc in 2017 and 2.6pc in 2018," he said.
NAB forecasts the Australian dollar will fall to US72 cents by mid next year and 70c by the end-2017.
"We see the AUD falling into the high 60s in 2018," Mr Ziebell said.