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.
That's according to its July Commodity in Focus report released today.
NAB Agribusiness general manager Khan Horne said the falling Australian dollar 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,” Mr Horne said in a statement.
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," Mr Horne said.
“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 8.5 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.
The BOM’s latest forecasts suggest that rainfall in southern New South Wales may be around average from August to October.
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 13.7pc and 23.2pc 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.