AUSTRALIA is facing the prospect of a winter crop the smallest in more than a decade.
The winter crop outlook showed just 27.7 million tonnes would be harvested — the smallest since 2007/08 — as ongoing severe drought conditions continue to take their toll on many of the nation’s main cropping regions, according to agribusiness specialist Rabobank.
This represents a decline of nine per cent on last year’s already drought-diminished grain harvest and is 31 per cent below the five-year-average for Australia’s winter crop.
In its Australian 2019/20 winter crop production outlook, the specialist agribusiness bank said while the year will see production increases in some cropping regions — most notably in southern Victoria — this “reflects the extent of last year’s decline rather than significant gains over typical production levels”.
Nor will these increases offset a significant downturn in 2019/20 production prospects for last year’s “star player” Western Australia — with less-than-ideal growing conditions set to see that state’s grain crop hobbled at 11.9 million tonnes, 33 per cent down on last year. While Queensland’s overall grain crop is expected to come in at just below 0.5 million tonnes, down more than 30 per cent on last season and an “eye-watering” 72 per cent below the five-year average, the report said.
“There is no ‘sugar coating’ the fact Australia’s grains industry is suffering the ongoing severe impacts of drought,” report co-author and Rabobank senior grains analyst Cheryl Kalisch Gordon said.
“The east coast largely was a repeat of 2018/19 with a few exceptions. Southern Victoria and central Queensland both managed to buck the national trend, with cumulative rainfall and yields reaching near to five-year average levels.”
Dr Kalisch Gordon said for many of Australia’s grain-producing regions, this will be the third consecutive year of severely drought-affected production.
“This means that the tough times are getting tougher and the tail of enduring impacts of the drought is getting longer,” she said. “And these impacts don’t just apply to cash flow for growers — they also relate to stymied expansion plans, as well as growing soil and resource management challenges.
“Moreover, Australia’s reduced capacity to service international markets over multiple years will severely challenge Australia’s competitiveness in export markets when our exportable surplus grows again.
“This tough time for the Australian grains and oilseeds sector has reached the point where a break in the drought will just be the start of a now long road to recovery.”
Commodities
THE bank is forecasting the nation’s overall wheat crop in 2019/20 to be down eight per cent on last season at 15.84 million tonnes (32 per cent below the five-year average).
Barley production is also set to fall seven per cent on last year to 7.71 million tonnes (21 per cent down on the five-year average), with the canola crop falling 16 per cent year-on-year to 1.83 million tonnes (45 per cent below the five year average).
Trade impact
WITH a significantly below-average crop, the bank expects another year of limited exports in 2019/20 — the third consecutive year of below-average export volumes, Dr Kalisch Gordon said.
“Exports are likely to be in the order of eight million tonnes of wheat, 3.9 million tonnes of barley and less than a million tonnes of canola,” she said.
“Collectively, this would be 15 per cent below last year’s export program.”
Dr Kalisch Gordon said increased volumes of wheat from the Black Sea region and Argentina had already moved in to make up for Australia’s supply shortfall in key export markets, especially South East Asia.
“Regaining market positioning will be increasingly difficult with every year that Australia does not have a buoyant export surplus,” she said.
With another year of reduced availability of local production, a significant increase in grain imports is also on the cards, the report says, predicting the amount of grain coming into Australia to rise by 52 per cent from last season — taking imports in 2019/20 to 250 per cent above the preceding five-year average.
