Australia’s agricultural department has warned of a significant drop in the country’s winter crop production, primarily affecting wheat output, as the El Niño weather pattern brings dry conditions. As the world’s second-largest wheat exporter, Australia supplies major Asian buyers, including China, Indonesia, and Japan.
According to the latest crop report from the Department of Agriculture, Fisheries, and Forestry, the total forecast for Australian winter crop production in 2023-24 is expected to decrease by 34% to 44.9 million tonnes.
This figure is approximately 3% lower than the 10-year average up until 2022-23, which stood at 46.4 million tonnes. Wheat production is projected to decline by 34%, reaching 26.2 million tonnes, while barley is expected to decrease by 30% to 9.9 million tonnes—both figures falling below the 10-year average.
Canola production is forecasted to fall by 41% to 4.9 million tonnes, yet remaining 15% higher than the decade average.
The decline in Australian wheat supplies has raised concerns among millers in Asia. A Singapore-based trader at an international trading company, which sells Australian wheat to Indonesian mills, commented, “For the last three years, millers in Asia have enjoyed ample supplies from Australia, but they will have to explore alternative sources next year.”
The trader mentioned that European, Black Sea, and to some extent, US wheat could potentially replace Australian wheat in the market.
Planting of Australian wheat occurs in April-May, with harvesting commencing in November. The country’s weather bureau has issued a warning, stating a 70% likelihood of the El Niño weather pattern’s development this year.
This pattern is typically associated with hotter and drier conditions, posing a significant threat to food producers across Asia. Consequently, Australian wheat, palm oil, and rice production in Southeast Asia are particularly at risk.
Despite the expected decline, the area planted with winter crops remains historically high at 23.3 million hectares, with wheat and canola plantings experiencing a minor decrease of 2% and 11% respectively. On the other hand, barley plantings are set to rise by 4% to 4.3 million hectares, as it is better suited to endure drier conditions.
The anticipated lower yields will exert pressure on the total value of agricultural production, with a forecasted 14% decrease to A$79 billion ($52 billion) in 2023-24, which will still be the third-highest on record.
Additionally, agricultural exports are expected to plummet by 17% to A$65 billion in 2023-24, influenced by reduced production and declining global prices for grains and oilseeds.
In the same period, summer crop production, including sorghum and cotton, is estimated to decline by 8% to 5.1 million tonnes, remaining well above the decade average.
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