Australian Wheat Exports Seen at 5-Year Low as Output Drops

By Phoebe Sedgman  Dec 9, 2014
Bloomberg
Wheat shipments from Australia will probably drop to the lowest in five years as dry weather curbs supplies in the world’s fourth-biggest exporter, according to a government forecaster, which cut its outlook 6.1 percent.

Exports in the year started July 1 may total 16.99 million metric tons, from 18.1 million tons forecast in September and last year’s total of 18.3 million, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a quarterly report today. That would be the lowest level since 2009-2010, according to the Canberra-based bureau.

Wheat in Chicago fell to a four-year low in September amid forecasts for record global supplies and rising inventories before rebounding in October and last month on concern that harsh winter weather will hurt Russian crops. Australia last week lowered its wheat-production estimate to 23.2 million tons from 24.2 million tons after dry weather curbed yields in eastern growing regions. The country had its hottest spring on record this year, according to the Bureau of Meteorology.

“The forecast decline in production is expected to be driven by a 16 percent fall in the average yield,” Abares said in the report. “Yields are expected to decline in all major producing states.”

Wheat for March delivery fell 0.8 percent to $5.9325 a bushel on the Chicago Board of Trade at 11:48 a.m. in Singapore. Most-active prices are still 25 percent higher than the year’s lowest close on Sept. 25. Hard red winter wheat for for March delivery fell 0.5 percent to $6.36 a bushel.

Global Production

Hard-red winter wheat, the most-exported U.S. variety, may average $285 a ton at U.S. Gulf ports in the year started July 1, unchanged from a September estimate and compared with $317 a year earlier, Abares said. A decline in U.S. hard-red winter supplies and quality issues with the 2014-2015 harvest in other major wheat-producing countries, including France and Ukraine, may reduce downward price pressure, it said.

Global production may total 718 million tons in 2014-2015 from 714 million tons forecast in September and 713 million a year earlier, according to Abares. Inventories at the end of 2014-2015 may reach 192 million tons from 185 million tons a year earlier, it said.

The U.S. Department of Agriculture forecast on Nov. 10 that world wheat output would total a record 719.9 million tons, boosting reserves to a three-year high.

The Agricultural Market Information System raised its forecasts this month for global wheat, corn and soybean production for the year that started on July 1. Combined output of the crops will reached a record 2.05 billion tons, according to a report from the group set up by Group of 20 ministers.