AUSTRALIA – Aussie wheat production in the marketing year 2023-24 is likely to dip 25% from the 39.2 million tonnes estimated in 2022-23, according to a Global Agricultural Information Network report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
This forecasted dip in production comes after three consecutive years of record-setting wheat crops in Australia.
Interestingly, even after the dip, the forecasted 29 million tonnes will still be the fourth-largest total over the last decade, according to the FAS report.
“Favorable conditions around the time of winter grain planting across most production areas of Australia bodes well for the early growth of wheat and barley in 2023-24,” the FAS said. “However, with predicted dry conditions in the coming months, production is expected to be down from the last three years of bumper winter crops.”
According to the report, the last two years of exceptional rains and excellent commodity prices resulted in farmers planting practically every available hectare for winter crops.
Additionally, these farmers are foregoing their crop rotation plans to optimize the planted area of winter crops, mainly wheat, barley, and canola.
However, wheat prices falling by 18% percent from the recent peak in June 2022 could result in farmers deciding to reduce their planted wheat area in MY 2023-24.
According to the FAS, the cost of nitrogen inputs is a significant production factor. The price of imported nitrogen-based fertilizers has fallen from US$770/MT in May 2022 to below US$500 in 2023.
However, the prices are still almost double those before the Russo-Ukrainian war, although there is a possibility of further decrease during the planting period and subsequent applications during the growing period.
The wheat harvested area could decline by 2% in 2022-23 to 12.8 million hectares, which would still be the second largest planting over the last 10 years and 8% above the previous 10-year average.
As a result, the FAS forecasts a 7-million-tonne decline in exports to 23 million tonnes, with China expected to be the largest export destination for Australian wheat.
However, despite the 23% anticipated decline, Australia would still be the fifth-largest wheat export total on record.
FAS’ forecast for Australian wheat consumption of 8.5 MMT in MY 2023/24 remains in line with the MY 2022/23 estimate, and the wheat utilized for milling is relatively stable from year to year.
Meanwhile, the FAS projects Australia’s barley output in 2023-24 to decline by 29% to 10 million tonnes following three straight years of record-setting production.
This lower production estimate is attributed to expected dry conditions from May to July 2023.
Australia’s barley exports for MY 2023/24 are estimated at 5 MMT, 3 MMT below the MY 2022/23, driven by the forecast 4.1-MMT decline in production, although global demand could remain firm.
China will be a major destination for Australian barley after the two countries reached a deal to reopen the Chinese market to Australian barley after China imposed an 80% import tariff in 2020.
“We have also made clear that we believe it is in both countries’ interests for these trade impediments to be removed,” China’s foreign affairs minister Penny Wong remarked about the deal.