Canada Markets

A Look at Australia's Winter Crop Potential

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This is the year-over-year percent change in expected production of selected winter crops in Australia. Current estimates indicate a similar volume of wheat produced, more barley and pulse production, and a smaller volume of canola. Eyes will remain on the impacts of the current El Nino event. (DTN graphic by Nick Scalise)

The attached graphic shows the year-over-year percent change in production estimated for select winter crops in Australia, comparing 2014/15 to 2015/16. The data is sourced from Australia's ABARES in its June Australian Crop Report.

Both the total planted acreage and the estimated total production of all winter crops are expected to increase 1% in 2015/16 from the previous crop year. While estimates suggest that producers seeded a similar area to wheat as last year, they tended to favor crops such as barley (seeded area up 4%) and pulses, with chickpea acres up 60%. Grain producers opted to plant fewer acres to canola, with acres down 13% due to inferior margin potential.

ABARES pegged its wheat crop at 23.6 million metric tons, down a fraction of a percent from 2014/15. This is below the current USDA estimate which was forecast at 26 mmt in Wednesday's monthly USDA report.

Barley production is estimated at 8.249 mmt, up 2.9% from 2014/15. Producers are reacting to increasing demand from China, with official import data from China showing 3.633 mmt of barley imported between January and April this year, up 155% from the previous year. Australia was the top supplier, supplying 2.377 mmt of the total volume, up 79% from 2014.

Canola production is estimated at 2.961 mmt, the lowest volume in five years and down 13.3% from last year. While perhaps not a major producer, this reduced production will contribute to the first drop in global canola/rapeseed production in five years, while ending stocks are currently forecast by the USDA to be the lowest in three years. Further tightening could be expected as the reality of the Canadian Prairies crop is accounted for in global projections.

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Pulse production is expected to be higher, with chickpea production estimated to be 52.3% higher than current estimates for 2014/15, fababean production expected to be 18.7% higher and lentils forecast at 6.6% higher. Field peas are the exception, forecast 12.4% lower. The potential for global pulse production will be watched closely with India's recent Third Advance Estimates estimating that country's 2014/15 pulse production at 17.38 mmt, down 9.7% or 1.87 mmt from 2013/14 and well below the government target of 19.5 mmt. Current Indian government forecasts suggest that monsoon rains will reach 88% of average this summer, which may result in a negative impact in 2015/16 production, while crops in Western Canada are currently stressed due to lack of moisture.

Of key importance will be the impact of the current El Nino event to Australia's crop production potential. Previous Canada Markets blogs have discussed the unpredictable nature of El Nino on crops grown on Canada's Prairies and in India, which is exactly the view of ABARES on Australia's production potential, with impacts on crops more closely related to the intensity of the event and the timing of the moisture accumulation.

Over time, ABARES suggests that approximately two-thirds of El Nino events experienced since 1900 have resulted in drought over large areas of Australia. Impacts include warmer weather and less moisture accumulation primarily seen in the southern and eastern growing areas of the country.

Three-month moisture projections for June to August, from Australia's Bureau of Meteorology, point to below-average moisture in the eastern regions of southern Queensland along with New South Wales. Beyond this three-month period, the lack of moisture is expected to spread across eastern Australia and South Australia.

Some crops and markets to watch in the expected driest areas of Queensland and New South Wales include: wheat, with approximately 33% of the total seeded acreage expected in this region; barley, with an estimated 18.7% of acreage seeded in this region; and chickpeas, with more than 50% of the acreage seeded in this area. Close to 25% of the country's canola acreage is also planted in New South Wales.

The Australia Bureau of Meteorology is suggesting that the current El Nino event will last until the end of 2015. The Climate Prediction Center, which is a division of the National Weather Service in the U.S., reported today increased odds -- by 5% to 85% -- that the event will continue into the winter in the Northern Hemisphere and view the event as being strong this fall and winter.


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Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

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