Drought in New South Wales Dragging Australia Wheat Lower

September 1, 2011

Australia has received good rainfall in August in the top wheat producing states Western Australia, New South Wales and Victoria.   However,  New South Wales prospects are reduced from drought previously, April through July.    Damage may be irreversible.    The Australia Commonwealth Bank in August predicted the new Australia wheat harvest may shrink to 23.54 million tons and 10.5% below last year.  

New South Wales wheat production was set at 7.1 million metric tons.   That compares to a record harvest of 10.6 MMT last year with abundant, even excessive, rainfall.     Western Australia wheat potential was judged to be 70% higher than last year.    There,  the new wheat estimate was pegged at 8 million metric tons compared to 4.7 million tons last season, when historic drought occurred.  

Western Australia and New South Wales are the 2 largest wheat states, together growing 63% of the Australia wheat crop.   Offsetting losses and gains would prevent a severe drop in Australia wheat production.    

The April-July rainfall map confirms serious drought in New South Wales with only 40-60% of normal rainfall in the norhern areas.   Conditions are relatively wet in Western Australia, the top wheat state.  See where Australia wheat is produced.

Drought in Eastern Australia can be seen in the satellite-generated vegetation.   Conditions are compared to a 5-year average.  The driest areas look worst on the late August rendering:   

The Western Australia vegetation shows “greenness” from crop health.   We need to remember one of the comparison years is 2010, when a devastating drought occurred.  

Record-low rainfall in July severely damaged wheat in northern New South Wales.   August rainfall was much improved, but may be too late for a strong recovery. 

Wheat production and exports would shrink in 2011-12 using the Commonwealth Bank estimates: