Eastern Australia Wheat Worsening From Dryness

September 26, 2011

Hoped for heavy rainfall did not materialize in southwest New South Wales and Victoria last week, raising doubts over new-crop wheat potential.  Showers stayed close to the southeast coast, not affecting inland wheat farms.     Virtually no rain has fallen in the past 14 days and less than 20% of normal in the past month in southwest New South Wales and Victoria.

Wheat normally is jointing in Victoria and southwest New South Wales in late September,  the rapid growth period that demands heavy rainfall.    Subsoil moisture was generally good to start with this spring,  but has rapidly declined rapidly with September heat and dryness.

Maximum temperatures in the 80s F occurred last week in southwest New South Wales and 3-5 C above normal (5-8 F).

Doubts over new-crop wheat potential were voiced last week by the Commonwealth Bank of Australia.    Analyst Luke Mathews predicted wheat production would fall to 23.5 million metric tons and 10.3% lower than the 26.2 million metric ton estimate from ABARE, the official government agency.   

The USDA wheat production estimate was 25 MMT in the September report, between the 2 estimates above.    Australia wheat exports were projected at 17 million metric tons in 2011-12,  down from  17.5 MMT last year.

Drought damage in New South Wales would be sigificant, as this is the largest Australia wheat state based on the past  3-year average.   Traditionally, Western Australia is the largest wheat-producing state.    However, historic dought last year shrank the state harvest 38%,  lowering the Western Australia production share.