Drought Brings Clouds for Australia Wheat, Silver Lining for Black Sea Suppliers

September 4th, 2019

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Category: Grains

(Reuters) – A third straight year of drought in Australia, blighted by forecasts of below-average rains during the crucial spring growing season, means the country’s wheat crop could shrivel by 10% from previous forecasts, traders and industry officials say.

And the gloomy prospects for wheat output in Australia, once the world’s leading supplier, offers a silver lining to rival Black Sea grain producers such as Russia and Ukraine seeking business in rapidly growing Asian markets.

Wheat production in Australia could drop below 19 million tonnes, industry participants expect, down from the 21.2 million tonnes estimated by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) in June.

“The Australian wheat crop is shrinking at the moment as more and more grain is cut for hay,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney. “We are looking at a crop of around 19 million tonnes at the moment and it could get lower unless we get rain over the next two-three weeks.”

Australian farmers plant wheat in April-May and the crop is harvested in December. The southern hemisphere spring, which starts in September, is the most crucial grain-making phase for the wheat plants.

But after one of the driest winters on record, Australia’s spring is also expected to be warmer and drier than average, the country’s Bureau of Meteorology said last week.

That’s grim news for Australia’s farmers, plagued by the prolonged drought that has parched cattle and sheep farming regions as well as grain growing areas.

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