The government bureau that this week forecast a doubling of Australia's next wheat crop has warned that there is only a slightly better than even chance that this near-record harvest will be achieved.
The Australian Bureau of Agricultural and Resource Economics forecast earlier this week that Australia's wheat crop would jump to 25.95 million tonnes, after drought cut the last crop to just over 13 million tonnes. "That's all assuming that we get a good season break," Leanne Lawrance, grains analyst at ABARE, told Reuters on Friday.
"If that break doesn't occur there could be quite a different scenario," she said. Encouraged by record world wheat prices and by a need for cashflow after years of drought, Australian farmers are planning to plant a big crop in coming months.
ABARE this week forecast that wheat farmers would plant 13.44 million hectares, up from 12.26 million hectares last at whether Australia would actually produce the forecast amount of wheat depended entirely on the weather, analysts said. "You can come out and say we're going to grow 25 million tonnes or 26 million tonnes this year, but our season is so variable and subject to so many forces that we might grow 30, we might grow 10," trader Andrew Walker at Fox Commodities said.
The Bureau of Meteorology was forecasting a greater than average chance of above average rainfall in the key wheat growing areas of New South Wales and South Australia, Lawrance said, but not for Victoria and Western Australia.
Last year ABARE started the year forecasting a wheat crop of 24.98 million tonnes, then drought cut the crop to 13.09 million, contributing to global shortages of the grain that lifted prices to record highs.
"But farmers will pull out all stops this year because its worth so much," Walker said. "If ever we're going to grow a record crop, it'll be this year," he said. Australia's existing record wheat crop is 26.13 million tonnes, set in 2003/04.
"It really is all a question of whether that autumn rain comes," Ron Storey, head of private group Australian Crop Forecasters, said.
The weather bureau had around a 55 percent weighting on above average eastern rains in the May quarter, he added. Who will be exporting the next wheat crop is not totally clear, despite the release of draft legislation by the government this week which does away with AWB Ltd's monopoly and opens the system to all comers, subject to conditions.
Australian groups GrainCorp Ltd and ABB Grain Ltd welcomed the plan. Global grains traders through the Australian Grain Exporters Association also supported the move. Wheat exporter AWB Ltd, now close to losing the monopoly it held for almost 70 years, said it welcomed the clarity and confidence, which the draft legislation gave growers.
But AWB also warned that the new system could leave growers in a "twilight zone" if the new legislation failed to be passed by the Australian Senate, which remains dominated by the coalition, which was voted out of government in November.
In this case AWB could not be expected to maximise returns to growers because it would no longer hold the monopoly, it warned Supporters of the plan see little chance that the Senate will block legislation. But they cannot predict Senate votes.
"If the Senate were to block this legislation we would have no certainty and have no clarity," said Alick Osborne, spokesman for the Australian Grain Exporters Association.