Australian farmers are expected to make only a modest expansion in wheat plantings this year, despite good recent rains, as weak global prices persuade them to hedge their bets and plant more canola as well. Wheat farmers are due to start sowing fields late this month, before harvesting the crops between October and late January.
Crop analysts said on Tuesday more rain forecast for this week over much of the country's grain-growing regions would boost optimism, especially among farmers in areas that had suffered from severe drought in recent years. But there is still a lot of uncertainty about how much additional land will be planted with wheat, which is trading at around five-year lows, and how much will be planted with other crops such as canola or pulses.
For wheat, ACF forecasts a 2010/11 crop up 3.7 percent to 22.5 million tonnes. Its previous forecast, in January, had been for a crop of 21.7 million tonnes. The Australia wheat crop has averaged 18.3 million tonnes over the five years to 2009/10, hurt by drought which cut the harvest to as little as 10.6 million tonnes in 2006-07.
Scott Briggs, a commodity strategist at ANZ Bank, said summer and early autumn rain in eastern states had boosted sub-soil moisture. He said fertiliser sales to date were similar to last year, providing another indication of optimism. ACF's estimate is at the higher end of current forecasts, but is still short of a record 26.1 million tonnes reaped in 2003-04.
Wheat is selling around the lowest level in five years as the world is awash with the grain. Last month the US Department of Agriculture forecast global wheat supplies to rise nearly 5 percent to 843.6 million tonnes in 2009-10 from an estimated 805.9 million tonnes a year before.
In 2009-10, Australia, one of the world's top exporters of canola after Canada, harvested about 1.9 million tonnes of the oilseed, largely for sale in Southeast Asian markets. Canola has the potential to provide higher returns, but it is more susceptible to damage from hot dry weather that last year damaged crops just ahead of harvest.