The production of wheat Australia's corn output is expected to fall 16% in the year starting July 1 from last year's record harvest as drought in some regions reduces soil moisture, bringing forecasts in line with historical averages, traders and analysts said.
Farmers in the world's third-largest wheat exporter are set to start planting this month amid tight global supplies, which should support prices.
Varied climatic conditions by region
While the main producing states of New South Wales and Western Australia have plenty of soil moisture, growers in Victoria and South Australia are likely to face severe drought, traders and analysts said.
“There is no subsoil moisture in Victoria or South Australia. Last year they had very little rain at harvest, but at least we had subsoil moisture going into planting,” said Stefan Meyer, head of a grains trading team at Sydney brokerage StoneX.
“This year’s crop potential is looking to be around average or slightly above average and the market is telling us there is a problem.”
Spot feed wheat prices have jumped to A$ 385 (US$ 241) a tonne for June delivery in Adelaide from US$ 355 a tonne since harvest in November, he said, even as Chicago futures have fallen to 2025.
Production forecasts
Australia is expected to produce 28.6 million metric tonnes of wheat in 2025/26, an average of five analysts and traders surveyed by Reuters shows, down 16.1% from 34.1 million a year earlier. Forecasts range from 27 million to 30.752 million tonnes.
In March, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimated wheat production at 30.5 million tonnes in 2025/26.
“Victoria and South Australia have been completely dry for months,” said Palwinder Singh of Melbourne-based grain and oilseed trading company Marina Commodities.
“There could be some improvement if we get some rain in the next month or two. For now, though, we are forecasting a production of about 28 million tonnes of wheat.”
Global context and world stocks
Forecasts of lower wheat production in Australia continue to gain traction. The country is a major supplier to Asian importers, including China and Indonesia. This scenario is happening right now. The US Department of Agriculture estimates that global wheat stocks will fall to their lowest level in nine years, reaching 260.08 million tonnes by the end of June.
“We expect global prices to rise throughout 2025. This is likely to be due to reduced supply expected for the 2025/26 season,” BMI Research, a unit of Fitch Group, said in a note.
Furthermore, Russia, the largest wheat exporter, is expected to reduce sales abroad in the first half of 2025.
On the other hand, excessive rains last week could also pose a challenge for farmers, said StoneX's Meyer.
“Parts of New South Wales and Queensland have had up to 200 mm (8 inches) of rain in the last 7 days. Many pastures are looking like lakes. So the next challenge in these areas now is getting machinery into the fields to plant winter wheat and barley.”
(US$ 1 = A$ 1.5977)
Source: Notícias Agrícolas
