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Grain production slides as WA battles big dry and east coast farmers suffer frost

Tara de Landgrafft, Thursday November 2, 2017 - 16:22 EDT
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Frosted wheat in Western Australia. Frost has again wiped millions of tonnes off the national grain production estimate. - ABC

Australian grain production is expected to take a big hit with volatile weather around the country making it harder for farmers to match the record-breaking yields from just twelve months ago.

Farmers are expected to produce 35 million tonnes this year. That might sound like a lot, but it's 41 per cent down on last year's record breaking crop of 59 million tonnes.

A dry winter in Western Australia and severe frost events on the east coast will likely result in the impending harvest to be eight million tonnes shy of the national five-year average.

The mediocre outlook comes from rural lending specialist Rabobank which has released its 2017/18 winter crop production forecast.

Rabobank agricultural analyst Wes Lefroy said as harvest gets underway in the coming days and weeks, there will be some disheartened farmers.

"It's been a disappointing year," he said.

"We were never expecting to match the 59 million tonnes of record production that we had last season but, equally, we would have like to at least reached the five-year average."

Mr Lefroy says the shortfall was almost purely due to poor yields, with a similar area planted in 2017.

"Hectares were down slightly, but not significantly," he said.

"We saw a four per cent fall year on year in planted hectares across the nation and really this is due to cut hectares in Western Australia, purely due to the dry start there."

Tale of two seasons

It was a dry start to the season in Western Australia with many farmers experiencing their lowest winter rainfall on record. Rainfall in recent weeks, however, had made for a soft spring finish and increased yields.

On the east coast, a better start to the season didn't mirror the finish with many farmers experiencing devastating frosts.

"Really the story across the nation has been a tale of two halves," Mr Lefroy said.

"The west had a poor start while in the east, Victoria in particular had a good start, even the Riverina too had a good start, but from then on in the east, it's gone backwards and the conditions have deteriorated.

"Frost has certainly been a factor in New South Wales and northern parts of Victoria where some losses have come in between 80 and 100 per cent."

"There are actually farmers in New South Wales that are looking to now graze out crops in canola and also in cereals."

He said New South Wales was looking at its lowest combined yield in a decade.

"Irrespective of where you were in the state, conditions really went back from [seeding]."

"It's really been those drier conditions and even in some of those areas as I mentioned, the frost has really put the nail in the coffin for that year and actually made more damage to the crop than the dry conditions have."

Prices move higher to reflect low grain supply

The yield losses are across the board with wheat down almost 20 per cent on the five-year average, barley 18 per cent down and canola down five per cent.

But Mr Lefroy said the bright spot was an increase in pulse plantings and as a result, the fall in yield would be just four per cent on the five-year average.

"So really the pulse prices at the moment, chick peas and lentils in the east are really incentivising growers to put more hectares in," he said.

Mr Lefroy said for the other bulk commodities, the decrease in supply was positive news for prices.

"Really driving basis, particularly in wheat has been local supply availability," he said.

"So in north eastern states such as Queensland and also New South Wales, local basis have been really quite strong and prices have remained really quite strong.

"To the point where we've actually seen some inter-state grain movements from South Australia and Victoria head to those states to supply the feed demand up there."

Mr Lefroy said prices started high in Western Australia but had dipped to reflect the boost in yields towards the end of the season.

"Basis was really quite strong heading through June and July but then flattened off in October once the season got better," he said.

"So the outlook for wheat price in particular locally, will depend a lot on that local supply story and how harvest plays out."


© ABC 2017

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