Australia could harvest nearly seven per cent less of the grain in 2010-11 than the previous season, analysts said Mar. 4, making their first estimates for the year.
“We expect Australian wheat area to fall by five per cent in 2010 and production to decline by 1.5 million to 2.0 million tonnes, said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia.
He said the direction of Australian wheat prices this year would be heavily influenced by the international market.
“The weak international price outlook, plus expectations for a firm Aussie dollar over the coming nine to 12 months means the near-term outlook for local wheat prices is relatively weak,” said Mathews.
He said a rise in Australian wheat stocks over the past few seasons also weighed on domestic prices.
Australian milling wheat futures for March delivery were at A$212 (C$197) per tonne on Mar. 4, about two-thirds the level a year ago.
Mathews estimated the 2009-10 crop just harvested at around 21.5 million tonnes, meaning stocks might grow by 10 per cent in the year to September 2010.
“Stocks may grow by more than this if exports don’t reach our optimistic target of 15.7 million tonnes,” he said.
Rabobank analyst Wayne Gordon said Australia’s main export destinations were still tending to fill near-term requirements only.
“For lower-quality milling grades, it remains tough going on the export front,” said Gordon.
Gordon also estimated the 2010-11 wheat crop would be 20 million tonnes in contrast to a forecast of a 21.94-milliontonnes crop, made by ABARE, the government’s commodities forecaster.