El Nino Hurts Australia Wheat-Crop Outlook as Yields at Risk

June 10, 2015 06:54 AM
El Nino Hurts Australia Wheat-Crop Outlook as Yields at Risk

Australia cut its wheat-production outlook as the first El Nino since 2010 threatens to curb yields in the country’s east, adding to signs that the pattern has the potential to disrupt food production around the world.


The harvest may total 23.6 million metric tons in 2015-2016 from 24.4 million forecast in March, the Australian Bureau of Agricultural & Resource Economics & Sciences said in a report on Wednesday. Output was 23.7 million tons a year earlier and 25.3 million in 2013-2014, it said. Farmers in the world’s fifth- biggest exporter begin harvesting about October.

Australia last month declared the El Nino, which can parch the country’s eastern states, and cause droughts in Asia and wetter, cooler summers in North America. The event may cut global wheat output 1.4 percent, the United Nations’ Food & Agriculture Organization predicted. India said the pattern may crimp this year’s monsoon, potentially hurting food output.

“It’s really difficult to predict the effect of an El Nino this early,” Peter Collins, manager for agricultural commodities at Canberra-based Abares, said by phone. “The timing of rainfall is very significant. So, it is possible to have below-average rainfall, but if you get it at just the right time then the effect is lessened.”

Wheat traded near a two-month high in Chicago on Wednesday after excessive rain in parts of the U.S., dry conditions in Canada and hot weather in Europe raised concern global supplies will decline. Grain for July delivery rose 0.5 percent to $5.35 a bushel at 9:22 a.m. in Singapore after climbing to $5.3725 on Tuesday, the highest for a most-active contract since April 6.

Particular Concern


Australian wheat is of particular concern amid the El Nino as its critical development stages still lie ahead, Morgan Stanley said on Tuesday. Should Australia remain dry, the case for higher prices will grow, according to the bank.


Impacts from El Ninos are hard to forecast, clouding the outlook for Australia’s grain output, National Australia Bank Ltd. said June 5. Dryness is likely to continue through Australia’s growing season, and wheat yields typically fall well below trend during El Ninos, MDA Weather Services said.

Farmers in New South Wales, the second-biggest wheat grower, may harvest 6.2 million tons from 6.3 million tons a year ago, Abares said. The Bureau of Meteorology forecasts a drier winter for northern and eastern parts of the state as well as south Queensland and eastern Victoria as El Nino strengthens.

Less Pronounced


Western Australia’s harvest, the country’s biggest, may total 9.3 million tons from 8.9 million tons a year ago, Abares said. The state is set for a wetter-than-normal June to August, the bureau said May 28. The impact of El Ninos on the state is far less pronounced than in the east, according to Abares.


The El Nino continues to develop, Australia’s weather bureau said on Tuesday. The extent of warm water across the Pacific hasn’t been seen since the event of 1997-1998, it said. That pattern was the strongest on record, according to the National Oceanic and Atmospheric Administration.

World wheat production will drop to 718.9 million tons in 2015-2016 from 726.5 million tons a year earlier, according to the U.S. Department of Agriculture. The agency, which is set to update its estimates on Wednesday, forecast Australia’s wheat crop at 26 million tons.


Back to news



Spell Check

No comments have been posted to this News Article

Corn College TV Education Series


Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!


Market Data provided by QTInfo.com
Brought to you by Beyer