Australian Farmers Facing Another Drought Year
USAgNet - 06/13/2019
Australia has cut its wheat production forecast for the 2019/20 harvest by more than 11% as an unrelenting drought across the country's east coast threatens crops for a third year in a row.
According to Reuters, the Australian Bureau of Agricultural and Resource Economics and Sciences pegged production of the country's largest rural export at 21.2 million tonnes, down from its previous estimate in March of 23.9 million tonnes. That
would be 14% below the 10-year average of 24.7 tonnes, and mean a third straight year of lower-than-average production - crippling growers and exporting companies, and providing a hurdle to an economy that is already threatening to stall.
The bureau said growing regions have received enough rain to establish crops, but many areas have very little moisture left in the soil, making them reliant of rains in September and October to avoid further crop downgrades.
Australia exports the bulk of its wheat crop but with increased domestic demand from the country's livestock sector due to the drought, exports from the world's fourth-largest supplier are expected to fall.
As a result, traditional buyers of Australian wheat such as Indonesian and Japanese millers will be forced to look to alternative markets such as Russia at a time when prices are rallying.
Supported by Australia's outlook, global benchmark wheat prices have risen about 15% since May.