High wheat prices if growers can produce a crop in dry
WHEAT has surged through the $400-a-tonne barrier, setting up a bumper return for growers this season – if they can produce a crop.
After jumping almost $100 in less than a month, the wheat price sits at $404.50 a tonne and appears on track to break the 2004 record of $440 a tonne.
But growers enduring drought conditions face the heartbreaking prospect of missing the higher returns.
The recent jump in wheat prices is due to ongoing dry conditions worldwide and subsequent tightening of wheat stocks.
The US Department of Agriculture August report, released late last week, reduced 2018-19 world wheat production by 6.63 million tonnes, citing continued drought conditions in Europe for a lift in global price.
The department’s August forecast 2018-19 world wheat production was 729.63 million tonnes, scaled back from a 736.26 milliontonne estimate last month.
The report forecast Australian wheat production for 2018-19 would be 22 million tonnes, unchanged from last month’s estimate.
Rabobank senior grains and oilseeds analyst Cheryl Kalisch Gordon said the USDA’s August report harshly cut back world wheat estimates.
“The WASDE numbers are quite bearish across the board for grain prices,” Dr Kalisch Gordon said.
“In the global context there are many other moving parts, not the least of which is the lower forecast production for Russia, Ukraine, Europe and Australia.”
While the report forecast Australian wheat production would be 22 million tonnes, Dr Kalisch Gordon said it could be closer to 19 million tonnes.
“The USDA still has Australia’s wheat production at 22 million, and you’d be hard pressed to find anyone in Australia forecasting production even close to 22 million tonnes, despite the very good outlook for Western Australia,” she said.
“There is still at least some likely revision down of global output in coming WASDE reports.”