Grain and Feed Update

An Expert's View about Grain Milling in Australia

Last updated: 25 Feb 2011

In eastern Australia, cooler and extremely wet conditions has boosted production for the 2010/11 (July-June) winter cereal crop (wheat and barley) beyond previous forecasts.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 1/21/2011 GAIN Report Number: AS1101 Australia Grain and Feed Update February 2011 Approved By: Grant Pettrie, Agricultural Counselor Prepared By: Mike Darby, Agricultural Specialist Report Highlights: In eastern Australia, cooler and extremely wet conditions has boosted production for the 2010/11 (July-June) winter cereal crop (wheat and barley) beyond previous forecasts. Western Australia, conversely, experienced record low rainfall and many failed crops, however, managed to exceed expectations. Post: Commodities: Canberra Wheat Barley Sorghum Rice, Milled Summary: Since Post last reported (November update), the eastern Australian wheat belt has received heavy rainfall, flooding and cooler temperatures. The spring period of CY 2010 was purportedly the wettest on record for eastern Australia. This has effectively pushed crop production higher than previously forecast and seriously affected the quality of the 2010/11 winter cereal crop. Despite this increase, Post has remained cautious in revising production forecasts, upwards. Eastern Australia appears to have broken its longest running and most severe drought ostensibly recording record rainfall for CY 2010. Widespread flooding has been experienced in the states of Victoria, New South Wales and most recently Queensland. Flooding has destroyed crops in areas adjacent to rivers, destroyed property and caused loss of life in towns and cities. The floods in N.S.W. and Queensland in particular, have been compared with the legendary floods of 1974. Western Australia remains in drought while South Australia has experienced wet conditions but not the extreme weather recorded elsewhere. In eastern Australia, cooler and extremely wet conditions boosted production for the 2010/11 (July-June) winter cereal crop (wheat and barley) beyond previous forecasts. However, wet and cooler conditions pushed the bulk of the winter cereal harvest back into late December and early January (which recorded heavy rainfall and flooding). In eastern Australia, the heavy rainfall resulted in more premium quality wheat being downgraded to feed quality. In the most extreme cases, some wheat and barley crops were unable to be harvested or lost to flooding. However, losses in harvested area were more than compensated for by improved yields boosting production in all eastern states (Victoria, South Australia and possibly New South Wales). Post has not yet revised planted area numbers downwards. Despite the difficult harvest conditions, many winter cereal producers in eastern Australia achieved record yields. Western Australia, conversely, experienced record low rainfall and many failed crops, however, managed to exceed expectations in terms of total production. Sorghum production prospects have improved despite losing some area to flooding. Improved yield, due to heavy rainfall, is expected to see overall production increase somewhat. Rice production is also expected to increase as water availability continues to improve. Wheat Total wheat production for 2010/11 is forecast at 24.6 MMT, up over one million metric tons on Post?s previous forecast and up over two million tons on estimated production for 2009/10. At time of writing this report, it remains unclear how much of the 2010/11 wheat crop has been lost to bad weather. NSW, Victoria and South Australia are forecast to surpass Post?s previous forecast. Queensland is likely to fall below previous expectations while W.A. is forecast to exceed previous poor expectations. At this point in time, it appears that Queensland and northern N.S.W. have suffered the worst conditions at harvest and this has lead to a decrease in forecast production for Queensland and constrained further increases for N.S.W. Western Victoria has also suffered from poor weather conditions at harvest and a conservative forecast has been maintained for production in this state as a result. State Production Assumptions for 2010/11 Wheat NSW Vic Qld WA SA Australia 10/11 (post July forecast) 8,000 3,000 1,700 6,488 4,000 23,188 10/11 (post Nov forecast) 9,500 3,200 1,700 4,488 4,300 23,188 10/11 (post Feb Forecast ) 9,500 4,000 1,500 4,700 4,900 24,600 10/11 (ABARE June forecast) 6,591 2,509 1,539 7,964 3,504 22,138 10/11 (ABARE Sept forecast) 9,875 3,395 1,575 6,063 4,161 25,069 10/11 (ABARE Dec forecast) 11,850 4,428 1,440 3,600 5,475 26,793 Previous record 8,602 3,145 1,941 11,070 4,778 26,132 Forecast production for 2010/11 would not be considered a record according to Australian Bureau Agricultural and Resource Economics and Sciences (ABARES?) historic data. However, ABARES? December forecast of 26.793 MMT would be considered an all time record. Post advises that a ?historically high? proportion of Australia?s 2010/11 wheat crop has been damaged by poor weather at harvest. Much of the crop has been downgraded to feed quality with expected trade implications. Historical ABARES data shows variation in the proportion of the wheat crop which is exported (vis a vi production) from year-to-year. Some of the factors influencing this variation include export demand versus domestic demand, relative value of the Australian dollar and the proportion of crop which is downgraded to feed. Increased proportions of feed wheat have indicated lower export levels as feed wheat has historically been consumed by domestic livestock feeders in preference to export markets. However, Post advises that the weather affected 2010/11 crop is facing historically strong export demand and that this will possibly see historically high levels of feed wheat exported. Industry sources believe export buyers have been more competitive than domestic processors in purchasing large volumes of feed grade wheat during this period. Data: ABARES. Photo: Mike Darby A recent Australian Bureau of Statistics (ABS) wheat use and stocks report, stated that bulk grain handlers were holding 6.3 MMT of wheat graded for milling and 2.1 MMT of wheat graded for feed at the end of November. This remains sharply higher than the 1.44 MMT of wheat graded for feed in November of the previous year. Post anticipates that the figures for the end of December are likely to show increased levels of wheat graded for feed as wetter conditions persisted into the crucial harvest period. Wheat 2008/2009 2009/2010 2010/2011 A Market Year Begin: Oct 2008 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 us Barley tralia USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 13,530 13,350 14,028 14,028 13,350 13,350 B Total eginning Stocks 3,651 3,651 3,588 3,588 4,106 4,683 barley Production 21,420 21,420 21,923 22,500 25,000 24,600 MY Im productiports 114 114 110 110 100 100 TY Imp on for orts 107 107 123 123 100 100 TY Imp 2010/11 . from U.S. 1 1 1 1 0 1 To has tal Supply 25,185 25,185 25,621 26,198 29,206 29,383 MY Expo been rts 14,747 14,747 14,790 14,790 13,500 13,500 TY Expor revised ts 13,450 13,450 13,744 13,744 14,000 14,000 Feed upwards and Residual 3,750 3,750 3,700 3,700 5,400 5,400 FSI Consump to 8.95 tion 3,100 3,100 3,025 3,025 3,075 3,075 Tota MMT. l Consumption 6,850 6,850 6,725 6,725 8,475 8,475 Ending Record Stocks 3,588 3,588 4,106 4,683 7,231 7,408 Total Distribution 25,185 25,185 25,621 26,198 29,206 29,383 rainfall recorded 1000 HA, 1000 MT for the spring period of CY 2010 combined with unseasonably cool weather in some regions has combined to boost barley yields and production by around 1.0 MMT above Post?s last report and by 0.5 MMT over the estimate for 2009/10. The 2010/11 crop is now expected to yield a near-record 2.24 MT per hectare, which includes the drought ravaged state of Western Australia. Despite this upward revision, Post?s forecast remains conservative. Harvesting conditions in eastern Australia varies from average to extremely difficult and some losses are expected. In Western Australia, severe drought has seen yields slashed and, in the most extreme cases, some crop failures. An ?historically high? proportion of the Australian barley crop has likely been downgraded due to wet weather at harvest. Despite feed grade barley traditionally being consumed domestically rather than exported, historically high export demand for feed grain is expected to see much of Australia?s feed barley exported. Source: ABARES data. Photo: Mike Darby Higher forecast barley production in 2010/11 has caused Post to revise its forecast consumption upwards and lift ending stocks slightly. Barley Sorgh 2008/2009 2009/2010 2010/2011 um A Market Year Begin: Nov 2008 Market Year Begin: Nov 2009 Market Year Begin: Nov 2010 ustralia USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 5,015 5,015 4,446 4,446 4,100 4,000 Total B sorghueginning Stocks 1,662 1,662 2,425 2,425 1,899 2,425 Produ m ction 7,997 7,997 7,909 8,300 9,800 8,950 MY Impo productrts 0 0 0 0 0 0 TY Impor ion in ts 0 0 0 0 0 0 TY Imp 2011/1. from U.S. 0 0 0 0 0 0 To 2 has tal Supply 9,659 9,659 10,334 10,725 11,699 11,375 MY Exports been 3,234 3,234 3,935 3,800 4,700 4,100 TY Exports revised 3,278 3,278 3,867 3,700 4,500 4,000 Feed sharply and Residual 2,900 2,900 3,300 3,300 3,700 3,800 FSI Consumption 1,100 1,100 1,200 1,200 1,300 1,150 upward Total Consumption 4,000 4,000 4,500 4,500 5,000 4,950 s to Ending Stocks 2,425 2,425 1,899 2,425 1,999 2,325 2.45 Total Distribution 9,659 9,659 10,334 10,725 11,699 11,375 MMT, around 1000 HA, 1000 MT 0.5 MMT higher than Post?s previous report and up by almost 1.0 MMT on 2010/11. Greatly improved yield prospects combined with a slight increase in planted area is expected to push production higher than previous expectations. The 2010/11 sorghum crop, which will likely continue being planted until February, is expected to be harvested from March onwards. Heavy rainfall has made planting difficult in some areas but, combined with heavy follow up rain, has boosted yield potential to historically high levels. The 2011/12 sorghum crop is expected to yield at around 3.61 MT per hectare which, according to historical records, would be the second highest all-time yield. Despite the greatly improved outlook for sorghum production, scope remains for further increases in forecast production depending on final planted area and yield. Improved production prospects for the 2011/12 crop are expected to see feed consumption and exports increase beyond previous forecasts. Source: ABARES data. Photo: Mike Darby Sorghum Rice 2008/2009 2009/2010 2010/2011 A Market Year Begin: Mar 2009 Market Year Begin: Mar 2010 Market Year Begin: Mar 2011 ustralia USDA Official New Post USDA Official New Post USDA Official New Post Australi Area Harvested 767 767 516 516 650 679 an rice B producteginning Stocks 791 791 676 678 671 573 Pro ion for duction 2,690 2,692 1,600 1,500 1,950 2,450 MY Imp 2011/1orts 0 0 0 0 0 0 TY Imp 2 is orts 0 0 0 0 0 0 TY Imp forecast . from U.S. 0 0 0 0 0 0 To to tal Supply 3,481 3,483 2,276 2,178 2,621 3,023 MY Expor increasts 1,000 1,000 600 600 800 950 TY Expor e to ts 1,360 1,360 350 350 800 950 Feed 850,00 and Residual 1,800 1,800 1,000 1,000 1,200 1,300 FSI Consumption 0 MT, 5 5 5 5 5 5 Total Consumption up 1,805 1,805 1,005 1,005 1,205 1,305 Ending Stocks 676 678 671 573 616 768 50,000 Total Distribution 3,481 3,483 2,276 2,178 2,621 3,023 MT on Post?s 1000 HA, 1000 MT previou s forecast and up four-fold on the estimate for 2010/11. An increase in area is expected to more than offset a fall in yield. As a result of the increase in forecast rice production for 2011/12, Post has increased its forecast for rice exports and carry out stocks. Heavy rainfall events in southern N.S.W., including catchment areas for irrigation water storage, have boosted irrigation water storages to 100 percent capacity or above. Subsequent allocations of irrigation water for rice growers have also increased sharply. This would likely have encouraged growers to exceed earlier planting intensions somewhat and thus Post has lifted planted area. Despite an improved irrigation water supply outlook, cool weather has persisted beyond the spring period into summer and this is likely to see average yield decline across the Australian rice crop. Yield has been revised downwards to 8.95 MT per hectare, which would be considered slightly above-average. Source: ABARE data. Photo: Mike Darby At time of writing this report, The 2011/12 Australian rice crop is approximately mid way through its growth cycle. An excellent start, which included cool temperatures and exceptional water availability, has been followed by cloudy days and continued cool weather when producers were looking to hotter sunny conditions for increased yield during the later stages of crop development. Rice, Milled 2008/2009 2009/2010 2010/2011 A Market Year Begin: Mar 2009 Market Year Begin: Mar 2010 Market Year Begin: Mar 2011 ustralia USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 7 7 19 19 82 95 Beginning Stocks 52 52 26 26 44 44 Milled Production 44 44 142 147 572 608 Rough Production 62 62 199 206 800 850 Milling Rate (.9999) 7,150 7,150 7,150 7,150 7,150 7,150 MY Imports 215 215 225 225 125 125 TY Imports 216 216 225 225 125 125 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 311 311 393 398 741 776 MY Exports 15 15 40 40 325 350 TY Exports 17 17 40 40 325 350 Consumption and Residual 270 270 309 314 330 330 Ending Stocks 26 26 44 44 86 97 Total Distribution 311 311 393 398 741 776 1000 HA, 1000 MT Recent Reports from FAS/Canberra Recent Reports from FAS/Canberra The reports listed below can all be downloaded from the FAS website at: http://www.fas.usda.gov/scriptsw/AttacheRep/default.asp. Title of Report Date Citrus Annual 2010 12/10/15 Ag DownUnder - Issue 7 2010 12/10/10 Winter crop harvest under way as rain continues in eastern Australia 11/30/10 Australia Moves toward Phasing Out the Use of Sow Gestation Stalls 11/24/10 Dairy and Products Annual 2010 11/23/10 Grain and Feed Lock-Up ? November 2010 10/28/10 Ag DownUnder ? Issue 6 2010 10/15/10 Sugar Semi Annual 2010 09/29/10 Livestock and Products Annual 09/01/10 Stone Fruit Annual 2010 08/20/10 Grain & Feed Update ? August 2010 07/30/10 Ag DownUnder Issue 5 2010 07/22/10 Food & Agriculture Import Regulations & Standards Report 07/21/10 Agricultural Biotechnology Annual 07/14/10 Biofuels Annual 2010 07/06/10 Ag DownUnder Issue 4 2010 06/25/10 Increased Access for Australian Fresh Fruit to China & Japan 06/23/10
Posted: 25 February 2011, last updated 25 February 2011