Bumper grain harvest australian farmer smiling

Bumper Harvest and Strong Demand Promotes Optimism in Australian Grain Sector

Despite early pressures, the 2021 winter grain harvest has broken all Australian records with a national yield of 61.9 million tonnes. This is the first time yield in Australia has exceeded 60 million tonnes. Better than expected yields in parts of Western Australia and New South Wales helped to boost annual production from an initial forecast of 58.4 million tonnes.

Australia’s top three yielding crops all broke their respective production records with wheat yielding 36.3 million tonnes, barley at 13.7 million tonnes and canola contributing 6.4 million tonnes.

Summer rains downgraded the quality of some crops, but experts are also hoping that a boost in soil moisture will have a positive impact on summer crops.

“It’s also been an extraordinary season for summer crops in Queensland and northern New South Wales,” said Jarred Greenville, executive director of ABARES.

“While there were flooding conditions in November that damaged early plantings of summer crops, overall the conditions have been very favourable, “ he added.

Currently, Australia’s summer crop is also expected to break national records with an estimated yield of 5.3 million tonnes, a 64% increase from the previous year.

“We also estimate that the area sown for summer crops to have risen by 48pc to 1.5 million hectares, which is 35pc above the 10-year average to 2020-21,” Dr Greenville said. Summer rains have also boosted the outlook for this year’s winter crop, with industry analysts predicting an above-average annual crop again in 2022.

Global Demand Hampered by Export Bottleneck

Strong global demand is likely to push the price of grain up but without an increase in export capacity, it is unlikely Australia will be able to capitalise on the opportunity.

The bumper winter crop has caused a sluggish supply chain with the movement of grain from inland to ports further hampered by recent flooding.

The disruption of trade from the Black Sea – which accounts for 34% of global wheat exports – is putting upward pressure on the price of grain with experts predicting it will exceed $400 a tonne in the near future.

But without increased export capacity, Australia will struggle to get any additional grain on the water. Exports slots are already sold out months in advance making it difficult for Australian exporters to fulfil more urgent orders.

Developing countries in the Middle East and Africa are likely to be affected by trade restrictions caused by the Ukraine-Russian crisis.

“Places like Egypt and Algeria rely on bread as primary foodstuffs,” said Andrew Whitelaw, a market analyst with Thomas Elder Markets.

“It’s going to be tough for them because food price is directly correlated with the price of wheat.”

Bulk handler CBH has made an additional 550,000 tonnes of export capacity available in Western Australia, but no progress has yet been made among East coast ports.

Export constraints will likely frustrate the industry given India’s recent announcement to remove an 11% trade tariff from lentils. India currently imports $1 billion worth of lentils annually and is home to the world’s second-largest population.

Sources: The Guardian, ABC News, The Land, AgTrader

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