Australia Wheat Crop to Decline Sharply, Gro Model Shows

Australia’s wheat crop will decline substantially year over year, Gro’s model shows, contrary to Australian government forecasts for another record wheat harvest. 

ABARES, a government agency, recently raised its 2021/22 wheat production estimate to 34.4 million tonnes, up 3% from a year earlier. But Gro’s Australia Wheat Yield Forecast Model indicates production will be down sharply from last year, and well below government estimates. 

Wheat production in Australia, the No. 4 exporter, is critical to global wheat supplies. Following this year’s harvest shortfalls in North America, and US wheat supplies at their tightest in 14 years, the world’s wheat importers were counting on a sound crop from Australia. 

Wheat is used largely for milling and baking. With supplies tight, bakeries could face higher input costs that may translate into elevated prices for consumers for products such as bread, cakes, pastries and even all-purpose flour.

Cooler than normal temperatures in eastern Australia have reduced wheat yield prospects, according to Gro’s model. Heavy rains in the region could further compromise crop quality and production, as forecasted here. 

CBOT wheat futures prices are trading near eight-year highs. In addition to heavy precipitation in Australia, dry conditions in the US Southern Plains are fueling worries about global availability of high-protein wheat. The recent return of the La Niña global weather pattern threatens to keep global wheat prices elevated until at least late spring 2022 when Northern Hemisphere harvests come in.

In the US, the Gro Drought Index shows moderate drought is plaguing winter wheat crops in Texas and Oklahoma and forecasts call for mostly dry conditions for the next two weeks. Nationally, winter wheat crop ratings are at their lowest levels in a decade at just 44% good-excellent. Just 20% of Texas’ crop falls in the good-excellent category, a nearly 20-year low. 

Yield estimates by Gro’s US Hard Red Winter Wheat Yield Forecast Model have declined in the past two weeks, especially for Texas. While it is still early in the season, the model currently projects the US winter wheat crop will be well below last year.  

The winter wheat crop in Russia, the world’s top exporter, is also entering dormancy in dry conditions. 

Supply concerns are not likely to change much over the Northern Hemisphere winter as little new data becomes available. But Gro’s Drought Index and soil moisture analytics will be important to follow as winter wheat emerges from dormancy in the spring.