Wednesday, March 9, 2011

ABARES grain & oilseeds forecasts for the new season.

Australian Bureau of Agricultural and Resource Economic and Sciences (ABARES) released the latest March quarter report. This report covers a diverse range of forecasts and trends for commodities. Several key points from the report are: ~

Despite the recent adverse weather impacts, the value of farm exports (grain, oilseeds, rice, cotton, sugar, wool, wine and meat) is forecast to rise by around 4.4% to $32.5 billion in 2011-12. Wheat is ranked 9th in terms of export value ($5 billion) for the 2010/11 market year a long way behind iron ore at $56.5b.

The Aussie dollar is assumed to remain relatively strong on the back of high interest rates and strong mineral exports. In the next few years (2012-13) it will average around US 97c, before moderating gradually to average US90c 2015-16.

The 2011/12 wheat area is forecast to increase by 3% to 13.8 million hectares. Despite the increase in area, wheat production in 2011–12 is forecast to be around 24 mmt as a result of an assumed decline in yields from this years bumper harvest. Wheat exports in 2011–12 are forecast to be around 16.5 mmt. Barley is forecast to fall another 3% to just under 4 million hectares. The grower’s reluctance to switch to alternative crops that provide better cash flow is clearly evident with the smallest barley area for nine years!

ABARES pegged Australian wheat exports for 2011/12 at 16.5 MMT, up slightly from their 2010/11 estimate of 16.2 MMT.

With such high soil moisture across eastern Australia, canola is to increase by 6%, reflecting favourable prices and strong global demand for oilseeds. Production is forecast to be around 2.2 mmt, 4% higher than last season, reflecting a larger area and a return to average yields, particularly in Western Australia after drought last season.

Grain prices are projected to decline gradually from current highs, but to remain above long-term averages. Factors expected to support world grain prices over this period include continued income and population growth in key import markets, which will lead to higher demand for feed grains and protein meal, and for industrial use, such as biofuels production.

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