Meat & Livestock News

Australian Wheat Environment Trends Towards Normalcy

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27 October 2023

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) recently released its September Agricultural Commodities update, shedding light on the global grains outlook, with a particular focus on wheat.

The report indicates a shift towards a more ‘normal’ marketing year compared to the previous one.

Australian Production:

  • Wheat production in Australia is predicted to decline by 35% for 2023-24, dropping from 39.6 million tonnes (mt) in 2022–23 to 25.3mt in 2023–24.

The record production in the 2022–23 marketing year was due to favourable climatic conditions combined with high global prices, which encouraged extensive plantings and robust harvests.

  • Other grains, such as barley, are also expected to see a decrease in production. Barley production is forecast to drop from 14.1mt to 10.4mt. Similarly, grain sorghum production might decrease from 2.5mt to 1.5mt, and cottonseed production from 1.5mt to 1.3mt.
  • Despite the anticipated decline in production, domestic use is expected to remain stable. Specifically, wheat’s domestic use will likely remain unchanged, even with the significant drop in production. This stability is due to an anticipated 40.5% decrease in exports over 2023–24, resulting in a relatively stable domestic supply of 7.6mt.

Global Outlook:

  • Global wheat production is forecast to experience a minor decrease, moving from 794.4 million tonnes (mt) to 791 mt in 2023–24. This decline is mainly due to a 9% drop in production in Russia and Kazakhstan. However, this is offset by increased production in regions like the USA, India, and the European Union.
  • The ongoing conflict between Russia and Ukraine might disrupt some production and trade. Despite these challenges, the overall grain supply for the next year is expected to surpass that of 2022–23 due to increased production of other crops, including rice and barley.
  • ABARES predicts a slight reduction in global prices, moving from A$389/tonne to A$360/tonne. This price drop makes exporting less appealing for Australian wheat, ensuring more stocks remain in the domestic market.

Price Trends:

  • The price of Darling Downs feed wheat has been on a steady rise throughout 2023. However, it hasn’t reached the peaks seen in 2020 and remains well below the record highs of 2008. A decline in the feeder steer price indicator suggests that feedlot buyers might lean towards heavier, more finished cattle in the coming months, especially as grain prices remain high.