US officials need to hack at least 3m tonnes from their Australian wheat production estimate to get to a realistic total, Pentag Nidera said, seeing the potential for downgrades to European and Canadian crops too.
The US Department of Agriculture, which is poised in its Wasde report later on Friday to upgrade its world crop production forecasts, currently sees the Australian wheat crop at 26.0m tonnes, up some 2m tonnes year on year.
However, Pentag Nidera, the Queensland-based broker backed by Netherlands-based Nidera, said that “today, we would be more comfortable with an estimate of 22m-23m tonnes”.
A forecast at that level would be above the potentially sub-20m-tonne crop that National Australia Bank has cautioned of, given the onset of the El Nino weather pattern, although below the 23.6m-tonne estimate from the official Abares bureau.
While Pentag Nidera did not elaborate on its thinking, the estimate comes amid entrenched concerns over El Nino, which typically causes dryness in eastern Australia.
In fact, eastern Australia has received some rain of late, with precipitation in Queensland, for instance, “mostly average across most parts of the state’s cropping region” last month, according to the University of Queensland.
And more rain is in the forecast, with Tobin Gorey at Commonwealth Bank of Australia saying that “forecasters continue to expect southern and eastern grain regions to get modest rainfall into early next week”.
‘High-risk of low-yielding crops’
However, the University of Queensland warned that latest modelling using the longer-term weather outlook “suggested that the likely impact of El Niño on the winter crop this season could be very significant”.
“Wheat growers throughout Australia face a high-risk of low-yielding crops for the 2015 winter cropping season,” said Dr Andries Potgieter, although adding that “the effect will vary from region to region”.
The university forecast a likely Queensland wheat yield of 1.28 tonnes per hectare, below the median of 1.45 tonnes per hectare.
‘Looking extremely stressed’
Meanwhile, in Western Australia, the top Australian wheat-producing state, concerns are growing over dryness, particularly in the north of the grain belt.
Western Australia farmer Aaron Edmonds said that while the state’s crops had achieved a “fantastic start to the season”, with early rains encouraging sowings, “we have had a June which has delivered 5-10mm”, and with a “hardly encouraging” weather outlook.
“Crops are well advanced but looking extremely stressed. In shallower soil types, crops are actually dying which is unheard of for this medium rainfall zone,” Mr Edmonds told Agrimoney.com.
“Until solid rainfall of 25-50mm is received our crop prospects will continue to head southwards.”
CBA’s Tobin Gorey said that “weather forecasters continue to expect northern parts of Western Australia’s grain regions to remain largely dry into early next week”.
‘Likely to have suffered a decline in yield’
Pentag Nidera said that Canada’s wheat crop could be in for a 2m-tonne downgrade from a current USDA estimate of 29m tonnes, flagging “frosts followed by adversely dry conditions” which CWB cautioned of overnight.
In Europe, which has “suffered hot and dry conditions for a month… some areas are ok”, the broker said.
“However, the northern areas of France and Germany are likely to have suffered a decline in yield.
“We struggle with the USDA production forecast for this region [of 150.7m tonnes] and believe it could be 10m tonnes lower.”
(Source – http://www.agrimoney.com/news/australian-wheat-crop-warrants-a-downgrade-says-pentag–8571.html)