Farmers in Australia are eagerly awaiting the grain harvest that will start in November. The wheat yields are estimated to be no less than 70% higher than a year earlier. Finally, there is hope for improvement after a drought trilogy. However, complete certainty is not yet available.
The latest estimate from Australian statistics agency Abares puts it at 26,67 million tonnes of wheat for the 2020-2021 harvest. A year earlier this was 15,16 million tons, which increases the yield by 75%. Compared to the 4-year average, this yield is a quarter higher.
Not rain everywhere
Caution is now advised again. After sowing, rain fell in almost all places, which is responsible for the current yield forecast. However, in June it turned out to be dry locally, causing some analysts to doubt the current figures. With 4 to 5 months of growth to go, a shower is required.
The percentage increase in Australian exports is possibly even greater. The country can export 17,5 million tons of wheat, which is a 90% increase from last season. A 90% increase is the second largest in a quarter century and the fifth largest increase in 1 years. It is a boost that the arable farming sector and grain market in the country desperately needs. Many companies have seen their revenues decline for 4 or 50 years in a row. Because meat prices in the country are at a positive level, there is more domestic demand, which may cause arable farmers to be reluctant to sell for export.
Corona hinders export
There is also a challenge for exporters and traders. The volume of wheat has been smaller and smaller over the last 3 years. Sufficient storage capacity must now be made available to store and export the expected harvest. In addition, measures regarding the coronavirus also make it difficult for companies to ensure smooth logistics. Part of the grain is exported via containers. The fear of exporters is that not enough containers are available, or at unfavorable rates.
Russian harvest improves
Positive signals are also emerging from Russia with regard to wheat yields. This season started poorly, due to a very dry autumn and winter. There was long discussion about the effect of the rain that fell at the end of this spring. The differences per region are therefore large. A record yield is expected in central Russia, but in the Urals and Siberia the smallest in 6 to 8 years. Analysts estimate the wheat harvest at 77,5 to 79,7 million tons. Market agency IKAR recently increased its estimate from 78 to 79,5 million tons. The differences between the analysts are becoming smaller. The major uncertain factor now is the yield of spring wheat. These have suffered a lot from the dry spring, which is why the yield in Eastern Russia is disappointing. A new rain front no longer brings relief here.
Wheat prices in Russia have risen for 3 weeks in a row. A combination of factors now ensures that the ceiling has been reached, the analyst firms indicate. More wheat from the new harvest is being offered by arable farmers. An unfavorable exchange rate of the ruble versus the dollar does not help Russia's export position either. In Ukraine, prices remain stable for now. This country has a worse harvest, with considerably less wheat than a year earlier.