Rain and Chinese demand to boost Australia's wheat, barley planting

Australian farmers are likely to plant more wheat and barley this year, thanks to Chinese demand and wet weather on the country's east coast, while canola sowing should fall amid lower profit margins and dry conditions in the west, analysts said. Australia is the world's second largest wheat exporter and a key supplier of barley and canola, with the size of its harvests impacting global supplies and prices.

Australian farmers are likely to plant more wheat and barley this year, thanks to Chinese demand and wet weather on the country's east coast, while canola sowing should fall amid lower profit margins and dry conditions in the west, analysts said.

Australia is the world's second largest wheat exporter and a key supplier of barley and canola, with the size of its harvests impacting global supplies and prices. Wheat and barley production is likely to rise by several million metric tons in the 2024/25 season ending in June next year, while canola output could drop by about a million tons, analysts forecast.

"The east coast is looking really good, with lots of rain," said Ole Houe, director of advisory services at IKON Commodities in Sydney. With sowing just getting underway, additional planting in eastern Australia should boost wheat area by 1%-3% and barley area by 3%-15%, while canola area could decline by 4%-20% from 2023/24, analysts estimated.

Dryness in Western Australia is likely to hit canola hardest because it is planted earlier and offers a smaller profit margin than wheat or barley. "Canola area will be the first to get cut ... If dry conditions (in Western Australia) push into May, we will start to see wheat and barley area pared back too," said Rod Baker at Australian Crop Forecasters in Perth.

Western Australia produced around a third of the 26 million tons of wheat and 10.8 million tons of barley harvested nationwide in the 2023/24 season and nearly half the 5.7 million tons of canola, government data show. Farmers want to plant more barley after China lifted punitive tariffs on Australian barley last year, adding to demand, said Commonwealth Bank analyst Dennis Voznesenski.

Australia's barley exports rose to a record monthly high of 1.3 million tons in December, of which 90% went to China. China has also boosted purchases of Australian wheat in recent years, though some cargoes have been cancelled in the last few months due to a drop in global prices.

IKON Commodities, Commonwealth Bank and Australian Crop Forecasters predict wheat production of 29.5 million-29.9 million tons in 2024/25, with brokers StoneX expecting around 26 million tons and consultants Episode 3 around 27 million-27.5 million tons. For barley, Commonwealth Bank raised its forecast by around 100,000 tons to 12.8 million tons and Episode 3 predicts a 11.5 million-12 million ton harvest.

For canola, Commonwealth Bank cut its forecast by around 750,000 tons to 5 million tons and IKON said the harvest could be as low as 4.6 million tons. Most Australian canola is shipped to Europe to be made into biofuel.

Below average rainfall is expected across most cropping areas in coming months but if a La Nina weather phenomenon forms later in 2024 this could bring wetter conditions to eastern Australia. "The success of crops is largely about what happens with the weather in June-to-September," said Episode 3 analyst Andrew Whitelaw.

"The prospect of La Nina gives us more confidence," he said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)