Dryness Lifts Australian Wheat Quality Even as Output Drops
Dry weather during the growing season has impacted Australia’s wheat production this year, resulting in a decrease in output. However, analysts and traders have pointed out that the majority of the crop has higher protein content, and limited supplies of lower quality grains for animal feed. Farmers in Australia, the second-largest wheat exporter globally, are expected to earn premiums for their higher quality grains, helping to offset some of the lost income from the smaller crop.
In recent years, Australia has experienced abundant rainfall, leading to record-breaking wheat harvests of around 40 million tons last year. However, hot and dry weather conditions during this growing season have reduced the crop to an estimated 25-28 million tons.
Despite the lower yields, the overall quality of Australia’s wheat crop has improved compared to previous years. A Singapore-based trader, whose company sells Australian wheat to China and Southeast Asia, explained that With lower yields, protein scales are usually better, resulting in top-quality milling wheat for importers. The dry and hot weather has accelerated the harvest, which is already more than half complete, according to Ole Houe at agriculture brokerage IKON Commodities in Sydney.
IKON estimates that approximately 60% of Australia’s wheat crop will consist of hard or premium white wheat with a protein content above 10%, a significant increase from around 40% last year. The projected production figures indicate around 7.6 million tons of hard wheat (AH) and 7.9 million tons of premium white (APW) this year. Output of less protein-rich standard wheat (ASW) is expected to decline to approximately 7.3 million tons from 15.7 million tons, while feed wheat is set to decrease to 1.7 million tons from 4.3 million tons, as per IKON’s analysis.
As a result of the drop in Australia’s lower-quality wheat, Houe believes that grain from Russia will likely fill the void in large Asian markets such as Vietnam and Thailand.
However, recent heavy rainfall in some parts of southeastern Australia could negatively impact the quality of wheat that is yet to be harvested, warned Rod Baker at Australian Crop Forecasters.
While the dryness has caused a decrease in wheat output, the higher protein content and limited supplies of lower quality grains present an opportunity for Australian farmers. The current crop quality allows them to earn premiums for their higher quality grains, helping to offset the financial impact of the smaller harvest. However, the weather conditions and possible quality concerns for yet-to-be-harvested wheat indicate ongoing challenges in the industry.
Overall, Australia’s wheat sector remains resilient despite the fluctuations in output due to climatic factors.
