Canadian farmers should not count on another year of reprieve from one of their biggest competitors, says a market analyst.
Weather conditions are finally starting to improve in Australia after three years of devastating drought.
“Next year, I would expect to see more competition from Australia if the current atmospheric conditions hold,” said MarketsFarm analyst Bruce Burnett.
Australia’s Bureau of Meteorology is reporting that a wet end to a hot and dry summer has provided some relief to parched eastern Australia.
“The rainfall helped contain many of the long-lived bushfires in the east and helped ease drought conditions in some locations,” bureau climatologist Andrew Watkins said in a recent news release.
“But many inland regions experienced only patchy rainfall and we still need to see sustained rainfall to relieve drought in many areas.”
Drew Lerner, president of World Weather Inc., agrees with that assessment. Australia’s drought is far from over but it has been “significantly eased” in some regions, such as Queensland where there has been a huge upswing in purchases of young cattle.
“The ranchers are convinced that they are moving in the right direction,” he said.
Lerner said there has been periodic rainfall in some regions of the country that is above normal but normal is minimal at this time of year.
“If you look at a percent of normal map you’re going to say, ‘Oh, the drought is over.’ But the reality is the volume of rain was not enough,” he said.
The good news for Australian farmers is there are no weather factors on the horizon that would prevent rainfall.
“The door is open wide for us to have a normal autumn. That doesn’t mean it’s going to happen but the situation looks good right now,” said Lerner.
There are some signals that a La Nina could develop in late 2020, which could finally “put the nail in the coffin” for Australia’s three-year drought.
“La Nina loves to make rain in eastern Australia,” he said.
One-third of the country has experienced serious or severe rainfall deficiencies over the past three years, with the most-affected regions receiving about half the normal rainfall over that period.
“Last year was Australia’s driest on record, intensifying one of the most severe droughts of the past century,” the bureau said in a news release.
“At the end of 2019, soil moisture reserves across large parts of the country were close to zero.”
A positive Indian Ocean Dipole fueled the extreme dryness in Australia during the last half of 2019. But that event has finished and the dipole is expected to remain neutral in the coming months as is the El Nino-Southern Oscillation.
“The prospects for precipitation as they get into the fall and winter have improved,” said Burnett.
If Australia receives normal precipitation in the coming months that will help build up depleted soil moisture reserves but they will likely still be below normal.
“It would probably be too much to expect to get it all back in one year or one season,” he said.
Australian farmers will start planting their winter wheat crop in about one month.
Farmers harvested 15.2 million tonnes of wheat last year, which is less than half of the 2016-17 record crop of 31.8 million tonnes.
The country is expected to export a paltry eight million tonnes of wheat, down from the record of 24.7 million tonnes in 2011-12.
That has resulted in vastly reduced competition for Canadian wheat in Asian markets. In fact, Australia has become a top-10 importer of Canadian wheat, which is extremely unusual.
Canada has also been facing reduced competition from Australian barley, canola and pulses in international markets.
The Australian government is forecasting a 40 percent increase in wheat production to 21.3 million tonnes in 2020-21.