Australian farmers just can’t get a break.
After contending with a multi-year drought through much of the past decade, they now have too much rain as a La Nina system delivers record precipitation to many parts of eastern and southern Australia.
With good moisture during their southern hemisphere winter, many
Australian farmers were jubilant that bumper yield potential was developing. Forecasts put total wheat production at 23 to 25.5 million tonnes, close to the record of 26.1 million in 2003-04 and up from last year’s 21.7 million tonnes.
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The outlook for bumper yields in eastern production regions was expected to more than make up for the fact that in the state of Western Australia, normally the largest producer, farmers were expecting to harvest only half the normal production due to lack of rain.
But the rain in the east won’t stop. Crops have been ready to harvest for weeks but the weather prevented combines from getting out on fields.
Severe thunderstorm deluges last week brought a month’s worth of rain in a few hours in parts of New South Wales, Queensland and Victoria. South Australia was in better shape.
Heavy rain was also forecasted for this week.
The situation helped to push Minneapolis wheat futures up 11 percent last week. Also supporting wheat were worries about the dry U.S. hard red winter wheat region and severe cold in Europe and Russia that could damage crops, although the winter storms also brought snow that would insulate fall-seeded crops.
In Australia, Victorian Farmers Federation president Russell Amery toldStock and Landnewspaper that while he held out hope for wheat quality, barley in heavy rainfall areas would likely all be downgraded to feed.
On Dec. 3, Luke Mathews, a commodity strategist with Commonwealth Bank of Australia, said about three to six million tonnes of wheat had likely been downgraded to feed.
The Australian Oilseeds Federation had predicted in November that the country would produce 2.045 million tonnes of canola, up from 1.9 million tonnes last year.
The rain’s damage in canola was not yet clear, but there were reports of crops that were flattened.
Weather problems this century have made Australia an unreliable wheat supplier. Drought gripped the country from 2002 to 2008. In the most severe years, half the wheat crop was lost, with production in 2006 at only 10.6 million tonnes and in 2007 at 13 million.
This year, the La Nina, the shifting of cool water toward the east in the equatorial Pacific, is following its normal tend: delivering wetter conditions in the western Pacific and dry conditions in parts of South America, especially Argentina.
Following on the heels of production problems in the Black Sea region and Canada last summer, these new weather challenges have the potential to push grain and oilseed prices higher yet.
