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Australian Bureau of Agricultural and Resource Economics and Sciences (ABARE) June crop report released Tuesday forecasts Australia to produce 21.9 million mt of wheat in the 2018-19 (October-September) season, up 3% from 21.2 million mt in the previous season.

Australian Wheat markets

ABARE made the forecast despite a slight drop in acreage due to constrained planting intention from dry weather,  also there is the assumption for timely and sufficient winter rainfall, particularly in areas where below average winter rainfall is likely. ]\

Australia experienced it's  third-driest May on record with June expected to be drier than average for most the country, according to the Bureau of Meteorology.

"Although the outlook for 2018-19 winter rainfall is currently unfavorable, it is still very early in the 2018-19 season and below average winter rainfall that is timely may be sufficient to lift yields from last year," ABARES said in its report.

Note seperately the US Department of Agriculture (USDA) released it's supply-demand crop forecast Tuesday with Australian wheat production higher at 24 million mt and exports at 17 million mt for the 2018-2019 harvest season.

The April to July planting season in Australia's wheat belt has been hit by drought and insufficient rainfall. The largest wheat exporting state in Australia is Western Australia and wheat production is forecast to increase by 2% to 8.1 million mt, though again this is dependant on timely and sufficient rainfall. The high domestic feed grain prices are expected to incentivise planting of cereal crops where suitable but the rain is expected to limit winter planting intentions on the Australian east Coast ABARE said.

The Victorian forecast shows production falling by 23% as yields are assumed to fall from last year because of unfavorable seasonal conditions. If domestic feed grain prices remain strong, Asian exports have little choice but to continue competing with domestic demand to secure their grains, Platts said.

Liquidity of Australian wheat on an FOB basis for exports have thinned considerably, as farmers continue to hold on to existing stocks awaiting further clarity on new crop yield, Platts said.

Australian Standard White, have also tightened as the season comes close to its end. Platts APW wheat was assessed at $257/mt FOB Kwinana Tuesday, the highest year to date and a 10-month high.

'Meanwhile, a notable decrease in the global wheat supply estimate by USDA saw the US CBOT soft red winter wheat futures rally overnight. The US CBOT July futures surged by 20 cents/bushel, closing at 534.40 cents/bushel on Tuesday. USDA's estimate is attributed to lower production in Russia, which is estimated to decline by 3.5 million mt to 68.5 million mt on drier-than-normal conditions in winter wheat areas and excessive wetness in spring wheat regions. The projection is a 19% decline from last year's record 85 million mt. ' - Platts


Source: Platts

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