El Niño expected to bring “normal” wheat crop in Australia

The climate event will likely end Australia's period of record-breaking harvests

Early signs emerge of El Niño bringing a “normal” wheat crop in Australia. The weather pattern forming in the Pacific Ocean has raised expectations that Australian wheat output will fall back to normal levels, ending a period of record-breaking harvests. Market participants expect outputs to settle within a 25 to 30 million tonnes range, trade sources have told Fastmarkets Agriculture.

The wide expectation is that the phenomenon will bring drier and hotter weather to the continent, although thanks to the rainy conditions that have dominated the last few seasons, soil moisture levels are said to be good across most of the country for now.

The market is confident there’ll be a return to more typical production levels.

Definitely some worries; the historical production during an El Niño pattern is not very good. We have plenty of soil moisture [for now], so that will provide a buffer against an El Niño. But if I had to wager a bet, we will return to a more normal production this year, which is more like 25 million tonnes,

Nick Crundal of Australian farmer group, Agrisk Management.

Nine of the ten driest periods during June-November windows on record for eastern Australia occurred during El Niño years, with a number of severe droughts in 1982, 1994, 2002, 2006 and 2015 – all associated with this pattern.

While the last three years have seen bumper crops amid above-normal rainfalls, a fourth consecutive record-breaking harvest would have been difficult to achieve in any case.

“It’s way too early to get concerned about this year’s crop, especially with the moisture profile, but the outlook is warranting some reservations about repeating production levels anywhere near what we’ve produced in the past three years,” Crundal added.

Other Australia-based sources said that 25 million tonnes would be possible, considering the same planting areas and average yields, and for the 2023-24 season, the forecast could be even higher and up to 28-30 million tonnes, according to Ole Houe, CEO of Australia-based Ikon Commodities.

All sources agreed that the weather would have to be monitored closely, especially as planting will start by April.

“It [El Niño] has been reported as starting up, but we haven’t seen anything yet… although we have been having some hot summer days, so I feel it may be on its way. We will need to keep an eye on things in the coming weeks and months leading up to planting, which is the end of April,” a local broker said.

Australia harvested its latest record crop in the 2022-23 marketing year, with government data agency Abares pegging the bumper crop at 36.6 million tonnes in its December report.

The final figure is expected in the March report.

The USDA’s estimate stands at 38 million tonnes, while industry sources have been placing this year’s final figures higher, at up to 40-41 million tonnes.

For more information on the current wheat market, take a look at our dedicated page for wheat price forecasts.

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