Optimism increasing in Australian wheat market, amid July rains

In July, rains were reported across most regions in Australia, which saved crops in some areas that had been dry, like Victoria or South Australia, and boosted potential yields in other regions. 

That has led to increased optimism in the market about production, with current estimates for the harvest above 30 million tonnes, and the highest estimates around 33-34 million tonnes. 

“Two weeks ago I was on 33 million tonnes. This week is probably closer to 34 million tonnes. Consensus at AGIC (Australian Grain Industry Conference) last week was positive following good rains across most cropping regions, especially in South Australia and Victoria. Northern [New South Wales], southern [Queensland] and Esperance in [Western Australia] are the best,” a local trader said. 

Ole Houe, chief executive officer at Australia-based Ikon Commodities, also expects the wheat crop to be 34 million tonnes, which is up by around 2 million tonnes from previous estimates. 

For now the crop looks good, but Victoria and South Australia still need more rains during the spring (September) to maintain a good projection. 

“[Weather conditions in South Australia and Victoria] were terrible, but July rainfall was above average so it’s brought the crops in those states back to life. They will require a decent spring though, as there is very little moisture under the crops,”  Nick Crundall, CEO of the Market Check agency, said. 

“Still some soil moisture deficits in parts, but outlook is positive and think we are definitely moving to larger production. If August is kind, I expect we may see 34 million [tonnes] and higher potential,” a second trader said. 

The official estimation from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) currently stands at 30.6 million tonnes, according to the June report, which is down by 10% from a final figure of 34 million tonnes last year. The wheat harvest in Australia typically starts in late October, with harvest in full swing closer to December. 

The next ABARES update is due to be released in September. 

The USDA is also less optimistic about the wheat crop, with the current estimation for the 2025/26 marketing year output at 31 million tonnes, down from 34.1 million tonnes for 2024/25. 

However, during the same period last year, expectations for the upcoming crop were less optimistic, with general estimates in range 30-33 million tonnes, as dry weather also persisted in South Australia and Victoria. 

That was still the case at harvest time last year, with poor results in those two states that were offset by an increase in production for New South Wales and Western Australia. 

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