Four weeks of very little rain is not what a wheat crop needs in late August and into September, but that is what some southern crops have endured. Over the past week spring rains finally arrived, reviving yield hopes across SA and a lot of Victoria, and topping up large parts of the central west in NSW.
The rains that swept across SA and Victoria have rebuilt yield potential that had been lost from August 23 to September 20, when very little rain fell over much of the southern cropping belt during that period.
Yield potential is now sitting close to where it was at the end of August. With good follow-up rains for NSW in September, and even rainfall totals of 10 to 25 millimetres or more across the bulk of the WA cropping belt, we are one step closer to locking in the large wheat crop forecast for Australia this year.
For many NSW producers this will be the first decent crop in four years, but now the concerns are turning to the forecasts for above average rains for October and November. It is a nervous time as too much rain too late in the season may impact harvest, and particularly the quality of the crop.
That is all ahead of us of course, but right now the bulk of the country, particularly outside of WA, is finally enjoying spring rainfall that will lock in a lot of the yield potential that had existed as we came out of winter. In some regions yield potential will have actually increased.
We can expect the international markets to watch what is happening here, along with Argentina. Australia and Argentina are pencilled in to have combined exports of 32.5 million tonnes in 2020/21. That makes the southern hemisphere exportable surplus important for world trade, which is expected to total 189.44mt.
Any talk of rain in Argentina to relieve drought conditions, or increased production from Australia if our spring now continues strongly, could be a weakening factor for global wheat prices.
However, the real concerns at the moment are soil moisture levels for the key northern hemisphere winter wheat crops that are currently being planted.
The dryness in Russia is slowing the pace of current selling by Russian farmers and underpinning the gain in prices for Russian wheat into key Middle East export markets.
The worst case scenario would be drought relieving rains in Europe and the Black Sea, combining with growing production estimates for Argentina and Australia. That is pretty close to where we sat for the start of this week.
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