Opinion

La Niña Showers Australian Grain Industry With Mixed Fortunes

Wheat
Australia
Published Mar 31, 2021
According to Australia’s weather bureau, the La Nina that persisted for six months, yielding more significant rainfall and cooler than average temperatures across the country’s east coast, has subsided. While the event has been blamed for the recent devastating floods across Australia’s east coast earlier this month that hampered wheat trade from the region, the wetter weather also drove record wheat production during the 2020/21 season. In the long run, the rainfall may improve the soil moisture conditions for the winter planting period as seeds sown in wet soil typically have better yield prospects.

Record-breaking wheat crop for 2020/21 season

According to a report published by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Australia is projected to have produced the largest wheat crop on record in 2020–21 (October-September) due to the favorable weather conditions, specifically in New South Wales, Victoria, and South Australia. Wheat exports for Australia in 2020-21 are projected to reach 21 million MT, the highest since 2016–17 and 22% more than the 10-year average to 2019–20.

Australian wheat production, exports, and closing stocks, 2000–01 to 2025–26


Source: ABARES

Supply chain hiccups and damage to summer crops

The heaviest rainfall and flooding were experienced in the east of the Great Dividing Range, a mountain range along the east coast, while most of the wheat production is to the west, leading to supply chain issues. Producers face logistical challenges delivering grain from inland to local end-users in the rest of the country, as major highways have been blocked off. There were also delays in export cargoes as it was difficult to load during the rains. Trains were halted, and ships were unable to enter Newcastle harbor, causing further delays.

Sorghum, a summer crop in Australia, is currently being harvested, and fields close to the rivers and waterways are partially washed out, causing damage to the crops. Some crops could still witness a more significant impact, and there is still the probability of floods around the rivers. However, all things considered, the recent heavy rainfall has been welcomed as the devastated area has been outside of the production regions.


Source: Reuters

Impact on winter planting  

Since most of the grain-growing regions have avoided the devastating flooding east of the range, the news is mostly positive for winter planting. Coastal areas have been most affected by the heavy floods, with the inland planting zones obtaining rainfall of up to 100 mm, which has not resulted in much harm but instead improved the soil moisture profile ahead of the planting window. It is currently too wet to begin planting. Therefore, producers are likely to start sowing in April.

Sources:

> Reuters. “La Nina has ended, Australian weather bureau says.

> S&P Global Platts. “Australian rains seen briefly hampering wheat supply chain: sources.

> Department of Agriculture, Water, and the Environment. “Wheat: March quarter 2021.

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