Australia, the world's second-largest wheat exporter, is preparing to significantly lower its wheat production forecast for the 2023/24 season as the El Niño weather pattern triggers drought that hurts yields.
Adjusting the forecast would reduce global wheat supplies, which are already struggling due to low yields in exporting countries.
Australia is a key supplier to key buyers such as China, Indonesia and Japan and plays a crucial role in the global wheat market. The intensification of the El Niño phenomenon has led to a prolonged drought after an already record-breakingly warm winter.
El Niño and the resulting drought pose a serious threat to food producers across Asia. Australian Wheat and palm oil and rice production in Southeast Asia are particularly vulnerable to these climatic challenges.
Brokerage firm IKON Commodities expects the harvest to be more than 10 million tonnes lower than last year, calling it a “significant loss”.
Market experts and traders expect the Australian Bureau of Agricultural and Resource Economics and Science (Abares) to revise its initial forecast for June production of 26,2 million tonnes by about 1 million tonnes. This forecast represents a 34% decline in production compared to the previous year.
The downward revision comes against the backdrop of three consecutive record harvests in Australia, driven by heavy rainfall.
Unfavorable weather conditions could push global wheat stocks among major exporters to their lowest level in more than a decade, according to a Reuters analysis. This trend falls e.gusammen that Canada, the world's fourth largest wheat exporter, recently announced production cuts due to the dry weather.
Argentina's crops are also suffering from unfavorable weather conditions, while heavy rains have affected wheat production in China.
A Singapore-based trader who supplies Australian wheat to importers in Asia said Australia's crop was likely to be below 25 million tonnes as the weather was hot and dry, particularly on the east coast and parts of Western Australia.
World market prices for wheat have fallen by 25% this year, largely due to high supply from Russia.
Source: Ukragroconsult (Ukraine)