IGC predicts the global wheat glut could ease

The International Grain Council expects the global wheat harvest area to contract by 1pc in 2018/19.

Australian farmers are suffering from the surplus of global wheat supplies, but a preliminary outlook into the 2018/19 season offers reason for measured optimism.

In its latest monthly forecasts, the International Grain Council said it expected the global wheat harvest area to contract by 1 per cent in 2018/19, as farmers react to the low prices.

Global wheat production has climbed rapidly in recent years, from 717 million tonnes in 2013/14 to last year’s 757mt. World wheat production highs were progressively raised over the past five seasons, but this pattern may be about to end, according to IGC.

The Council projected a 2pc decline in world wheat production to 742mt, down from 757mt in the 2017/18 season, assuming a return to average yields. IGC sees continued robust growth in food demand for wheat with record demand into Asia and Africa, with world trade projected at a new peak.

Although it’s still early days for the world 2018/19 season, IGC projected the first stock declines in six years is possible, mainly in the major exporting countries. It said global would stocks would shrink by around 6mt to 248mt, under the average yield and stronger demand assumptions.

It’s premature to get excited about global wheat prices. A stock contraction of 6mt is modest given that global stocks have soared by more than 80mt since 2012/13, but it would be a step in the right direction.

Local summer crop conditions remain challenging with no end in sight to the hot, dry weather pattern. Temperatures continued to hover in the low to mid-30s last week, but it’s the lack of rain that is the major concern.

Central Queensland farmers are waiting for more rain to finish planting sorghum. Some crop was seeded on the early January rain but many farmers are looking for follow-up to complete seeding. Sorghum plantings are expected to be up on last year as farmers swing away from chickpeas.

Southern Queensland farmers are also desperate for rain to avoid potential yield declines. Crop conditions across the Darling Downs remain variable by the nature of the scattered storms in late December. Farmers are looking at well above average yields in the best of the crops, while the drier areas are struggling.

Some late sorghum has been planted on patchy rain in the past fortnight but overall plantings have been small.

Weather forecasts are showing no sign of an easing in the dry weather, with limited chances of any significant rain in the last week of January.

Sorghum prices continued to strengthen last week as traders move to cover in earlier sales. New crop bids for sorghum delivered into Brisbane were $10 higher for the week at $285. The new crop sorghum prices into Brisbane have rallied by $20 a tonne in the past three weeks.

Comparatively, northern wheat markets have only edged higher in the past month. Darling Downs stockfeed wheat prices were $1 higher last week at $323 delivered and is up $6 in the past month.

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