Why it matters: Australia is a major export competitor with Canadian grain into Asian markets

In a quarterly crop report for December, the government’s ABARES agency also lifted its projections for Australia’s barley harvest by around 1.1 million tonnes to 15.7 million tonnes and canola production by around 800,000 tonnes to 7.2 million tonnes.

Australia is one of the world’s biggest exporters of all three crops and is roughly halfway through its 2025/26 harvest. Wheat is used mainly for milling into flour, barley for animal feed and canola, or rapeseed, to crush for oil.

Plentiful supply helped push benchmark Chicago wheat futures in October to their lowest level since 2020. Barley and canola prices are holding up better, with barley in particular having more supportive supply-demand fundamentals.

“National winter crop production has been revised higher,” said ABARES, which stands for the Australian Bureau of Agricultural and Resource Economics and Sciences.

It said this was due to timely spring rainfall at critical growth stages and mild spring temperatures in most cropping regions.

Wheat production is now set to be four per cent above last year’s 34.1 million tonnes, 29 per cent above the 10-year average and the third-largest for any season on record, according to ABARES.

Barley output should come in 18 per cent above 2024/25’s 13.3 million tonnes, 33 per cent above the 10-year average and be the biggest ever.

The canola harvest is on track to be the second-largest on record, beating last year’s 6.4 million tonnes by 13 per cent and the 10-year average by a whopping 50 per cent, ABARES said.

The median estimates of five analysts just before ABARES published its numbers were for Australia to produce 36.1 million tonnes of wheat, 15.75 million tonnes of barley and 6.9 million tonnes of canola this season.

ABARES also issued forecasts for Australia’s summer crops, saying the country should produce 2.6 million tonnes of sorghum in the upcoming harvest, down four per cent from 2024/25, 943,000 tonnes of cotton lint, 23 per cent less than last season, and 178,000 tonnes of rice, down 66 per cent.

The sharp falls for cotton and rice are due to the lower availability of irrigation water, it said.

— Reporting by Peter Hobson

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In its September quarterly outlook, ABARES forecast 2025/26 canola production in the country at 6.45 million tonnes, which would be up by 0.8 per cent on the year despite a 1.7 per cent decline in seeded area as yields improved. If realized, canola production would be 34 per cent above the 10-year average.

For wheat, Australian production is forecast at 33.77 million tonnes, which would be down by 1.0 per cent on the year by still the fourth-largest crop on record and 22 per cent above the 10-year average.

Barley production is estimated to rise 9.7 per cent from 2024/25 at 14.55 million tonnes, which would be 23 per cent above the 10-year average.

Australia’s winter crops are typically harvested in the country’s summer months, from September through December.

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As well, ABARES noted the higher production would also be nine per cent above the 10-year average of 47.0 million tonnes and come in as the country’s fifth-largest harvest on record.

In comparison, Australia’s summer crops are to reap 4.6 million tonnes in 2023/24, down 11 per cent from the previous year.

ABARES pointed to improved conditions in the Queensland and New South Wales states for much of the greater winter output due to the above-average rainfall during Australia’s summer. The agency noted the autumn rains for the western parts of Victoria, along with South Australia and Western Australia were below average. Crops in those states will require sufficient rains in June for good germination and establishment.

The long-range weather outlook for the country called for a 40 to 60 per cent chance of above-average winter rains for Queensland, New South Wales, Victoria, and South Australia. There’s a 50 to 75 per cent chance for Western Australia to get above-average precipitation.

Coupled with Australia’s forecast for above-average output, ABARES projected planted area to reach 23.6 million hectares, which would six per cent greater than the 10-year average.

The country’s total wheat area is projected to bump up three per cent from 2023/24 at 12.7 million hectares. That’s to garner 29.1 million tonnes of wheat, which would make it Australia’s sixth-largest wheat crop. It would also be up 12 per cent from 2023/24 and 10 per cent more than its 10-year average.

Australia’s barley area is also to expand by three per cent at 4.3 million hectares, with its output projected to be 11.5 million tonnes in 2024/25 to be the fifth-best harvest. As well, it would improve on last year’s crop by seven per cent and be two per cent above the 10-year average.

Total pulse area is to rise 17 per cent at 2.5 million hectares, led by lentils at a record 885,000 hectares and chickpea area ballooning 80 per cent at 730,000. ABARES forecast lentils at 1.6 million tonnes, which would be about the same as the previous harvest, and 10 per cent greater than the 10-year average. Chickpeas are to come in at 1.1 million tonnes, skyrocketing 133 per cent from 2023/24 and 46 per cent above the 10-year average.

On the downside, the country’s canola is to contract nine per cent in 2024/25 at 3.2 million hectares due to reduced financial returns with farmers switching to the above crops. Australia’s canola output is to drop five per cent from last year at 5.4 million tonnes, but as the fourth-largest crop, it’s to come in 21 per cent above the 10-year average.

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Total 2023/24 winter crop production in Australia, at an estimated 46.1 million tonnes, was up from the September estimate of 45.2 million tonnes but still 33 per cent off the record highs hit last year. 

The national winter crop harvest was reportedly progressing earlier and at a much faster pace than in recent years. The earlier start to harvest reflects hot and dry finishing conditions in Queensland, northern New South Wales, South Australia and Western Australia, according to ABARES.

However, much of eastern Australia recorded significant rainfall totals in late November 2023, which delayed harvest operations in the region and likely led to reduced quality of unharvested crops.

Total canola production in Australia is now forecast at 5.5 million tonnes, which would be up by 300,000 tonnes from the September estimate, but 33 per cent below last year’s record crop.

Barley production is forecast at 10.8 million tonnes, which would be down 24 per cent on the year and four per cent below the 10-year average but still up from the 10.5 million tonnes forecast in September.

Australia’s 2023/24 wheat crop is projected to be 25.5 million tonnes by ABARES, up by 100,000 from the September forecast and 37 per cent lower on the year.

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.

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Persistent dry conditions in northern growing regions cut into yield prospects, although southern regions received better-than-expected rainfall which helped crops there, according to the report.

Total canola production in the country is now forecast at 5.2 million tonnes, which would be up by 300,000 tonnes from the June estimate, but well below the 8.3 million tonnes grown in 2022-23.

Barley production is forecast at 10.5 million tonnes, which would be down 26 per cent on the year and six per cent below the 10-year average but still up from the 9.9 million tonnes forecast in June.

Australia’s 2023-24 wheat crop is projected to be 25.4 million tonnes by ABARES, down by 200,000 from the June forecast and 36 per cent lower on the year.

“While El Niño is expected to develop and reduce production prospects, the extent to which it influences Australian rainfall and temperatures presents a key downside risk to the outlook,” the ABARES report said.

“Analysis of past El Niño events suggests that climate impacts can be variable. If conditions are even drier and hotter than expected, this is likely to see crop prospects deteriorate further in regions where winter crops have little soil moisture.”

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Total seeded wheat area in the country is only forecast to be down by two per cent on the year, at 12.8 million hectares. However, production is forecast to drop by 34 per cent to 26.2 million tonnes which would be slightly below the 10-year average.

Canola seedings are forecast to be down by 11 per cent on the year but would still mark the second-largest Australian canola acreage base on record at 3.5 million hectares. Production of the oilseed is forecast to drop by 41 per cent on the year but would still be above the 10-year average at 4.9 million tonnes.

While wheat and canola seedings will be down on the year, some of that lost area will go into barley, “largely because of the crop’s ability to withstand drier conditions compared to wheat and canola.” Area planted to barley is forecast to increase by four per cent to 4.3 million hectares.

However, barley production is also forecast to be down by 30 per cent on the year due to the expected dryness, at 9.9 million tonnes.

In addition to the dryness concerns, increased mouse activity in many cropping regions has resulted in growers undertaking more baiting this season, according to the report. “The delayed and difficult harvest of the record 2022-23 winter crop led to greater grain loss than usual,” said ABARES, adding “dry summer conditions meant that grain left on the ground did not germinate, increasing food availability for mice. These conditions have been favourable for breeding, resulting in a resurgence of mice.”

On-farm pest management limited damage to winter crop plantings and development in affected regions so far, with national production not expected to be significantly affected by the mouse activity at this point.

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USDA’s Global Agricultural Information Network (GAIN) office in Canberra pegged Australia’s wheat production for 2022-23 at 37 million tonnes, 400,000 more than the official USDA estimate. In comparison, the Australian Bureau of Agriculture and Resource Economics (ABARES) placed the wheat harvest at 36.6 million tonnes.

If the USDA attaché’s forecast is realized, the wheat harvest would be the largest on record. Near-ideal growing conditions in the states of Western Australia and South Australia were cited for the sizeable crop, but excessive rainfall in New South Wales and Victoria took some of the shine off of this year’s production.

The Australian Bureau of Agriculture and Resource Economics (ABARES) placed the wheat harvest at 36.6 million tonnes.

The attaché also bumped up Australia’s wheat exports for 2022-23 at 28 million, which would be 500,000 more than the department’s official call. Total domestic consumption was trimmed by 50,000 tonnes at 8.5 million. In the end, the attaché’s wheat carryover came to 4.261 million tonnes, only 10,000 more than USDA has forecast.

When it came to Canadian wheat production for 2022-23, the USDA attaché in Ottawa was virtually in line with the department’s current estimates. The report noted the much-improved growing conditions on the Canadian Prairies compared to the previous year.

The most notable exception in the attaché’s estimates was a 50,000-tonne decrease in total supply at 38.047 million — the difference being a small decrease in wheat imports, pegged at 550,000 tonnes.

Also, total domestic usage was trimmed by 3,000 tonnes at 8.447 million. This resulted in ending stocks being trimmed to 3.6 million tonnes.

Agriculture and Agri-Food Canada (AAFC) placed total supply for 2022-23 all wheat at 37.622 million tonnes, imports at 125,000, domestic usage at 9.022 million, and the carryout at 4.7 million.

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