Running on Empty: Australian 2018/19 Winter Crop Production Outlook

"This is because, for vast regions of the east coast, there will be no harvest, and where there is a harvest, yields will be anywhere between 30% and 50% down on average," says Wes Lefroy – Agricultural Analyst at Rabobank. "Late, to no, season opening rains, below-average to lowest on average in-season rainfall and above-average temperatures, have been coupled with damaging frosts to reduce harvest volumes and affect grain quality."

Record prices will soften the financial impacts for some growers

As the ‘fuel’ warning light has come on across the east coast and new crop prospects deteriorated, Australian grain prices have moved higher. Record price highs for cereals and canola have been reached at all major ports, driven by this local supply deficit, and are at record basis levels over international prices. These higher prices, which we expect to hold well into 2019, will offset lower yields for some growers, though for many with greater reduced yield prospects, or no prospects, these higher prices will deliver little solace.

Domestic exports will continue well into 2019

Higher east coast pricing has drawn grain supplies from Victoria, SA and Western Australia to the driest regions of the east coast.

Australian grain exports will again fall in 2018/19

Low supply, sustained high-level local demand and the resulting high basis over world prices will limit Australia’s export volumes in 2018/19. We expect wheat exports of 8.9m tonnes, barley of 3.5m tonnes, and canola of just 1.5m tonnes, down 52 percent, 48 percent and 49 percent respectively on average.

Co-author: Wesley Lefroy