Dryness lifts Australian wheat quality even as output drops

Dry weather in the growing season has reduced Australia’s wheat output this year, but most of the crop is with higher protein content and supplies of lower quality grains for animal feed are limited, analysts and traders said.

Premiums earned by farmers in Australia, the world’s No. 2 wheat exporter, for higher quality grains will partly offset lost income from a smaller crop, they said.

Plentiful rain in 2021 and 2022 saw Australia reap record quantities of wheat, with around 40 million tons harvested last year. Hot and dry weather this growing season has cut the crop to around 25-28 million tons.

“Australia’s overall crop quality is better than what we have seen in the last few years,” said a Singapore-based trader whose company sells Australian wheat to China and Southeast Asia.

“With lower yields, protein scales are usually better,” he said. “Importers will get top quality milling wheat.”

The dry and hot weather has brought forward the harvest, which is already more than half complete, said Ole Houe at agriculture brokerage IKON Commodities in Sydney.

Around 60% of the crop in Australia will be hard or premium white wheat with a protein content above 10%, up from around 40% last year, IKON estimates.

Australia is set to produce around 7.6 million tons of hard wheat (AH), up from 6.1 million tons in 2022, and 7.9 million tons of premium white (APW), roughly unchanged from last year, according to IKON.

Output of less protein-rich standard wheat (ASW) is likely to fall to around 7.3 million tons from 15.7 million tons and feed wheat is set to dip to 1.7 million tons from 4.3 million tones, it said.

Grain from Russia will likely replace Australian lower-quality wheat in large Asian markets such as Vietnam and Thailand, Houe said.

However, heavy rainfall in parts of southeastern Australia this month could depress quality in wheat which is yet to be harvested, said Rod Baker at Australian Crop Forecasters.

Tags: drought, crop forecast, grain quality, Australia