CANBERRA: Australia’s huge wheat market in Indonesia has climbed in value again to be worth more than $1.4 billion in 2014-15 – well ahead of our next biggest wheat buyers Japan and China.
Although wheat is our only major grain commodity sold to Indonesia, the near northern neighbour consumes a healthy 14 per cent of Australia’s total grain exports according to a national crop summary from Rural Bank’s research unit, Ag Answers, That compares with China taking about 19pc of Australia’s total grain exports last financial year – a mix of wheat, barley canola and sorghum.
In fact, China’s total Australian grain purchases fell in value by $500 million to $1.9b, with wheat representing less than $300m of that total. While the value of sorghum exports to China increased more than 50pc, our barley and canola sales also slipped.
Japan has also declined in value as a grain buyer for the past three years to represent only 6pc of our overseas sales, although wheat exports remained relatively static, worth about $250m last year as barley volumes slipped by more than half. A lower Australian dollar – down from $US87 cents a year ago to around $US71c this month – has helped buffer Australian exporters’ returns from the generally restrained price trends on global markets.
Despite global wheat production heading towards a near record, Ag Answers noted current season grain prices in Australia had also rallied lately on the back of recent dry end-of-season conditions after a tough growing year for many producers, particularly in Central Queensland and Victoria.
Rural Bank and Rural Finance general manager for agribusiness Andrew Smith said expectations for the Australian crop continued to decline because of the dry and hot season. Farm earnings would, however be boosted by good yield results expected in a number of regions in NSW and Western Australia, despite drought still restraining NSW production options.
Rural Bank noted last season’s average farm cash incomes (the difference between receipts and total cash costs) had risen for South Australian and Victorian croppers to more than $300,000 and exceeded $650,000 in WA, but continued a two-year slide to about $100,000 in Queensland and dropped about $50,000 to $300,000 in NSW.
Ag Answers has tipped a 3pc lift in this season’s national wheat harvest tonnages to 24.3m tonnes for the 2015-16 season and a big 12pc rise in barley volumes to 8.8m tonnes, although patchy growing conditions and a blast of heatwave temperatures early this month could have eroded result more than first expected in Victoria and Tasmania.
Canola production forecasts dropped 14pc to 2.8m tonnes, with legume crops picking up much of the slack to help bolster the national grain harvest figure. The Ag Answers’ crop update noted the St George and Goondiwindi districts in South West Queensland had enjoyed an unusually buoyant winter with wheat and chickpeas planted fence to fence.
Consistent rainfall over four months had set the area up for typical wheat yields up to 3.5 tonnes a hectare and as high as 2.5t for chickpeas. Rural Bank’s Tom Kennedy in Adelaide said the recent spike in temperatures had hurt legume crops in South Australia, but despite the prevailing El Nino weather conditions cereal yields were expected to remain “average to good” in much of the state.
In Victoria, Rural Finance representative Dustin Lovell at Swan Hill said the dry, hot spring had slashed yield potential in half in better areas while in the southern Mallee and other districts many crops were “beyond salvage”.
