NAB forecasts 34% drop in Australian wheat

National Australia Bank says below average rainfall this winter will result in a 33.8 percent drop in the Australian wheat crop.

“While this decline appears to be substantial, given last season broke the previous record crop by over six million tons, it was always unlikely that this figure would be matched,” NAB said in its latest wheat production outlook report released earlier this month. The bank is forecasting a total crop size of 23.3 million tons.

NAB’s latest forecast is a downward revision following the release of June rainfall data “showing just how severe the rainfall deficits were last month.” Prior to that, NAB’s estimate of 24.4 million tons was in line with the Australian Bureau of Agricultural and Resource Economics and Sciences, which in mid-June had said it expected wheat production to reach 24.2 million tons in the 2017-18 season.

“While down on the record production of 2016-17, the latest estimates still paint a positive picture for Australia’s cropping sector, with winter crop production forecast to be around the five year average to 2015-16,” Peter Gooday, acting ABARES executive director, said in a statement at the time.

However, NAB said decent rainfall is “desperately needed” if wheat yields are to reach average levels.

“While the El Niño outlook has moderated significantly over the past few months, the Bureau of Meteorology’s latest forecasts still point to drier than average conditions across most of Australia’s wheat regions for the remainder of winter and into spring,” NAB said.