Singapore — Australia is forecast to produce 24 million mt of wheat during the 2018-2019 (October-September) harvest year, up 11.63% from last season's harvest of 21.5 million mt, the US Department of Agriculture attache report released Tuesday showed.
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The production forecast assumes an average seasonal condition over the year, with outlook appearing to be comparatively favorable, following timely rains in early 2018 that improved soil moisture.
However, given a dry April, additional rainfall is still necessary during the planting window across many regions for better crop planting and development.
"The dryness has been there for a little bit longer but it's still early days. There is still time till April 25 when planting starts," an Australia-based trader said.
"There is few more weeks to go for rain to come to the rescue and get a decent crop," another trader said.
Australian consumption of wheat was estimated at 7.3 mil mt for the 2018/19 harvest year with demand rising primarily for feed grain.
The higher domestic stock feed grain prices in April 2018 compared to the same month last, indicated the increase in feed grain demand, which was partly driven by the poor harvest last year, the report said.
As a result of the relatively higher prices for grain on the Australian market, farmers had not been in a rush to export, market sources said.
"With the dry weather persisting, you tend to find growers hanging on to any old crop," another trader based in Australia said.
USDA expects high domestic feed prices in eastern Australia to limit wheat exports from the region compared to Western Australia, which exports around 90% of its total harvest and accounts for 40% of Australia's total exports.
Australian wheat exports were forecast at 17 million mt for the 2018/19 harvest year, above current year's estimate of 16.5 million mt, due to higher production forecast.
S&P Platts assessed APW at $241.25/mt FOB Australia Tuesday, up $1.75/mt day on day, and up $15.50/mt since the start of 2018.
Although the price has stabilized in recent weeks, sellers remain bullish given limited stocks released by farmers.
Australia is the world's third largest wheat exporter, though it has been facing increasing competition recently from Black Sea wheat exports.
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