Australia, known for its significant contributions to the global grain market, is expected to witness a slight decline in grain production in the 2023/24 season, following a record-setting harvest in the previous year. The U.S. Department of Agriculture (USDA) predicts a decrease in wheat, barley, and sorghum production, influenced by factors such as anticipated dry conditions and farmer decisions. However, despite the decline, Australia’s grain production remains strong, and export prospects remain favorable.
Food security remains a critical concern for nations across the globe as the world population continues to grow exponentially. Amidst these challenges, Australia has emerged as a pivotal player in ensuring global food security through its significant grain production and robust exports.
Australia possesses several natural advantages that have elevated its importance in global food security. Vast expanses of arable land, favorable climate conditions, and advanced agricultural practices contribute to its agricultural prowess. Additionally, the nation’s stringent biosecurity measures and commitment to sustainable farming practices have established Australia as a reliable source of high-quality food products.
Australia’s grain industry stands as a thriving pillar of the country’s agricultural sector, playing a vital role in both domestic food security and global food supply. Australia’s abundance of arable land and favorable climate make it an agricultural powerhouse, often referred to as the “breadbasket of the south.” The nation’s grain industry boasts a wide range of crops, including wheat, barley, canola, oats, sorghum, and pulses. These crops flourish across different regions, with wheat being the most prominent. Its grain production is characterized by efficient cultivation techniques, advanced technology adoption, and innovative research and development.
The nation consistently ranks among the world’s top grain exporters, supplying major markets across Asia, the Middle East, and Africa. These exports not only meet the growing demand for staple food items but also support livestock feed, contributing to protein availability worldwide. Australia’s geographical proximity to Asia presents a strategic advantage for meeting the continent’s increasing food demands. Rapidly growing populations, particularly in countries like China and India, have created a substantial need for grain imports. Australia’s reliability as a supplier, combined with its high-quality grains, positions it as a crucial partner in securing food for the region.
WHEAT PRODUCTION AND EXPORTS
Australia’s wheat production is of paramount importance to global food security. With consistently high yields and superior quality, Australian wheat is sought after worldwide. The country’s wheat industry is driven by innovative farming practices, advanced plant breeding, and ongoing research to enhance productivity and adaptability to changing climate conditions.
The USDA forecasts Australian wheat production in MY 2023/24 to reach 29 million metric tons (MMT), down from the record-breaking 39.2 MMT in the previous year. Favorable soil moisture conditions and early autumn rains provide a positive start for wheat planting, but the forecast for below-average rains in the coming months may affect yields. Wheat consumption is expected to remain stable at 8.5 MMT, with no significant changes in livestock feed and milling usage.
Australia’s wheat exports are forecasted to decline to 23 MMT in the 2023/24 season, reflecting a 7-MMT decrease from the record export program of 30 MMT in the previous year. Despite the decline, this export volume would still be the fifth largest on record. The decrease in exports primarily stems from the expected decline in production. However, the availability of carry-in stocks and firm global demand are expected to support export levels. Key export destinations include China, South Korea, Indonesia, and the Philippines.
Australian wheat, barley, and canola typically are exported through the same ports and at similar times. Although typically Australian export and port capacity is more than sufficient to meet export requirements, the combination of strong global demand and record production of wheat and canola in MY 2022/23, along with near-record production of barley, is resulting in sales pushing logistical export capacity to its limits. In the past, between 4-4.5 MMT of monthly exports of these crops was the peak that could be shipped, but in February this level had been surpassed and reached 4.6 MMT. The main logistical bottleneck has been the transporting of grains from Western Australian regional receival points to port, and there has been substantial investments in upgrading some of these points over the last year or two.
Australia’s ending stocks of wheat in 2023/24 are anticipated to decline with lower anticipated production, expected firm global demand, and strong export momentum carrying into the forecast year from 2022/23. USDA forecasts MY 2023/24 ending stocks to decline from 4.3 MMT to 2 MMT.
Record-busting wheat production along with estimated record exports for 2022/23, is pushing the limits of port export capacity which is anticipated to result in a rise in ending stocks for this year. With lower but still firm world wheat prices, it is anticipated that the high monthly export momentum will carry through into MY 2023/24, resulting in a reduction in wheat inventory in the forecast year.