CASE STUDY ▶▶▶
Australia set for another big year of grain production
After two years of drought, Australia is set for a second year of excellent grain production.
BY NATALIE BERKHOUT, CORRESPONDENT A
After the domes- tic supply pres- sure for feed grains during the drought, Australia pro- duced a record wheat crop and a near record barley crop.
ustralia’s MY 2021/22 wheat production is forecast to be 22% higher than the previous ten-year aver- age at 29.5 million metric tonnes (mmt). If this forecast is achieved, this would be a mere 3.8 mmt
lower than the record-breaking MY 2020/21 wheat crop and the fourth highest on record for Australia. Such a harvest is due to favourable seasonal conditions across many of the grain-growing regions of the country. From this harvest, Aus- tralia is on track to achieve total exports of 23 mmt in MY 2020/21, and it is anticipated exports will remain strong in MY 2021/22 at 21.5 mmt.
Pasture production reduces demand Domestic consumption of wheat in Australia is forecast to be 7.5 mmt in MY 2021/22, 4 mmt of which comes from the feed sector. Droughts have impacted the dairy and beef cattle in- dustries, but improved rains since early 2020 have greatly in- creased pasture production and thus reduced grain demand for feedlot rations.
More barley used in feed rations The widening price gap between wheat and barley has also impacted the demand for wheat from the livestock sector.
After the domestic supply pressure for feed grains during the drought, Australia produced a record wheat crop and a near record barley crop in MY 2020/21. This has contributed to wid- ening the price gap between wheat and barley to more typical levels with a price premium of around AU$ 40 (US$ 29.60) per mt for wheat. This price differential will encourage increased use of feed barley rather than wheat. Australia’s MY 2021/22 barley production is forecast to be 10.5 mmt – 2.6 mmt below the MY 2020/21 estimate of 13.1 mmt, which was the second highest on record after 13.5 mmt in 2016/17.
China: duties impact barley exports Barley exports for MY 2021/22 are forecast to be 5 mmt, down 3 mmt from the MY 2020/21 estimate of 8 mmt. It is an- ticipated that Australian barley will face greater competition in Middle Eastern markets next year as northern hemisphere feed grain production is expected to recover. Prior to China’s commerce ministry imposing an 80.5% duty on Australian barley in May 2020, China accounted for around two-thirds of Australia’s barley exports. However, Australian barley export- ers have been able to diversify feed barley exports away from China, and Australia has exported large shipments to Saudi Arabia and significant amounts to other Middle East markets. Exports to nearby Asian market such as Thailand, Vietnam, and Japan have also risen. The Australian barley industry is mindful of the circumstances surrounding the success of di- versifying feed barley exports away from China. The industry has partly adapted by reducing the area planted with barley, replacing it with canola, taking advantage of high prices.
More production of well-priced sorghum Sorghum is very well priced compared to other feed grains, including wheat and barley, but it is generally regarded as a lower quality feed grain. Although sorghum is a summer crop, and wheat and barley are winter crops, all of them are typically sold all year round in both domestic and export mar- kets. The forecast for MY 2021/22 sorghum production is 1.6 mmt, which is around 7% above the previous ten-year aver- age. Due to increased use in feed, sorghum consumption in Australia in MY 2021/22 is forecast to be 610,000 mt, which is 300,000 mt higher than the MY 2020/21 estimate. The export forecast for sorghum in MY 2021/22 is 800,000 mt.
The information in this article has been extracted from a USDA Foreign Agricultural Service report.
34 ▶ ALL ABOUT FEED | Volume 29, No. 8, 2021
PHOTO: BELINDA FEWINGS , SCHWOAZE AND RAPHAEL RYCHETSKY
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