Postive story for RJA turns negative
Austrailian floods were thought of as bad, but new article says record crops might be the result.
2011 Toronto Star Newspapers Limited
The Toronto Star
Analysts say Australian disaster may bring massive crop outputs
January 20, 2011 Thursday
Floods to bring record wheat crop;
Rain that caused billions of dollars of destruction in Australia could propel wheat output in the fourth-largest exporter to a record next harvest and boost irrigated crops after floods swept parched land.
Heavy rains saturated soils, providing moisture for the next wheat-growing season and raising dam levels for irrigated crops such as cotton, Rabobank Groep NV analysts Wayne Gordon and Tracey Allen said Wednesday.
Rising wheat and cotton supplies from Australia may help curb global prices that soared last year on concerns that demand may outpace supply. Floods this month followed the country's wettest July-to-December on record, ending in some areas a decade-long drought and filling dams in the Murray-Darling Basin, which produces more than a third of the nation's food supply.
"It's plausible to see that we could plant and perhaps grow a record wheat crop in the coming year," Gordon said. Still, that depends on improved production in Western Australia, where drought persists, and "top-up" rains in the east, he said. The grain is mostly planted from April to June.
Wheat futures on the Chicago Board of Trade gained 47 per cent last year after Russia's worst drought in at least 50 years prompted the country to ban exports and amid concern that rains would cut milling-quality supplies from Australia. The contract reached a five-month high of $8.25 (U.S.) a bushel on Jan. 3. Cotton on ICE Futures U.S. in New York reached a record $1.5912 a pound on Dec. 21.
Australia may produce 25 million tonnes of wheat from the current harvest, the U.S. Department of Agriculture said last week. Output may reach a record 26.8 million tonnes, the Australian Bureau of Agricultural and Resource Economics and Sciences, known as Abares, estimated last month, as production in the east offset drought in the west.
The country produced 26.1 million tonnes in 2003-2004, according to Australian government data.
The bureau will update its estimate for the current harvest on Feb. 15 and release its 2011-2012 forecast on March 1.
Rainfall levels suggest Eastern Australia will produce another big crop this year, and history suggests it's unlikely Western Australia's crop will slump by the same amount for a second year, said Peter Rowe, Perth-based manager of agribusiness projects and strategy at Bankwest.
Prime Minister Julia Gillard has called the flooding in Victoria, Queensland and New South Wales was Australia's biggest natural disaster in economic terms. Rebuilding may cost as much as $20 billion (U.S.), or about 1.5 per cent of gross domestic product, economists from Australia & New Zealand Banking Group Ltd. Wrote.
Queensland Premier Anna Bligh has said the state's death toll could be as high as 32, and that 2.1 million people had been affected. The floods disrupted coal exports, damaged roads and rail networks and inundated farms.
The Murray-Darling Basin, which produces more than 90 per cent of Australia's cotton, had its wettest 12 months in 2010 after a record series of below-average rainfall years going back to 2001, according to the Bureau of Meteorology. Water storage's were 81 per cent full as of Jan. 12, compared with 26 per cent at the start of 2010, while dam levels outside the region have also increased.
"In terms of the longer-term benefits, we haven't seen storage's at these sort of levels for probably more than a decade," said Rabobank's Allen. "Across the basin it is security for irrigators moving into the next few seasons."
