After drought, monster storm threatens Australia's wheat crop

SYDNEY/SINGAPORE (Reuters) - Heavy rains in eastern Australia forecast to intensify over the weekend are threatening to wipe out or damage up to 4 million tonnes of wheat due to be harvested soon, with many grain storage sites forced to close.

Harvesting machinery can be seen behind a wheat crop in a paddock located on the outskirts of the South Australian town of Jamestown, in Australia, December 1, 2017. REUTERS/David Gray

Most of the state of Victoria and parts of the states of South Australia and New South Wales were facing a “major weather event” in coming days from torrential rains, forecasters said.

Australian farmers have had a tough wheat growing season. A severe drought earlier in the year reduced yields, with the world’s fourth-largest wheat exporter now set to harvest its smallest crop in a decade.

Australia’s past winter, which runs from June to September, was the warmest since records began more than a century ago. It was also among the nation’s 10 driest seasons ever.

Globally, there is no shortage of wheat. The U.S. Department of Agriculture estimates world inventories will stand at a record 267.53 million tonnes at the end of the current crop year in June 2018.

Chicago Board of Trade December wheat futures hit a contract low on Tuesday and were trading at $4.09-1/4 per bushel on Friday.


Around 50 percent of the wheat crop has been harvested in South Australia, but in Victoria and southern parts of New South Wales only about 30 percent of the crop has been gathered, according to analysts.

“The main concern is that these are the areas where crops are still being harvested,” said James Maxwell of Australian Crop Forecasters, which expects to lower its national wheat harvest forecast of 21.7 million tonnes once the damage is assessed.

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“At the moment, we estimate that around 4 million tonnes will be affected,” he said.

Growers were selectively harvesting their highest-quality grains in order to maximize returns on what they could salvage.

Australia’s largest listed bulk grain handler, GrainCorp, said many storage sites across Victoria state remain closed due to the weather.

In some cases, silos were being utilized in-between heavy rains and strong winds to receive grains.

More than 300 mm (11.8 inches) of rain is forecast by the Bureau of Meteorology to fall across all parts of Victoria state on Friday alone.

“GrainCorp is closely monitoring the situation to ensure we resume operations as soon as possible once it is safe to do so,” the handler said in a statement to Reuters.

Victoria state alone could see the loss or damage of up to 1.7 million tonnes, according to Maxwell.

In New South Wales and South Australia, the combined figure for losses and damage could be as high as 1.9 million tonnes, Maxwell said.

Bureau of Meteorology forecaster Scott Williams said the rain would fall heavy and fast, with the potential of more than 50 mm in just an hour.

Rainfall in excess of 250 mm is forecast by the Bureau of Meteorology for parts of eastern Victoria, with the overall state expected to see more than 60 mm.

Prices for wheat from Australia’s East Coast have risen by about A$10 a ton to around A$280 ($212) a ton this week, reflecting a premium for the risk to crops, said analysts.

“We fear more of a quality downgrade rather yield losses,” said Brett Cooper, Asia head of agricultural commodities at brokerage INTL FCStone in Sydney.

“There could be more feed quality wheat and that will support global high-protein wheat prices.”

Reporting by James Regan in SYDNEY and Naveen Thukral in SINGAPORE; Editing by Christian Schmollinger and Tom Hogue