Australian grain and oilseed prices have surged as much as 20 percent in recent weeks as drought threatens winter crops in eastern and southern regions, and brokers warned on Friday the market could rise further. The increases have taken domestic prices of all major grains and oilseeds to trade at premiums well above world prices. Over the past six weeks, Australian Premium White milling wheat prices have jumped 20 percent to A$215 ($163) a tonne. Prices of barley, sorghum and canola are also up by similar levels.
Brokers on Friday put the size of the domestic milling wheat premium at A$35-A$40 a tonne over world prices for multigrade wheat, with bids up to A$200, from less than A$150 over the last three months.
New-crop canola prices of around A$345 a tonne are also at a premium to world prices. With the planting window almost closed, traders are expecting a much smaller crop.
Wheat premiums are expected to rise even further if key growing regions don't get plentiful rains in coming weeks, brokers said, but added the planting window for the wheat crop would still remain open for the next four to six weeks.
"(If there is) widespread East Coast rain, then the wheat market's going to drop," Rob Imbrue of rural broker Farmarco said.
Brokers, who asked not to be identified, told Reuters that without rain, Australia's national wheat crop could easily shrink to 15 million tonnes. This is based on estimates of a good crop of around 10 million tonnes in Western Australia, around 500,000 tonnes in Queensland, and the rest mostly from South Australia.
"Western Australia has had its best start in years. It's going sensationally. The forecasts look good for rain," Imbrue said. In 2002, Australia's worst drought in 100 years had decimated the wheat crop to around 10 million tonnes.
Planting is also under way in southern and western Queensland. But virtually no planting rain has fallen to the south in New South Wales and Victoria.
Industry group Canola Association of Australia has cut its forecast of the area planted under the oilseed in New South Wales by nearly 50 percent, against the year to March 31 2005.
But the Australian Oilseeds Federation is forecasting Western Australia, the key-growing region, to plant around the same area with canola as last season's 420,000 hectares. This limits the forecast fall in the national canola crop to less than 20 percent. In the last crop year, Australia produced 1.5 million tonnes of canola to maintain its position as the world's second-largest exporter, after Canada.
In the drought year of 2002, Australian production of the oilseed plummeted to 870,000 tonnes.
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