Focus on Australia

by Chris Lyddon
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Australia
 
Australia is one of the world’s most important producers and exporters of grains and oilseeds, a role made more important by its position in the Southern Hemisphere, which means it can supply world markets when the big Northern Hemisphere producers are months away from a crop.

In its Grain Market Report at the end of September, the International Grains Council (IGC) forecast Australia’s total grains production in 2017-18 at 32.8 million tonnes, down from its estimate a month earlier of 34 million tonnes and well down from the previous year’s 52.1-million-tonne crop.

The IGC’s forecast for wheat production is now 21.5 million tonnes in 2017-18, down from a figure of 22.8 million forecast a month ago and down from the previous year’s crop of 35 million tonnes. The IGC said the tonnage would be a nine-year low, describing the 2016-17 crop as “exceptional.”

“While timely showers in July and August stabilized conditions in some areas, including in Victoria and southern parts of Western Australia, nationwide rainfall was highly variable,” the IGC said. “More recent concerns have arisen about frosts in New South Wales. Amid less-than-ideal conditions, some private forecasts for output have dipped below 20 million tonnes.”

The IGC’s forecast for Australia’s maize production is unchanged at 400,000 tonnes. Meanwhile, its forecast for barley production is unchanged for the month at 7.8 million tonnes, but well down from the 13.4 million produced in 2016-17. Australia’s sorghum production in 2017-18 is forecast at 1.8 million tonnes, up from 1.7 million forecast a month earlier and well up on the 1 million produced the previous year. The IGC forecast Australia’s oats production at 1.1 million tonnes, unchanged from its previous estimate, but down from 1.9 million the year before.

Australia is one of the world’s biggest grain exporters. Despite the reduced crop, its total grain exports are forecast by the IGC at 27 million tonnes in 2017-18, reduced from a previous estimate of 27.7 million and down from 32.1 million the year before. Wheat exports for 2017-18 are forecast at 19 million tonnes, revised down from the IGC’s previous forecast of 19.7 million. The previous year’s wheat exports were 22.1 million. The IGC’s forecast for barley exports in 2017-18 is 7.3 million tonnes, including 5.3 million for feed and 2 million for malting, unchanged from the previous month, and down from 9 million (7 million for feed and 2 million for malting) in 2016-17. The IGC’s forecast of Australian sorghum exports in 2017-18 is unchanged on the month at 450,000 tonnes, down from 717,000 the year before. Australia’s exports of oats in 2017-18 are now forecast at 1.65 million tonnes, up from a forecast of 1.6 million made a month earlier and up from 1.617 million exported in the previous year.

wheat
 
“In 2017, low prices for Australian wheat increased competitiveness and access to a number of markets such as the Philippines, India and Iraq, especially in the period before Black Sea harvests were available for the international market,” the USDA attaché said in a report issued in July. “Indonesia traditionally accounts for around 20% of total wheat exports.”

Australian exporters are facing greater import competition in the feed market, as well as in the baking industry, the attaché said. Virtually all wheat is exported in bulk and less than 5% has been reportedly exported by container in recent years.

“The Australian barley industry produces grain for standard and craft beer and distilled spirits production, as well as feed grain for domestic and overseas livestock industries,” the attaché’s July update explained. “Demand for malt barley is increasing while prices for feed barley have weakened due to improved pasture growth across Australia and high winter crop production.

“Around 30% to 40% of barley grown in Australia usually achieves malting grade, with the remainder consumed as food and feed barley. Malting barley is used primarily to produce alcohol (beer and distilled spirits such as Shochu, a Japanese distilled spirit) and food including confectionery, snack foods, breakfast cereals, miso and barley tea. China has been by far the biggest destination for Australian barley exports, ahead of markets such as Saudi Arabia and Japan. ”

Exports of malting grade barley to other countries such as Japan are expected to be stronger over the year with lower supplies from some other countries, the attaché report said. The Australian barley industry has sought to strengthen links with buyers in Asia through investment in malting plants in a number of countries. In mid-2017, CBH Group opened a $70 million, 110,000-tonne malt plant in Vietnam to provide barley growers in Western Australia with a stronger link to the Vietnamese beer market, which is the fastest growing in the region.

“Australia normally accounts for around 20% of the global feed barley trade,” the attaché said. “China has been the largest single market for Australian feed barley exports in recent years, but demand has fluctuated.”

The attaché report noted the difficulty in predicting China’s feed barley demand because livestock producers there are being encouraged to use domestically produced maize.

“In early 2017, Australian feed barley prices declined to a 15-year low, allowing a significant increase in exports to China and Southeast Asia, although domestic prices have risen by over 20% in the three months to July 2017, which may constrain the supply available for export for the rest of the year,” the attaché said. “Exports of feed-grade barley to Saudi Arabia increased significantly in the first quarter of calendar 2017 and a 1.5-million-tonne feed barley contract was agreed with Saudi Arabia for around A$180/tonne.”

oilseeds
 

Oilseeds and Milling

Australia is also important as an exporter of rapeseed. For 2017-18, the IGC has forecast its production at 2.8 million tonnes, down from its forecast of 3 million made a month earlier, which compares to the previous year’s exports of 4.1 million tonnes. The IGC forecast Australia’s 2017-18 rapeseed exports at 2.5 million tonnes, unchanged on the previous month’s estimate and down from the 3.7 million tonnes exported in 2016-17.

There are 46 flour mills in Australia, plus one mill devoted to training and research, according to information supplied to World Grain by the Australian Technical Millers’ Association. The biggest milling companies are Allied Mills Pty Ltd, MAURIanz, Manildra Group and Laucke Flour Mills.

Biofuels and Biotechnology

The attaché put Australian biofuel production in 2017 at 250 million liters of fuel ethanol and 40 million of biodiesel.

“The Australian biofuel industry and market remain small because mandates do not cover the entire country and remain modest compared to other countries with biofuel programs, and tax relief alone has not boosted biofuel use,” a report on the sector said. “With minimal mandate support, biodiesel production and imports have collapsed since 2014 due to lower world crude oil prices and high feedstock prices.”

In a separate report on biotechnology in Australia, the attaché described Australia’s federal government as “very supportive of biotechnology and has committed considerable long-term funding to research and development.”

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