Exporters are facing lower prices and greater competition, even in traditional markets.
CANBERRA, AUSTRALIA – Transportation and logistical problems in Australia along with the continued strong Australian dollar and lower production has resulted in an estimated 20% drop in wheat exports for 2017-18.

Exports are estimated at 18 million tonnes, down from 23 million tonnes in the marketing year from October 2016 and from 22 million tonnes in the trade year from July 2016, said the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) in a report released on April 18.

“These revisions are below the official estimates due to ongoing port and logistical problems, which have continually hampered wheat exports and could continue for the rest of the year,” FAS said in the report.

Given the world oversupply of wheat, Australian exporters have faced lower prices and greater competition, even in traditional markets, it said. The nation has seen a drop in its overall market share in Indonesia, where Australian higher grade wheat had one-third of the market.

A large portion of Australian wheat is exported in bulk cargoes, particularly from Western Australia. In the second half of 2016, many containers were diverted for large pulse and oilseed export cargoes.

“These grain exports have higher unit values and were given priority by shipping companies, which also introduced higher fees during peak periods,” FAS said. “As a result, there were considerable logistical and transport problems in exporting the wheat crop from the second half of 2016, particularly for traditional exports of milling wheat into Southeast Asia.”

Wheat production in 2017-18 is estimated at 24 million tonnes, down from a record 35 million tonnes last harvest, due to less favorable seasonal conditions.

Average wheat yields for 2017-18 of 1.9 tonnes per hectare are expected, down from 2.7 tonnes per hectare in 2016-17. This is due to a less favorable seasonal outlook, including projections of lower average rainfall. Falling wheat prices on world markets are also impacting farmers, and alternative crops such as canola are expected to become more popular, the FAS said.