8 Dec 2014

Australia cuts grain output forecast

2:44 pm on 8 December 2014

Australia's chief commodity forecaster has dramatically revised down forecasts of this season's grain harvest, and that could benefit New Zealand grain growers.

While many winter crops in Australia got a good start to the season, in the later months the rain stopped falling, putting an end to farmer dreams of a bumper harvest.

If the forecasts are correct, Australian grain production will fall 16 percent this year.

Much of the milling wheat used in New Zealand is imported from Australia, and a reduced grain harvest would help underpin the prices New Zealand grain growers get for their crops this year.

South Island growers' representative David Clark said lower volumes of grain coming into the country would benefit the local industry.

"The events in Australia with both dry weather and frost affecting cereal yields is going to put a floor in the prices of imported wheat coming into New Zealand, which ultimately I guess is good news for the New Zealand growing industry.

"It's certainly going to be supportive of those import prices and would suggest that there's no reason why New Zealand grower prices should fall away significantly.

Mr Clark said the world wheat price had risen from $US5 to $US6 a bushel in the past four weeks.

Meanwhile, dry conditions in Canterbury may trim the harvest in this country's main grain growing region as well.

Dryland crops were under pressure but irrigated crops would still perform well, said Mr Clark.