Australian wheat quality surges amid production decline

AUSTRALIA- The ongoing dry weather during the growing season has led to a reduction in Australia’s wheat output this year, but the majority of the crop boasts higher protein content. 

Analysts and traders suggest that premiums earned by farmers for superior quality grains will help offset the lost income resulting from the smaller crop.

As the world’s second-largest wheat exporter, Australia has faced challenges in 2023 due to hot and dry weather conditions, reducing the expected wheat harvest to approximately 25-28 million tons from the record 40 million tons reaped in the previous year.

Despite the decrease in overall quantity, the dry weather has positively influenced the protein content of the wheat, particularly in the higher-quality varieties. A Singapore-based trader noted that Australia’s overall crop quality this year is superior to that of the past few years. 

Lower yields tend to result in better protein scales, making imported wheat particularly attractive for top-quality milling.

Ole Houe, from agriculture brokerage IKON Commodities in Sydney, mentioned that the dry and hot weather has accelerated the harvest, which is already over half complete. 

IKON estimates that around 60% of the crop in Australia will be hard or premium white wheat with a protein content above 10%, a notable increase from the 40% recorded last year.

Specifically, Australia is expected to produce approximately 7.6 million tons of hard wheat (AH), up from 6.1 million tons in 2022, and roughly 7.9 million tons of premium white wheat (APW), maintaining levels from the previous year. 

Conversely, output of less protein-rich standard wheat (ASW) is projected to decrease to around 7.3 million tons from 15.7 million tons, and feed wheat is set to dip to 1.7 million tons from 4.3 million tons, according to IKON.

While Australia faces a decline in the production of lower-quality wheat varieties, analysts anticipate that grain from Russia will fill the gap in large Asian markets such as Vietnam and Thailand.

However, concerns have been raised about the potential impact of heavy rainfall in parts of southeastern Australia this month, which could affect the quality of wheat yet to be harvested, according to Rod Baker at Australian Crop Forecasters. 

This underscores the dynamic challenges faced by the Australian wheat industry amid changing weather patterns and emphasizes the importance of flexibility in global grain markets.