Australia's winter crop planting is set to climb by more than 25 per cent this year, after widespread and well-timed rainfall, across most of the country.
After prolonged drought conditions, which saw three years of decline in Australia's grain production and exports, global agribusiness specialist Rabobank has forecast the nation's crop planting to be up by 26 per cent on last season.
The 22.5 million hectares forecast to go under crops is 12 per cent above the five-year average.
Combined with forecast above-average rainfall for the critical growing season ahead, that should deliver Australia an average to above-average winter grain crop, the bank said.
Much of this improvement would occur in the previously-droughted cropping regions of the eastern states, with New South Wales-planted area forecast to be up by a staggering 95 per cent and Queensland by 44 per cent, the bank said in its Australian 2020/21 Winter Crop Outlook.
For wheat, the report said a total harvest volume of 26 million tonnes was "not unrealistic, given our expectations for hectares planted this year".
Rabobank senior grains and oilseeds analyst Cheryl Kalisch Gordon said the promising crop outlook was welcome news for Australia's agricultural sector, after years of drought and the severe disruptions of summer bushfires and COVID-19.
"While it's still around six months until the grain is in the bin, all the hallmarks of an above average season are now falling into place," she said.
"2020 finally saw a strong opening to the east coast winter crop planting season, with good rains and fast planting progress.
"With the Bureau of Meteorology's forecast for above-average rainfall for all Australian cropping regions during the critical growing months of June to August, these increased hectares planted are expected to combine with at least average yields to deliver an average to above-average grain crop."
Dr Kalisch Gordon said eagerness to 'make hay' while there was moisture around after drought - along with the high cost of the alternative of restocking livestock - had featured in farmers' decisions to expand their planted area in 2020/21.
A more buoyant outlook for wheat than barley had prompted greater increases in wheat planted compared with last year and longer term averages.
"And the recent announcement of China's tariffs of 80.5 per cent on Australian barley would also have influenced this choice for the small number who hadn't planted by then," Dr Kalisch Gordon said.
While the renewed supply of Australian grain would see prices move down from the drought-driven highs of recent years, the Rabobank report said average prices are expected to "remain in sight", supported by an ongoing softer Australian dollar.
Export volumes - though remaining challenged by competitive global supplies along with the Chinese barley tariffs - would likely increase by as much as 70 per cent on last year.
This could see Australia set to export up to 17.5 million tonnes of wheat (up 110 per cent on last year), 4.5 million tonnes of barley (up 13 per cent) and two million tonnes of canola (up 17 per cent).
Report co-author, Rabobank associate analyst Dennis Voznesenski said rainfall was received across large sections of New South Wales and Victoria during late summer and early autumn.
"Favourable soil moisture profiles in both states were then further enhanced as the months have rolled on and rainfall events continued," he said.
"Strong early season rainfall has put New South Wales in a great position to plant a large crop of six million hectares, up a staggering 95 per cent from last year and 31 per cent above the five-year average.
This planting program has been driven by the best opening rains in three years, but also the challenge of sheep and cattle restocking at high prices, which has prompted putting more country to cropping.
" Victoria's planted crop for 2020/21 is forecast to be up 14 per cent to 3.5 million hectares.
For Queensland, however, good early rains had not been followed up in all areas, with cumulative rainfall in central Queensland now having fallen below the 10-year average, the report said.
Rabobank still sees total area planted to cropping in Queensland increasing by 44 per cent to 0.95 million hectares in the 2020/21 season.
South Australia had seen a fantastic start to the year, with most cropping areas enjoying above-average planting rains, Mr Voznesenski said.
"Meanwhile, Western Australia had a promising start, but conditions became drier through March and April.
"However late May rain has improved prospects," he said.
Rabobank is expecting total grain area planted in South Australia to be up 12 per cent on last season at 3.9 million hectares and Western Australia up seven per cent at 8.2 million hectares.
Across the country overall, wheat, canola and pulses would see the largest increases in planting from last year, the report said, mainly driven by improved conditions in the eastern states.
Wheat planting is expected to be up by 33 per cent on last season, with canola up 35 per cent and area planted to pulses increased by 36 per cent.
Barley has seen a modest (one per cent) decline in planting, Rabobank's Dr Kalisch Gordon said, off the back of a pessimistic price outlook.
"Further declines were limited by the fact China's tariff decision following the anti-dumping investigation came after the majority of barley area had been planted," she said.
The bank forecasts Australian grain prices to move lower in 2020/21.
Although the "return to earth will be softened by the Australian dollar", it said.
"Firming global wheat production expectations, and a softening in demand post the COVID19 stockpiling, means we have a neutral outlook for global wheat prices over the coming 12 months," Dr Kalisch Gordon said.
The bank expected CBOT (Chicago Board of Trade) wheat to trade in the USc 525-534 range.
Renewed local wheat supply prospects would, however, increasingly weigh on local prices as harvest approaches, with local prices down year-on-year, Dr Kalisch Gordon says.
For barley, increased supply and a competitive global feed grain market (due mainly to cheaper corn prices because of a coronavirus-driven slump in ethanol demand for fuel) means global prices would be down this year.
Locally, increased barley supply and a challenging export market - particularly in light of the imposition of China's tariffs - saw a flat price outlook, although also supported by the lower dollar.
With Australian canola, particularly the non-GM variety, enjoying stronger pricing in recent times - off the back of drought-driven low supply, increased usage in home-cooking during COVID-19 lockdowns and increased export demand - prices were expected to return lower over the course of the year.
For pulses, lower global supply should keep chickpea and lentil prices supported in 2020 - with increased demand from India and Turkey critical - although higher Australian production would hold domestic prices in check, the report says.
Exports Increased Australian production, lower domestic premiums and a favourable Australian dollar all support an increase in Australian grain exports in 2020/21, the Rabobank Outlook said.
However, finding a home for that grain was likelyto be challenging.
"Stagnant global demand, low shipping costs and depreciation of Black Sea region currencies will continue to challenge Australia's competitiveness in traditional markets," Dr Kalisch Gordon said.