Australia's wheat sowings 'could break record'

Australian farmers' clamour to cash in on high wheat prices may turn out even stronger than had been thought, with seedings potentially to set a record - at the expense of barley sowings.

Farmers in the southern hemisphere's top wheat-exporting nation will likely plant more than 14m hectares of the grain for 2011-12 when sowings start in a few weeks' time, Rabobank said.

This would represent a rise of wheat sowings of at least 600,000 hectares, compared with a year before, and potentially break the record, which stands at 14.03m hectares, set in 2009-10.

It would also beat estimates of 13.8m hectares by Abares, the official Australian commodities bureau, and US Department of Agriculture attaches stationed in Canberra.

The extra sowings of wheat, and a forecast rise in rapeseed plantings too, will come "at the expense of barley areas", the bank said.

"This is not surprising, given the stark discounts received for feed barley in 2010-11."

Barley vs wheat

Feed barley, closed on Friday at Aus$217.50 a tonne, a discount of 27% to east coast milling wheat, with which the grain neared parity last autumn.

And the gap is deemed unlikely to close, given the extent of milling wheat downgraded to feed by wet harvest conditions late last year.

Luke Mathews at Commonwealth Bank of Australia said: "This historically-wide spread is likely to persist for the next 12 months as domestic feed grains remain plentiful compared to high-protein milling wheat supplies.

"Only strong export demand from feed grains has prevented this spread from widening further."

'Limiting factor'

Rabobank also noted the "exceptional" conditions for east coast farmers, who have been left by the persistent rains with unusually plentiful soil moisture levels.

However, the bank stopped short of predicting the 2011-12 crop setting a production record, given the risk that further rains would pose to fieldwork on the east coast, and expectations of only average rains for Western Australia, where soil moisture is "extremely low".

"Moisture maybe again a limiting factor to crop production in Western Australia."

Separately, Australia & New Zealand Bank said that rains in Western Australia, usually the country's top grain-growing state, "has been barely enough to settle the dust in most of [the state's] wheatbelt".

"Weather models indicate chances of up to 15mm of rain across parts of the wheatbelt on Monday and then again chances of higher falls next weekend."