Australian crop output set up to rewrite records

Australia's agricultural production is "set-up potentially to rewrite records" in 2011-12, despite the lingering dryness in western areas, with healthy rains in other areas set farmers up "for another bin-buster".

The country may, in cotton, trounce the 4.0m-tonne record harvest on the cards for 2010-11, with output potentially hitting 5m bales next season, Rabobank analysts said.

"Our view is based on the expectation that Australian cotton growers will once again respond to strong price signals and take advantage of adequate water allocations to increase plantings," the bank said.

Production of canola, the rapeseed variant, was also pencilled in at a record, of 2.36m tonnes, helped by the increased sowings favoured by decent soil moisture on the east coast, and a desire for crop rotation.

Record wheat sowings?

Indeed, Rabobank said that it expected "strong crop prices, high moisture levels on the east coast and strong farm cash flows to shift Australia's winter crop plantings up a gear".

"The east coast is looking at a bumper crop. South Australia hasn't looked better for years".

Australia's wheat area looked set for a record too, of 14.1m tonnes next season, largely at the expense of barley, although the bank stopped short of forecasting production hitting an all-time high, pegging it at this stage at 25m tonnes, down 1.1m tonnes year on year.

"Australian crop production is set up to potentially rewrite records."

Once-in-a-lifetime chance, twice

The forecast places Australian farmers in the blessed position of, for a second season, enjoying both high crop production and elevated crop prices, which weak global inventories look set to keep high "through until at least 2012".

This position was denied to growers in countries such as Russia, whose poor crops sparked the rise in world grain prices, while US hard red winter wheat farmers already face 2011-12 yields thanks to a lack of rain.

"Many Australian cropping farmers... may have another bite of the cherry for a once-in-a-lifetime opportunity? High prices co-inciding with bin-busting crops," Rabobank analysts said.

Growers of feed grains looked most likely to miss out on the boom, as healthy domestic inventories left over from this year's crop, combined with good pasture conditions, give livestock farmers buying power.

'Smell of a wet rag'

Rabobank cautioned that its forecast was based on forecasts of continued, but not excessive, rains on Australia's east coast states, and average rainfall in Western Australia, usually the top grain-growing state, but which has been dogged by drought.

While the outlook "suggests no immediate relief to the dry conditions that crimped Western Australian wheat output during 2010-11... the outlook by no means guarantees a well-below average crop".

"Western Australia has been known to produce good crops on the smell of a wet rag."