Australian Wheat Estimate Downgraded Amidst Forecasts of Intensifying El Niño

As Japanese forecasters announced this week that they predict an intensifying of El Niño, Australia reduced its estimate for its 2015/16 wheat crop.

The Australian Bureau of Agricultural & Resource Economics & Sciences (ABARES) cut its estimate for the country’s 2015/16 wheat crop from a March forecast of 24.4 million tons to 23.6 million tons. Output for the world’s fifth largest exporter was 23.7 million tons in 2014/15, and 25.3 million tons in 2013/14. The U.S. Department of Agriculture (USDA) has predicted an Australian wheat crop of 26 million tons, but this forecast may be revised.

Although it is still early in the season to fully predict the effect of El Niño, the weather system typically causes drought in Australia’s eastern regions and Asia, and wetter, cooler summers in North America, prompting the UN Food and Agriculture Organization to cut its outlook for global wheat production by 1.4%.

Japanese forecasters agree with the FAO prediction that the El Niño is strengthening and will likely last through the 2015 season, and that Australian grain output is of noted concern. Production in the state of New South Wales, the second biggest wheat producing region, will likely total 6.2 million tons, down from 6.3 million tons last year. However, in Western Australia, which is not expected to be as severely affected, wheat output is seen rising to 9.3 million tons from 8.9 million tons last year, according to ABARES.

Australia’s weather bureau has stated that the intensity of warm water currently seen across the Pacific hasn’t been seen since 1997/1998 – the strongest El Niño pattern on record, according to the National Oceanic and Atmospheric Administration.