Australia's 2022-23 wheat output seen 20% lower on year to 29 million mt: USDA

Australia's wheat output is likely to decline sharply on the year in marketing year 2022-23 (October-September) due to an anticipated drop in sowing area and yield on account of rising fertilizer costs, the Canberra attache of the US Department of Agriculture's Foreign Agricultural Services said.

According to the report dated April 27, Australia's wheat output in MY 2022-23 is seen falling 20% on the year at 29 million mt, from a record 36.3 million mt projected for MY 2021-22.

The area under the crop is also likely to decline to 12.5 million mt, 4% down from 13 million mt seen in MY 2021-22.

The planting area is seen declining, despite expected favorable conditions and adequate moisture content during the planting season, due to the rising input costs, including increasing fertilizer prices, the report said.

Soil moisture conditions around the time of planting are crucial for wheat, which is generally planted during April-June and harvested between October and December.

Apart from the likely decline in the area under the crop, anticipated drop in crop yields is also seen weighing on the production. The FAS report indicated that the yields in the wheat crop in MY 2022-23 is seen at 2.3 mt per hectare, down from 2.8 million mt in MY 2021-22.

"The three major input cost items of fertilizer, chemicals, and diesel have all skyrocketed in recent months, and the supply of some of these items is also proving to be challenging," the report added.

Fertilizer and chemical prices have increased sharply over the past few months due to banning of fertilizers from China. In addition to that, Russia's invasion of Ukraine has also contributed to the sharp increase in fertilizer prices as both China and Russia are key exporters of nitrogen-based fertilizers.

Although Australia sources primarily from the Middle East and is well placed to meet its requirements, high prices of fertilizers will increase the input costs for wheat.

Exports seen lower in MY 2022-23

As a result of a likely decline in output, Australia's wheat exports are also seen falling in MY 2022-23.

According to the report, Australia may export 22 million mt in MY 2022-23, down 20% from 27.5 million mt projected for MY 2021-22.

"Despite this large fall, if realized, this would still be the fifth largest wheat export program on record," it said.

Exports are unlikely to drop as much as output due to strong global import demand and possible supply constraints from other key exporters.

With wheat supplies from Black Sea nearly muted, demand for Australian wheat is likely to remain strong in the near term.

Russia and Ukraine, combined, account for about 25% of the global wheat supplies. Australia usually exports around 12% of global wheat shipments, the report added.