After three consecutive years of falling exports, Australian wheat exports are forecast to rebound to 14.5 million tonnes (+76.8%) in 2020/21, from the low volumes of 8.2 million tonnes projected for this marketing year (2019/20). According to USDA, production is also forecast to rebound from the low levels expected for this season as a result of drought conditions in eastern Australia. Consequently, as of 22nd April, Australian wheat prices were 4% y-o-y higher, supported by reduced output and overall gains in the global wheat market due to strong demand for wheat products as a result of the coronavirus outbreak.
Recent rainfall has boosted soil moisture levels in time for the wheat planting, increasing expectations of higher output in 2020/21. As a result, Australian wheat production is forecast at 23 million tonnes in 2020/21, representing an increase of more than 50% y-o-y, if achieved. This higher production would allow greater export availability, increasing Australian wheat competitiveness in the market and potentially overtake Argentina as the sixth-largest wheat exporter.
Therefore, in the medium to long term, Australian wheat prices are likely to be driven by fundamentals, easing partially the current bullish trend due to projected ample supply. However, the anticipated increase in competitiveness in the global market would potentially curb some of the downward pressure. In the short term, prices are likely to continue to be determined by the impacts of COVID-19 on the global wheat market.