Waterlogged Australian wheat adds to food supply fears

Melbourne — Flooding and excessive rains across parts of Australia’s wheat-growing areas have resulted in extensive damage to what was expected to be a record high-quality crop just a few weeks ago, worsening concerns about world food supplies.

A lower quality crop in Australia, the world’s second-biggest supplier of the grain, comes as low rainfall in North America and the Russia-Ukraine war curb global supplies, fuelling food prices.

While Australia is still on track for a third year of bumper harvest, about half of the crop grown on its eastern grain belt — known for premium hard wheat — is likely to be reduced to animal feed, though the extent of the damage will be known after waters recede, traders, analysts and farmers said.

“There have been some growers who have suffered total loss ... it’s still pretty raw for many people,” said Brett Hosking, a grains farmer in southern Victoria state, who is also the chair of the farmers body GrainGrowers. “In the next fortnight or so we will have a clear picture.”

Residents in major regional towns across Australia’s most populous state are being urged to leave homes as slow-moving flood waters push downstream and the country’s fourth flood crisis this year rolls into a second month.

Large swathes of farmland across Australian states of New South Wales, Queensland and Victoria have been inundated with flood waters, damaging wheat and other crops, including potatoes, and delaying sorghum planting.

“Floods have come at the worst time as the wheat crop was getting ready for harvest,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney. “Initial estimates are that about half of the crop or about 8-million tonnes have been reduced to feed quality on the east coast.”

Infrastructure damage

Australian grocer Woolworths said on Thursday that heavy rains are likely to keep squeezing supplies of farm-based staples, including potato chips, as soaring shelf prices contributed to a drop in its first-quarter food sales.

Floods have damaged roads and other infrastructure used to transport grains to domestic users and ports in the country.

“Roads are badly damaged, some have just been washed away,” said Matthew Madden, who grows wheat, barley and sorghum in Moree, northern New South Wales, one of the worst-hit areas.

Benchmark Chicago wheat jumped to an all-time high of $13.64 a bushel in March on supply concerns. The market is up almost 10% in 2022, after last year’s 20% gain.

The world is heading towards the tightest grain inventories in years despite the resumption of exports from Ukraine, as the shipments are few and harvests from the main producers are smaller.

Adverse weather in agricultural hubs from the US to France and China is already shrinking harvests and cutting inventories, heightening the risk of famine in some of the world’s poorest nations.

Still, Australia’s production is expected to reach a record 40-million tonnes in the year to June 2023, traders and analysts say.

Reuters