Wheat

The gross value of Australian wheat production is forecast to increase by 10% to $10.7 billion in 2024–25. The forecast increase in value is driven by higher Australian wheat production despite easing prices (Figure 1.1):

• Australian wheat production is forecast to increase to 31.8 million tonnes in 2024–25. This reflects improved seasonal conditions across key cropping regions in New South Wales, Queensland and Western Australia during the 2024–25 winter cropping season. By contrast, production prospects are less favourable in South Australia and Victoria.
• However, lower wheat prices are expected to partially offset the increase in production. Australian wheat prices are forecast to ease in line with falling international prices – reflecting improving global supplies and subdued demand.

The forecast for the gross value of Australian wheat production in 2024–25 is around $590 million higher than in the June 2024 Agricultural Commodities Report. An upwards revision to wheat production volumes is more than offsetting a downward revision to prices.

Figure 1.1 Annual gross value, volume and unit price of Australian wheat production

The value of Australian wheat exports is forecast to fall by 18% to $8.1 billion in 2024–25. Lower export values reflect easing international prices and falling export volumes. In 2024–25, the exportable supply of Australian wheat is expected to fall from previous highs as high carryover stocks from consecutive record seasons have been drawn down. Lower export values also reflect subdued import demand in key Asian markets for Australian wheat, which is less competitively priced relative to other major export competitors.

Despite the fall, the forecast export value is expected to be the fourth highest on record. Major Asian markets remain the largest export destinations for Australian wheat, by value and volume. In 2023–24, Australia's top three wheat export destinations – China, Indonesia and the Philippines – accounted for 51% of total wheat export values (Figure 1.2). China remained Australia’s largest wheat export destination by value for the third consecutive financial year (July to June).

Figure 1.2 Annual Australian wheat export values by destination

Australian wheat prices are forecast to continue moderating in 2024–25, reflecting easing world prices and subdued global demand. Lower international prices reflect easing supply uncertainty across major wheat producing countries as the northern hemisphere harvest progresses. Price volatility in global wheat markets is expected to be mostly subdued in 2024–25, driven by:

• Ample Russian Federation wheat stocks and high export volumes following two consecutive years of high production, and another large wheat harvest forecast for 2024–25 (despite production downgrades due to drier conditions in western regions and frost events).
• Reduced uncertainty surrounding grain exports from Ukraine following improvements in export capacity via deep sea ports in the Black Sea.
• Improvements in production conditions in some major wheat exporting and producing countries, such as Canada and the United States, which is more than offsetting production downgrades in other major exporting countries.
• Rising world grain supplies, particularly for corn (see Coarse Grains).
• Lower expected import demand for wheat in major importing countries in 2024–25.

As a result, the Australian wheat export price (Australian Premium White) is forecast to fall by 12% in 2024–25, averaging $392 per tonne. The world indicator price (US no.2 Hard Red Winter wheat) is forecast to fall by 11% to US$261 per tonne (Figure 1.3).

Figure 1.3 Annual Australian and US wheat export prices

Australian wheat production is forecast to increase by 23% to 31.8 million tonnes in 2024–25. This is 20% above the 10-year average to 2023–24 and, if realised, will be the fourth highest wheat harvest on record. While production is forecast to increase overall, varying seasonal conditions across Australia are driving different state-level outlooks (see Australian crop report):

• Wheat production is forecast to rise to near-record levels in New South Wales and Queensland. Wheat crops have excellent yield potential heading into spring following a strong start to the winter cropping season and above average rainfall in most cropping regions.
• Improved seasonal conditions in Western Australia have boosted production prospects, with wheat production now expected to be above average. Despite a dry start to the winter cropping season, wheat crops have developed well following timely winter rainfall, particularly across northern and western cropping regions.
• By contrast, production prospects are lower in South Australia and Victoria. Planting and establishment conditions were unfavourably dry across major cropping regions in South Australia and parts of western Victoria. Dry conditions throughout the season have led to moisture stress with wheat yields in these regions forecast to be below average.

Australian wheat export volumes are forecast to remain elevated at 20.9 million tonnes in 2024–25. Better-than-expected production in Western Australia (Australia's largest exporting state) will likely support above average volumes of Australian wheat exports in 2024–25. Exports are expected to be 10% above the 10-year average to 2023–24 of 19 million tonnes, however, down 7% from 2023–24. While production is forecast to increase, the share of production exported is expected to fall leading to higher expected domestic stocks.

World wheat production is forecast to increase by 1% to 799 million tonnes in 2024–25. The increase reflects mixed production conditions in major exporting countries:

• Wheat production in Canada is forecast to increase by 8% to 34.4 million tonnes in 2024–25. This is despite recent hot and dry conditions reducing yield potential in western Canada.
• In the Black Sea region, production in Kazakhstan is forecast to increase to above average levels. Russian Federation wheat production is forecast to fall but remain historically high in 2024–25 at 82.4 million tonnes. This fall reflects drier conditions and frost events in western regions that led to some production downgrades of winter wheat, as well as dry and cold conditions that affected the development of spring wheat. Despite dry conditions reducing production prospects in Ukraine, grain quality is reportedly better than in 2023–24 with a higher share of wheat making milling grade. Wheat production in the Black Sea region is still forecast to remain above average and high export volumes are expected to continue in 2024–25, supported by high supplies and discounted prices.
• Wheat production in the United States is forecast to increase by 9% to 53.9 million tonnes in 2024–25, reflecting mostly favourable conditions. Wheat yields and quality were reportedly better than expected across key hard red winter wheat producing states, with an increase in the production of hard, high-protein milling wheat. This is represented by an estimated 29% increase in US hard red winter wheat production in 2024–25.
• Wheat production in the European Union is forecast to fall because of production downgrades in France and Germany due to wet weather. This has more than offset a rebound in production in Spain, following drought-affected production in 2023–24.
• Wheat production and exports in Argentina are expected to recover further in 2024–25. Sowing progressed under generally favourable conditions. However, recent dry conditions and cold temperatures are expected to negatively affect crop development.

Increased production in Argentina, Australia, Canada, Kazakhstan and the United States is expected to more than offset falls in the European Union, the Russian Federation and Ukraine. The world supply of hard, high-protein milling wheat is expected to improve in 2024–25. Despite an increase in world wheat production, global stocks are forecast to fall resulting in a slightly lower stocks-to-use ratio. While this suggests tighter world supply, global wheat prices are expected to decrease in 2024–25 due to high supply from major producers and lower expected world demand.

World wheat consumption is forecast to fall slightly to 800 million tonnes in 2024–25, with a fall in feed use expected to more than offset an increase in food use:

• World feed use is forecast to fall by 5% to 149 million tonnes in 2024–25. Feed wheat demand is expected to be constrained due to increased use of more affordable alternative feed grains, particularly corn.
• By contrast, food use is forecast to increase slightly in 2024–25, driven by consumption growth in low- and middle-income countries across Asia and Africa.

Reflecting the overall fall in consumption, global import demand is expected to be subdued in 2024–25. Global wheat trade is forecast to fall by 5% to 206 million tonnes, driven by:

• Lower expected purchases by China and Indonesia, the two largest importing countries in Asia.
• Import restrictions in Pakistan and the Republic of Türkiye.

Australia to face stronger competition in key Asian markets

Weaker import demand from Australia's traditional export markets – including China and south-east Asia – is expected to weigh on Australian wheat exports in 2024–25. Australia is likely to face higher competition in these markets given Australian wheat prices are now less competitive relative to wheat from other exporting countries – reflecting the northern hemisphere harvest beginning to be available to the world market and large volumes of low-priced wheat out of the Black Sea region. This is despite Australia’s geographical proximity to key Asian markets which would typically provide a freight advantage compared to other export competitors.

Wheat import demand in south-east Asian countries is more sensitive to price compared to other markets due to a high number of low-income consumers. However, Asian demand for milling wheat is expected to remain strong in 2024–25. While exports will largely depend on the quality profile of this year’s wheat crop, Australian exporters should be well-positioned to supply high quality wheat to high income economies – including specialised wheat to noodle markets in Japan and the Republic of Korea.