In its June 2026 crop report, Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) painted a gloomy picture of production potential for their winter-seeded crops thanks to concerns over dryness and the crop input situation.

A very dry weather pattern impacting northern New South Wales and southern Queensland (up until mid-May) is expected to reduce seeded area in those portions of the country while more favorable conditions for the remainder are expected to encourage normal plantings there.

High input costs and concerns about their availability are also impacting planting decisions with risk aversion expected to result in total Australian winter crop seeded area to fall by 12% from last year. Wheat area is expected to fall 12% (to the lowest since 2019-20), barley area is forecast to increase 4% due to strong prices and relatively low(er) fertilizer requirements, while canola area is set to decline by 6%. In the case of canola, where producers have adequate moisture, area is expected to be steady to higher despite the intensive fertilizer use and price given favorable margins thanks to a strong crop value. Winter pulses are also expected to see a decline in seeded area (of 7%) with chickpea areas expected to fall by 35% and lentil area predicted to increase 2%.

Given the concerns about weather and input impacts, production prospects are expected to fall even further. Australian wheat production is forecast to fall to 26.7 million metric tons (mmt) (see the green bar on the accompanying chart) for 2026-27 compared to the USDA May estimate of 30 mmt, 36 mmt last year and 34.11 mmt in 2024-25. That may still be overly optimistic given the super El Nino event currently developing that traditionally can decimate Australia's wheat crop. As recently as 2019, they produced less than 15 mmt of wheat thanks to an El Nino episode at the time. Despite all of that, USDA is still currently forecasting their exports will only fall from 26 mmt last year to 23 mmt in 2026-27 -- likely far too optimistic.

Barley production is expected to fall by 15% despite the slight increase in planted area as yields are likely to fall given the weather risks and input concerns. If 14.1 mmt total barley production is realized (as suggested), it would still be 2% above the five-year average and 12% above the 10-year average despite the decline from last year.

The canola production estimate is far more pessimistic than the planted area would imply, thanks to weather and input concerns. Total production is expected to fall by 20% in 2026-27 to 6.2 mmt (from 7.65 mmt last year), leaving it 13% below the five-year average but 17% above the 10-year average. It's worth keeping in mind that the El Nino event of 2015 contributed to a total Australian canola crop of 3.0 mmt while the more significant El Nino of 2019 resulted in a decline in production to a mere 2.136 mmt.

Regarding input availability for the coming crop, while ABARES is confident "growers will have their fertilizer requirements for the sowing period, there is more uncertainty surrounding growers' willingness to purchase fertilizer at elevated prices -- in particular urea -- for crops in July and August for top-dressing, which could impact yields."

This leaves the old saying that "small crops tend to turn into smaller crops" (in future updates) a valid concern going forward.

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Mitch Miller can be reached at mitchmiller.dtn@gmail.com

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