Stocks of bread and noodles face new threat due to flooding in Australia

Flooding in eastern Australia is degrading the quality of the wheat crop in one of the world’s largest exporters, exacerbating a global shortage of the high-quality variety used to make bread and ramen noodles.

This will dampen the international wheat market, which has been counting on Australia’s bumper crop to alleviate stock shortages and lower food prices. While the harvest is still likely to be large, torrential downpours and flooding could turn an unusually large chunk of the crop into grain only good for animal feed and reduce the amount that can be ground into flour.

Quality concerns are evident in the rising premium for eastern milling wheat over forage, which hit a record high this month. A shortage of flour-grade grain on the East Coast this year means demand for more versatile, low-protein wheat is gaining momentum, said James Maxwell, senior manager for Australian Crop Forecasters.

“People are like – you know what, I’ll make do with what I have, I just want everything I can get,” Maxwell said in a phone interview.

Although Indonesia and the Philippines buy general purpose wheat such as Australian Standard White (ASW), where it is qualified as a milling variety, that classification usually does not come with a significant premium, Maxwell said.

“Of course, it’s not surprising that higher squirrels are going up, but ASW is a little more, because usually ASW is priced a little lower,” he said, adding that the increased price may indicate that the market is expecting a “massive downgrade.” rating”. crops in animal feed.

Wetter weather

The impact of the flood on the quality of wheat in eastern Australia is still difficult to predict, mainly because the weather has kept farmers out of the fields to harvest. The weather in New South Wales will remain wet next week, forecaster Maxar said.

As analysts and farmers are just starting to get a clearer picture of the “good-to-bad patchwork” in terms of yield, Maxwell said all signs point to higher prices for any grain that offers minimal levels of protein. .

For China, this could be painful. One of the world’s leading importers, the country is buying more from Australia than ever. In the first 10 months of 2022, more than 60 percent of Chinese imports came from Down Under, more than double the share for all of last year, according to customs data and Bloomberg calculations.

The rains have also slowed down harvests in parts of Western Australia, another major growing region, where the local industry association is forecasting further bumper harvests. Nationally, wheat exports this season could reach 26 million tons, almost three times more than in 2019-20, when shipments dwindled due to drought, according to the USDA.

California Lost Rain

California has lost a full year of rain and snow since 2020, leaving much of the recent past farmland dormant in a region that supplies a quarter of fresh food in the United States, according to a government-funded study.

The worst drought in a millennium has left more than half a million acres of empty fields in 2022, researchers report looking at how California’s driest three-year period has impacted the largest U.S. agricultural producer.

Most of the unused land is in the Central Valley, which produces about a quarter of the country’s food, including 40 percent of fruits and nuts. More free land could emerge across the state next year as the government struggles to deal with dangerously low water levels in the Colorado River, which flows into California.

“There is pressure to cut,” said Josue Medellin-Azuara, a professor at the University of California, Merced, who led the study, published Tuesday.

Southern California and other crop-growing regions heavily dependent on Colorado River water are bracing for drastic cuts, putting food supplies and farms at risk. A two-decade-long drought in a region where at least 70 percent of irrigated farmland grows livestock feed has already increased price pressure on such crops, according to the report.

However, not all of the report’s conclusions were bleak. While the drought has hit communities and the food sector particularly hard in parts of central and northern California, the statewide economic impact on farm income has been “significantly mitigated” by measures such as increased groundwater pumping, water trading, and insurance payments for some cultures, the researchers say.