Australia has substantially revised upward its wheat production forecast for the 2026/27 marketing year to 31.0 million metric tons (MMT), an increase from previous expectations of 29.0 MMT and about 7% above the ten-year average. This optimistic outlook follows well-timed rain across major growing regions in New South Wales, Queensland, and Victoria, which improved yield expectations despite a reduction in planted area due to increased canola and barley plantings. The improved conditions have helped buffer an increasingly grim global supply outlook for the grain.
Wheat exports are also forecast higher, now expected to reach 24.5 MMT, an increase from the earlier forecast of 23.5 MMT. This upward revision is supported by higher carry-in stocks from the previous year and strong export demand. Australia is projected to remain a reliable supplier to its traditional markets in Southeast Asia and the Middle East, with export competitiveness influenced by crop outcomes from other major exporters like Russia, the European Union, Canada, and the United States. This forecast is a significant rebound from earlier fears, with Rabobank initially projecting as low as 21.3 million tons, now estimating up to 30 million tons.
The improved Australian outlook comes at a critical time for global wheat markets, which have been strained by disruptions to shipping in the Black Sea due to the conflict between Russia and Ukraine, and heatwaves across the Northern Hemisphere. These disruptions have sent benchmark Chicago wheat futures to a two-year high in July. With exports from other grain-producing nations constrained, Australia is poised to help fill the supply gap for major importers like Indonesia, the Philippines, and potentially China. Australian export prices have already surged, with Australian Standard White (ASW1) wheat reaching around EUR 267 per tonne ($291/t) FOB Kwinana and Australian Premium White (APW) climbing to roughly EUR 274 per tonne ($298/t), marking three-year highs.
The significant increase in Australian wheat export prices, up by about EUR 23–24 per tonne since early July, is largely driven by intensifying attacks on Black Sea ports and commercial vessels. This has forced Asian buyers to increasingly turn to Australia, which offers a freight advantage over the Black Sea, where shipping costs to Southeast Asia can exceed EUR 73–75 per tonne ($80/t). Despite the growing optimism, a significant El Niño is still forecast to impact Australia in the second half of the year, which historically brings high heat and little rainfall, posing a potential downside risk to production prospects. However, current farmer sentiment is positive, with falling diesel prices and easing fertilizer costs contributing to a more favorable environment than anticipated earlier in the year.
