Australia, the world’s second-largest wheat exporter, is likely to face a 20 percent supply drop from a record level in the coming fiscal year as production falls due to a shift to a drier climate.
Exports are likely to fall to 22.5 million tons in 2023-24 from a record high of 28 million tons a year earlier, and production will fall to 28.2 million tons from 39.2 million tons, government forecaster Abares said. The freshly harvested crop is up from 36.6 million tonnes estimated in December. Sowing of the future crop begins only in April.
Australia’s staple food shipments helped cap global prices last year after a Russian invasion of Ukraine choked supplies and pushed grain prices to record highs. Production in Australia has increased due to heavy rains caused by the La Niña weather event, and a return to less favorable and drier conditions is expected in the coming months, the agency said in a report.
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According to assumptions based on statistical analysis and climate modeling, in 2023-2024 the agricultural sector “will be affected by an El Niño surge or IOD-driven positive dry conditions.”
The Indian Ocean Dipole refers to a model of sea surface temperature changes in the western and eastern tropical Indian Ocean.
“We expect the climate to become drier,” Abares chief executive Jared Greenville said in an interview. “We’ve had three really rainy years and that’s really unusual in historical data.”
But given factors such as water levels and soil moisture, production should remain about average, he said. Winter precipitation is a key uncertainty in terms of climate change.
Canola production in Australia is expected to decline by 35 percent to 5.4 million tonnes in 2023-2024 on expectations of drier conditions.
Barley production is likely to fall by 30 percent to 9.9 million tons in 2023-2024, while sorghum production is projected to fall by 28 percent.
The value of crop production is likely to fall to A$46 billion ($31 billion) in 2023-24 from a record A$54 billion, mainly due to a fall of about a third in the value of wheat, barley and canola production.
Livestock production will remain relatively stable at A$35 billion. The value of agricultural exports is projected to fall to A$64 billion in 2023-24 from A$75 billion a year earlier.
The government of Peru, the second largest producer of copper and zinc, expects shipments of goods to begin to normalize within days as the country’s worst street protests in decades subside.
“At the moment, the problem of protests has been kept to a minimum,” Oscar Vera, the newly appointed Minister of Energy and Mines, said in an interview. “The mining corridor is now open and mining will begin in the coming days.”
The full resumption of shipments will come as a relief to tight global metals markets, shaken by the surge in protests sparked by the impeachment of former President Pedro Castillo. Months of unrest, which limited the transport of metal to ports and deliveries to mines, hampered the activities of companies including Glencore Plc and Freeport-McMoRan Inc., and also exposed risks to the production of goods in emerging markets.
Speaking on the sidelines of a conference in Toronto on Monday, Vera said authorities have eased tensions by establishing lines of communication with the public and understanding their concerns. In many cases, the conflicts have been linked to a halt in investment in local water and health projects, he said, adding that the government has stepped up efforts to enforce public works.
Undoubtedly, unrest in some areas continues. In Puno, where some of the most violent protests have taken place, roadblocks continue to remain even after roadblocks in other mining regions have been removed. Although the giant San Rafael tin mine, owned by Minsur SA, has resumed operations after a 45-day shutdown, it is still a long way from reaching full capacity.
Minister Vera said that direct and constant communication and concrete action to meet the demands is paying off – even at the Las Bambas mine, owned by MMG Ltd., which has experienced more than 400 days of roadblocks in its seven-year history.
With a minimal blockade, Las Bambas is likely to resume copper transportation “between today and tomorrow,” Vera said. He said he hoped a long-term solution could be found, with a military presence along the roads and authorities on the ground, to ensure demining commitments were met. There are also proposals to change the route of transportation of ore to the port.
Peru’s copper production is likely to have been hit by the protests, but Vera said he is “very optimistic that things will start to normalize in the coming days” with production rebounding over the rest of the year.
The government has identified a total of $6.9 billion in mining investment this year and next, consisting of seven potential projects. However, there are some projects, such as Southern Copper Corp.’s Tia Maria, which, while technically sound, require further work to convince local communities of the benefits, he said.