News last update:6 Aug 2012

Biofuels power Aussie grain farms

The outlook for the Australian grain-growing sector is bright, thanks to the growing demand from the biofuels sector.

The Australian Bureau of Agriculture and Resource Economics is expecting grain production to bounce back this year, said ABARE's Vince O'Donnell at the Outlook conference in Canberra. "The low world grain stocks are pushing world prices up, due to "increased demand for feed grains for biofuels, combined with theexpansion of intensive livestock industries", he said.

Better years to come

ABARE executive director Phillip Glyde said 2006-07 had been a tough year, with grain growers in eastern states particularly hit hard. "The upside is we are expecting agricultural commodity prices generally to be holding up into 07-08, so, if they can get a crop in the ground and we get a return to normal seasonal conditions, then I think it is a good story," he said.


Winter cereal production, assuming normal seasons, is forecast to be 38.4million tonnes, 23 million above last year's drought-reduced crop. "We are expecting a fairly strong rebound from the drought and probably stronger than what we have seen from the last few droughts," Mr Glyde said.

World wheat prices are currently at their highest level for 10 seasons, at $242 a tonne, up from $191 a tonne last year. ABARE is forecasting a 21% rise in the value of wheat exports, up to $3.8billion. Mr O'Donnell said demand for biofuels was expected to drive demand for grains and oilseeds in the medium term.

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