Key facts
- Australian farmers are significantly reducing wheat planting due to drought and high input costs.
- Australia, a top wheat exporter, may ship 10 million tonnes less wheat in the upcoming season.
- High fertilizer prices, linked to the war in Iran and Strait of Hormuz closures, are a major factor.
- An expected El Nino weather pattern is predicted to bring dry conditions to key cropping regions.
- Reduced Australian supply is expected to tighten global wheat availability and increase prices.
Australian wheat production is facing a significant downturn, with farmers like Justin Everett planting substantially less wheat due to a combination of factors. A lack of rainfall, coupled with sharp increases in fuel and fertilizer prices exacerbated by the war in Iran and disruptions to shipping through the Strait of Hormuz, has forced many to revise their seeding plans. Farmers are also switching to less fertilizer-intensive crops like barley or canola, or those with higher selling prices.
Across Australia, an estimated seven to 20 percent less land will be planted with wheat, potentially reducing the harvest by 16 to 41 percent from last year's 36 million tonnes. This could mean Australia, the world's third-largest wheat exporter, has up to 10 million tonnes less to ship, representing about five percent of annual global exports. The situation is mirrored in other major exporting nations like Argentina, where farmers are also cutting back planting due to high costs.
Forecasters predict the formation of an El Nino, which typically brings dry conditions to Australia's east coast, further increasing the risk for farmers. While some regions, like Victoria, are experiencing good rainfall, many in New South Wales and Queensland are finding planting too risky. The fertilizer shortage is acute, with Australia importing over half its nitrogen fertilizer from the Middle East, and current supplies are estimated to be 20% below typical usage. This economic pressure is expected to have a ripple effect throughout rural communities.
Farmers are resorting to measures like reduced fertilizer application, which saves money in the short term but could impact soil health and future yields. The long-term outlook for 2027 is a concern for farmers like Everett, who worry about the ability to restore soil nutrients if prices remain high.