Trains roll to rescue drought victims

NSW wheat crop is forecast to be one-third of its annual average

MALLALA, Australia - Until a few months ago, train driver Gavin Slater had never seen anything like it. Five locomotives, with a combined 15,000 horsepower, ready to pull 101 wagons brimful of grain.

The converted coal carriages behind Slater were being loaded in Mallala, a town of several hundred people in Australia's fertile southern wheat belt.

It's one of few farming areas in the country able to provide grain to parched eastern states to keep cattle and sheep fed and flour mills grinding amid one of the worst droughts on record.

"It's virtually double the train I'm used to driving at home; we're just as big as a coal train," Slater, who lives in an agricultural belt 300 kilometers north of Sydney, said from the cab of his diesel locomotive.

"From a small pocket of South Australia to feed virtually the rest of Australia - it's good," he said before heading off on the overnight trip to rural New South Wales, Australia's most populous state.

Bone-dry conditions for the second successive year in Australia's major eastern grain growing areas are creating the demand and prices to restart domestic trade routes not used since the height of the last major drought a decade ago.

South Australian farmers are selling whatever grain they have left in their silos at bumper prices in the knowledge the knee-high wheat in their fields will produce another decent crop in a couple of months.

A spokesman for food and bakery company Allied Pinnacle said its flour mills had been sourcing additional grain from South Australia since February.

But as Australia, the world's fourth-largest wheat exporter, diverts grain for internal use, Asian flour millers are locking in record volumes of wheat from rival producers to make up for the shortfall.

Three months from the start of the important wheat harvest, the entire state of NSW is in drought. Recent erratic rains can do little to salvage crops that have already failed, or weren't planted at all.

The NSW wheat crop is forecast to come in at 2.4 million tons, according to Glencore Agriculture, which is less than one-third its 10-year annual average.

Saving grace

While the drought is most acute in NSW, it extends north into Queensland and is also cutting production in some southeastern grain-growing areas, meaning a lean year for the country's largest agricultural export.

Australia's national weather agency, the Bureau of Meteorology, have predicted continued drought conditions in their 2018 Spring Outlook released on Thursday.

One saving grace is an anticipated bumper wheat crop in Western Australia, which is expected to enjoy a harvest in excess of 10 million tons this season, about 2 million tons above its 10-year average.

However, Jason Craig, general manager of marketing and trading at the country's largest grain exporter, Western Australia-based CBH Group, said east-coast buyers were pushing up prices and outbidding overseas importers.

That's meant grain ships traveling from Western Australia to east coast ports, instead of to markets in Asia.

Australian wheat exports to Indonesia have plunged to 1.2 million tons in 2018, down more than a half from the 2.66 million tons during the same period last year, according to industry data.

Rival exporters including Argentina, Canada, Ukraine and the United States have all increased wheat exports to Indonesia over the same period.

"Australia has sold very little new-crop wheat as of now as against at least a couple of million tons traded by this time in a normal year," said one Singapore-based grains trader at an international trading company.

Reuters