Celebrations over WA's bin-busting grain harvest may be short-lived, as economists warn lower yields and lower wheat prices could crimp growers' profits this year.
But it's not all bad news, with the State's sheep farmers poised for a bumper year thanks to the high summer rainfall and prices for both wool and sheep meat hovering near long-term highs.
Grain handler CBH Group declared in January that WA farmers had produced a 15 million-tonne crop, the biggest on record and a stark contrast to the previous year's drought-ravaged harvest. However, volatile equity markets and high global grain stocks have weighed on prices, with premium APW wheat - the country's biggest crop - dropping as low as $230 a tonne in recent months. Many farmers have also had their grain downgraded in quality because of damaging late rains.
Economists say this reduced the 15mt crop to 11mt in value terms, although the pain was partially offset by stronger than expected yields across much of the State.
Yesterday, Rabobank said WA wheat production was likely to fall to 8.5mt in 2012-13, down from the just-harvested 11mt haul. Nationally, it expects wheat production to fall 13 per cent to 24.7mt.
In its latest crop update, the bank warned the strong Australian dollar would remain a "headwind for profitability" for grain producers.
The comments echo those from industry sources, who say farmers are grappling with higher input costs this year and weaker prices across most wheat grades.
Based on average yields and current prices, economists say WA grain farmers are heading for a break-even year.
However, the wet weather - WA received 30 per cent more summer rain than average - has given growers some good news via a good start to their upcoming planting programs.
The Department of Agriculture and Food WA said yesterday levels from Harvey Water in the South West showed dams were at 52 per cent capacity, up 22 per cent from the same time last year. Most dams in the Central Wheatbelt are reportedly full.
MarketAg director Richard Vincent said farmers were also optimistic of good yields this year.
WA Farmers Federation president Mike Norton welcomed projections of strong autumn rainfall.
"Hopefully the rains fall good and strong early in the season and we can harvest another record crop," Mr Norton said.
"This coming year is shaping as a positive year for agriculture. There is however, still quite a bit of debt out in rural areas and another strong season with high quality crops will help farmers and rural community's bottom lines considerably."
Bankwest agricultural economist Peter Rowe said the summer rains had also delivered a boon to sheep farmers, with good pastures likely to result in a lower cost of production this year.