Good vintage for wine producers
Wine grape production in the Southern Hemisphere appears to have been quite healthy, with nearly all major supply countries registering above-average crops for the first half of 2013, according to Rabobank's Wine Quarterly report released last week.
The estimated size of the 2013 Australian wine harvest at 1.83 million tonnes has surprised many, increasing by 10 per cent on the previous year.
Chile, South Africa and New Zealand are expected to harvest record or near-record crops.
Rabobank senior analyst Marc Soccio said the extended heat wave at the beginning of the year had little effect on the crop in hot inland regions which contributed roughly 60 per cent towards the largest crop in five seasons.
"Wine grape prices also strengthened, with average prices across cooler, more temperate climate regions rising by 13.1 per cent on the prior year, while prices across hot inland regions increased more modestly by 3.5 per cent," he said.
"Lower supply from shorter harvests in recent years have caused export sales of Australian wine to dip; however, the larger 2013 crop will see this trend reverse and require Australian winemakers to find a home for more wine over the next couple of years."
Australian wine exports declined 5.8 per cent in volume and 1.7 per cent in value in the first four months of 2013 compared to the same period in the prior year.
The Rabobank report suggested incremental improvements in the US labour market has provided renewed support for the greenback, at a time when the Australian dollar has been re-rated by markets in line with weaker than expected economic activity in the Australian economy.
Mr Soccio said the strong gains made by the US dollar against the Australian dollar in recent times have "buoyed the hopes of weary wine exporters".
He said a lower currency took time to provide a boost to competitiveness and earnings.
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