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Life returns to wine grape prices

AAP logoAAP 31/10/2016 Trevor Chappell

The price of wine grapes in Australia is improving after some years in the doldrums, thanks to China's growing demand for imported wine.

Agribusiness banking specialist Rabobank says grape prices, especially for red grapes in premium growing regions, have rebounded from their low point in 2011.

The lower Australian dollar and relatively constrained production of grapes in Australia and overseas have also helped lift prices.

"Life has returned to Australian wine grape prices, with China driving much of the recovery in market conditions," Rabobank said in its latest Wine Quarterly report.

The recovery in prices has been stronger in red wine grapes from premium cool/temperate climate regions such as the Barossa Valley, McLaren Vale, Coonawarra, Mornington Peninsula and Tasmania.

But prices for global commodity bulk wine had also lifted recently, which is expected to boost demand for grapes from warm inland regions.

"Fortunately, most of the market developments that saw wine grape prices bottom out in 2011 are no longer at play," Rabobank senior analyst Marc Soccio said.

"We are starting to see sentiment in the industry recover from a time when the national average wine grape price more than halved to A$413 per tonne."

The performance of the Chinese wine market is a key barometer of future market conditions for red grapes, Rabobank says.

Mr Soccio said there were signs that Chinese demand for premium red wines may be moderating, with some of that demand transferring to lower priced wine in a shift that could offer more support for commercial red wine grapes.

China's imports of Australian wine rose 41 per cent in the six months to June 2016, and the trend is expected to continue in 2017.

Mr Soccio said demand for premium red wine in Australia, the US and Canada also contributed to greater demand for wine grapes.

Australia's wine grape production increased by six per cent in 2016 but limited investment in developing new vineyards is expected to constrain supply over the next three to five years.

Mr Soccio said the size of Australia's national vineyard estate fell between 2012 and 2015, more so among white wine grape varieties in a reflection of the greater demand for reds.

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