CANBERRA, Australia (Reuters) — Drought across Australia’s east coast might cut production of key agricultural commodities such as wheat, canola and beef next season and reduce exports.
Forecasts of a return of dry El Nino weather conditions across the key farming states of Queensland and New South Wales later this year mean the prospects for agricultural production remain uncertain.
Global markets will carefully watch forecasts of Australia’s crop, particularly in light of recent concerns over tensions disrupting supply in the Black Sea, one of the world’s key grain exporting regions.
Australian wheat production is forecast to fall 8.2 percent to 24.795 million in the 2014-15 season from 27.013 million tonnes in 2013-14, said the Australian Bureau of Agricultural and Resource Economics and Sciences.
ABARES said the decline in production will come despite a two percent increase in planted acreage because yields should return to historical average levels after last year’s exceptionally high yields. The forecast is based on normal growing season rainfall.
“The crop will go in the ground, but we will be relying on rains across the country,” said Luke Mathews, commodities strategist with the Commonwealth Bank of Australia.
Despite the dry conditions, this season’s wheat harvest could be the country’s sixth-largest crop on record.
Australian canola production in 2014-15 is expected to fall 17 percent to 2.948 million tonnes, ABARES said, down from the 3.548 million tonnes in the previous season. Dry conditions will discourage seeding, with planting seen falling five percent, it said.
ABARES increased its forecast for 2013-14 beef exports to 1.15 million tonnes amid record slaughter because of a two-year drought in the cattle state of Queensland.
ABARES said Australia’s national herd will fall to 27.1 million head, the lowest since 2009-10, which was also affected by drought.