SYDNEY, Australia (Reuters) – Rain in Western Australia and across the south of the country have raised the country’s wheat crop outlook by more than one million tonnes in the last month, keeping it on track for the best harvest in four years, a private forecaster said last week.
Higher supplies from the world’s fourth largest wheat exporter will help keep wheat prices around the lowest level in more than two years, despite some tentative signs of a price recovery.
The country is likely to harvest 23.1 million tonnes in 2009-10, Australian Crop Forecasters estimated, up from the 22 million tonnes prediction made last month.
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It said there was the possibility of as much as 24 million tonnes, just short of the 25.2 million tonnes harvested in 2005-06 before drought slashed production.
“Barring a major catastrophe such as severe frost, there’s still potential for a crop somewhere above 23 million tonnes and even 24 million tonnes if we get some favourable rain this month,” said ACF analyst Gavin Warburton.
Production estimates
Warburton said the forecast for Western Australia was up by more than one million tonnes to about 8.7 million tonnes and for South Australia by 400,000 tonnes to just over four million tonnes.
Western Australia is the country’s top grain producing and exporting state, selling more than 90 percent of its production to buyers in Asia, the Middle East and Africa.
In contrast, dry weather over parts of New South Wales led ACF to cut its estimate for the country’s second-largest grain producing state by 500,000 tonnes to six million tonnes. Last season, the state harvested 6.8 million tonnes.
“New South Wales is going a little bit backwards but the other states, Victoria, South Australia and Western Australia, will more than cover that,” said Warburton.
ACF expects South Australia to harvest about four million tonnes, the state’s best harvest since 2005.
ACF’s estimate is near the top end of forecasts ranging from 21.8 million to 23.5 million tonnes.
About 14.6 million tonnes are likely to be exported, adding to already ample global supplies that are keeping a lid on prices.
“The fundamentals are still very bearish for wheat even though we’ve seen fund activity pick up,” said Wayne Gordon, an analyst at Rabobank.
