Dryness expected to hold back Aussie wheat crop

SYDNEY, Australia (Reuters) — Australia expects a flat winter wheat crop of 23.6 million tonnes in 2015-16 amid a drought-inducing El Nino.

The national barley yield was forecast to rise three percent to 8.2 million tonnes because of higher plantings to meet China’s rising demand, the Australian Bureau of Agricultural and Resource Economics and Science  said in its latest crop report.

Canola production is expected to fall by 13 percent to three million tonnes because of better relative returns from other crops and dry conditions in some regions during the planting window, ABARES said.

The start to the 2015-16 winter crop season in Australia has been generally favourable as above average rainfall in April replaced below average rain across southeastern Australia in March, according to the report.

Higher soil moisture on the east coast could boost production of high-protein prime hard wheat, which is in strong demand in domestic and overseas markets.

However, meteorologists warn that an El Niño in the tropical Pacific continues to strengthen, which increases the possibility of below-average rain in eastern Australia.

The Southern Oscillation Index, which measures the intensity of an El Nino, has averaged minus 9.7 in the past three months, exceeding El Nino thresholds, according to the Australian Bureau of Meteorology.

The impact on crop yields from an El Nino is not uniform and difficult to predict because the timing of any rainfall is also significant, ABARES said.

The last El Nino in Australia was in 2010. An El Nino typically has less impact on rain in Western Australia than in eastern Australia.

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