SYDNEY/SINGAPORE (Reuters) — Australia’s wheat production is likely to fall 27 percent from last year’s record crop, a Reuters poll shows.
And as dry weather continues to reduce yields, production forecasts could fall further.
Australia is one of the world’s largest wheat exporters. Worries about its 2012-13 crop are raising fears about global food supplies and helping to support global wheat prices. U.S. wheat futures are up 42 percent since the beginning of June.
Reuters surveyed 10 analysts and traders, and their average estimate for the wheat crop came in at 21.44 million tonnes, a fall of nearly five percent from Australia’s official forecast of 22.5 million tonnes and eight million tonnes below last year’s all-time high output of 29.5 million tonnes.
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“A dry August and September have taken a lot of potential off yields, making it hard for Australia to have an above average crop,” said Malcolm Bartholomaeus, an analyst at industry newsletter Profarmer.
The median forecast for the Australian wheat crop pegs production at 21.59 million tonnes, with estimates ranging from a low of 20 million tonnes to a high of 23 million tonnes.
Wheat production forecasts are falling with each dry week that passes, and several analysts said they will not be surprised to see only 20 million tonnes harvested.
“We probably need another week or two before we take it down, but ultimately it looks like it will come in about 20 million tonnes,” said a Melbourne-based commodity trader who had maintained an estimate of 22 million tonnes.
“The crop had a huge potential two weeks ago, but the rains that were supposed to come last weekend were disappointing, especially for Victoria and New South Wales,” said Stefan Meyer, a manager for cash markets at brokerage INTL FCStone in Sydney.
As a result of the dry weather, he said Australia’s wheat exports in 2012-13 are expected to fall below 18 million tonnes from an estimated record 24.9 million tonnes last year.
A lower Australian wheat crop would reduce global supplies, which may tighten further if Russia, typically the world’s fourth largest exporter, curbs exports because of dry weather earlier this year. Wheat prices were also supported by the drought that ravaged corn and soybean crops across the U.S. grain belt.
Investment bank Goldman Sachs said Oct. 1 it expected corn and wheat prices to outperform soybean prices over the next few months because of bigger-than-expected U.S. soybean supplies reported by the U.S. Department of Agriculture.
Western Australia, the nation’s largest wheat producing state, has been particularly dry.
