Australia cuts forecast wheat output, but expects bumper crop
Australia has trimmed its forecast wheat production in the current marketing season by more than 3 percent after dry weather across key growing states, but output from the world's No.2 exporter is still expected to be its sixth largest on record.
The Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) on Tuesday pegged wheat production at 24.467 million tonnes, down from its previous forecast of 25.399 million tonnes in June.
But a downward revision had been widely expected by market participants and is unlikely to ease fears that the size of the Australian crop will pressure global prices for the grain in the long term, although it could offer some shorter-term support.
"A downgrade of nearly 1 million tonnes from Australia, which is one of the world's largest exporters, is likely supportive of global prices but we don't know if it will move the dial too significantly as the market was largely working of a crop size of between 24-25 million tonnes," said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.
Chicago Board of Trade wheat futures have tanked more than 18 percent so far this year as producing nations, particularly in the Black Sea region, expect bumper crops.
Dry weather in eastern Australia, which produces the country's premier wheat, has hit crop yields, ABARES said. Production in New South Wales and Queensland will total 8.98 million tonnes, a fall of 4.5 percent from ABARES' previous estimate for the two states of 9.4 million tonnes.
Much of northern New South Wales and Queensland have received less than 20 percent of typical rainfall during August, data from the Australian Bureau of Meteorology shows.
ABARES also lowered its production estimate for Western Australia to 7.33 million tonnes from 8.807 million tonnes previously. Analysts said that reflected mixed weather conditions across the state.
But an increase in production from South Australia offset the projected falls in Australia's largest wheat producing states. ABARES said South Australian wheat production will top 5.2 million tonnes, up 27.5 percent from the forecaster's last estimate of 4.11 million tonnes.
Elsewhere, ABARES predicted that Australian canola production in 2013/14 would rise to 3.31 million tonnes. It had previously forecast output at 3.23 million tonnes.
Australian cotton production was seen at 990,000 tonnes, down on ABARES' June forecast of 995,000 tonnes. (Editing by Joseph Radford)