Weak El Nino may cut eastern Australia's wheat output

A weak El Nino may cut wheat production by as much as 25 percent in the eastern states of Australia, according to Standard Chartered Plc.

Wheat production in the states of New South Wales, Victoria, Queensland and South Australia account for nearly 70 percent of the country's total.

Eastern Australia's share of the nation's wheat output may drop to 50 percent, from about 70 percent forecast for this year, said John Reeve, director for commodity sales at Standard Chartered in Singapore.

Still, El Nino may spare wheat harvests in eastern Australian states, should it start to take effect in late October just before the harvest when the crops have enough soil moisture and the roots are deep enough in the soil, Reeve said.

Reduced output from Australia could support wheat prices, which have dropped 15 percent this year on expectations of higher global supplies and weaker demand.

New South Wales, Victoria, Queensland and South Australia were estimated to produce 14.46 million tonnes of wheat in the 2009- 2010, up from an estimated 12.45 million tonnes a year earlier, according to a June 16 forecast by Australia Bureau of Agricultural & Resource Economics (ABARE). 

Australia's total wheat output was forecast to rise 2.7 percent to 22 million tonnes from a year earlier, ABARE said late June.