April 23, 2010

Drought to hit Australia's western grain areas

The grain regions of Western Australia may have drier-than-normal weather in the next three months when farmers need rain to plant crops.

The state's south-west has a 55-65% chance of below-average rain in May to July, the Bureau of Meteorology said. Southern Queensland and northern New South Wales have a 60-80% chance of above-average rainfall.

Farmers will begin widespread planting of winter crops from late April, depending if there's sufficient rainfall for germination and early plant development. The nation's western state accounted for 38% of total wheat output last harvest, according to the Australian Bureau of Agricultural and Resource Economics.

"The outlook seems to be weakening a bit in Western Australia from a rainfall perspective, but it is more about timing," Wayne Gordon, agricultural commodities analyst of Rabobank Groep NV, said.

Wheat for July delivery fell 0.5% to US$4.975 a bushel on the CBOT at 12:44 p.m., Melbourne time. The futures have dropped 8.2% this year on rising global supplies.

The bureau's outlook reflected a warming of Indian Ocean and Pacific Ocean temperatures, which has also brought drought to parts of Eastern Australia.