July 28, 2010

La Nina may boost Australia's wheat production

Australia's wheat output may rise amid rainfall in the country's west and the development of the La Nina weather pattern.

Production from the next harvest may climb as high as 24.5 million tonnes, from a current forecast of 23.1 million, if there is favourable weather for the rest of the season, said analyst Dan Basse.

Wheat prices on the Chicago Board of Trade may range between lows of US$5.25 to US$5.50 a bushel and highs of US$6.25 to US$6.50 for the remainder of the year, assuming there are no significant problems with crops in Australia and Argentina, Basse said.

"We are quite optimistic with the recent rains in Western Australia that this wheat crop could be rather special," Basse said. Exports from the nation could be 15.5 million to 16 million tonnes, he said. The USDA forecast 2009-2010 exports at 14.5 million tonnes.

Output for the 2009-2010 season was 22.5 million tonnes, according to the USDA, while the Australian Bureau of Agricultural and Research Economics estimated the harvest at 21.7 million tonnes.

Australia's eastern states may benefit from the development of La Nina, Basse said. The weather pattern, which typically brings more rainfall to the region, was highly likely to be in its early stages, the Bureau of Meteorology said on its website last week.

"With La Nina building, there is a strong correlation between large Australian wheat crops and good rainfall, at least during the months of August and September," Basse said.

La Nina is a cooling of the equatorial Pacific Ocean that occurs on average every three to five years and lasts nine to 12 months, according to the US National Oceanic and Atmospheric Administration.