September 22, 2010

Western Australia cuts wheat output estimate

The grain sector forecasting group of Western Australia cut its state wheat production outlook by 18% due to dry weather and warned that crops may deteriorate further as rain fails to arrive.

Output may be 4.473 million tonnes, the Perth-based Grain Industry Association of Western Australia said in a report based on observations and data as of September 16. That compares with 5.486 million tonnes forecast by the group earlier this month.

Reduced production will curb exports from the state, the country's largest producer last year, as global output drops. Grain regions in the southwest have been mostly dry this month, after below-average falls in August, even as wet weather boosts output potential in the eastern states.

"The forecast has nothing in the rain gauge for at least two week. We have crops trying to mature on almost nothing and to make matters worse, now it is into late September the temperatures are going up. There was still downside to the latest forecast," said Alan Meldrum, association project manager.

Wheat for December delivery on the CBOT gained 0.6% to US$7.22 a bushel at 4:09 p.m. Melbourne time. suspend grain exports until after next year's harvest. Futures touched US$8.68 a bushel last month, the highest since August 2008, after Russia announced an export ban because of drought.

Australian wheat production may be 25.1 million tonnes this season and exports may gain to 18.4 million tonnes, the second highest on record, the Australian Bureau of Agricultural and Resource Economics-Bureau of Rural Sciences said September 14. Western Australia's output may be 6.1 million tonnes, compared with 8.2 million tonnes last year, it said.

The country is forecast to be the third-largest wheat exporting nation in 2010-2011, after the US and Canada, according to the USDA. Shipments from Russia may drop to 3.5 million tonnes from 18.6 million tonnes in 2009-2010 because of drought.

Total Western Australian crop production is forecast at 7.57 million tonnes, the grain industry association said, down from its previous outlook for 9.15 million tonnes. The canola forecast was cut to 867,000 tonnes from 963,000 tonnes.

Merredin in the wheat-growing area has received nine millimeters (0.4 inch) of rain so far this month compared with the September average of 26 millimeters, while Wongan Hills has had 10 millimeters compared with an average 29.3 millimeters. , According to Bureau of Meteorology data, the central wheat belt received no reported rain in the past seven days.