December 13, 2004

USDA Cuts Australian Wheat Crop Estimate

The US Department of Agriculture has lowered an estimate of Australia's wheat crop for the third time in three months because of unseasonably hot, dry weather that may cause output to plunge 18 per cent from a year earlier.

Australia, the biggest wheat exporter behind the United States, will probably gather 20.5 million metric tons of grain from the harvest that started last month, according to the department's Foreign Agricultural Service. That compares with its forecast for 21.5 million tons on November 5, and 24.92 million tons from the last harvest.

"Limited subsoil moisture and periodic dry, hot episodes have plagued the 2004-05 winter grain crop during key periods over the growing season," said the report, which was prepared December 6 by Andrew Burst at the US Embassy in Canberra.

A smaller Australian harvest would reduce the amount of wheat available for export and ease a global oversupply. Wheat futures in Chicago have fallen 21 per cent this year.

Wheat for delivery in March fell 5.5 cents, or 1.8 per cent, to US$2.965 a bushel when last traded December 10 on the Chicago Board of Trade.

The US report comes after the Australian government's commodity forecaster cut its estimate of the October-to-January wheat harvest on November 30. The Canberra-based Australian Bureau of Agricultural & Resource Economics pegged the crop at 20.2 million tons.

Wheat exports from Australia, which are sold by Melbourne-based AWB Ltd, may fall to 15.75 million tons in the year ending September 30, 2005, from 17.83 million tons a year earlier, the US agriculture department said.

It pegged the barley harvest at 6.5 million tons, or 7.1 per cent less than a month earlier. Australia had grown 8.63 million tons of the cereal a year earlier.

It said December 10 that global wheat production will reach 618.26 million tons in 2004-05, or 12 per cent more than its forecast for demand of 606.42 million tons.

Global output of wheat, barley and other cereals this year will probably climb 8.5 per cent to a record 2.04 billion tons, leading to the first increase in stockpiles in five years, the United Nations' Food and Agriculture Organization said December 9.