Dry weather may see Aussie wheat output fall short

Wheat production in Australia, the world's second-biggest exporter, may be less than a government forecast after dry weather curbed yield prospects just as drought from the U.S. to Russia threatens crops.

Output may be 23.25 million metric tons in 2012-2013, according to the median estimate of six analysts and traders in a Bloomberg survey. That's 3.5 per cent less than the 24.1 million tons predicted by the Australian Bureau of Agricultural and Resource Economics and Sciences, and compares with a record 29.5 million tons a year earlier. The U.S. Department of Agriculture estimates the harvest at 26 million tons.

Wheat has climbed 35 per cent this year, reaching a four-year high in July, as the worst U.S. drought since 1956 and dry conditions in Russia shrink global supplies.

The world needs swift, coordinated action to avoid another food crisis in the face of rising prices, the heads of three United Nations agencies said Sept. 4. Surging grains and oilseeds prices drove the biggest monthly gain in food costs in July since 2009, according to the UN.

“Colder and drier-than-ideal conditions in much of Western Australia and some parts of the east coast have really eroded the potential for the wheat crop,” said Graydon Chong, senior grains and oilseed analyst at Rabobank International. “The next two-to-four weeks will be crucial from a weather perspective.”

Abares is set to update its production forecast on Sept. 11 followed by the USDA on Sept. 12. Australian grain farmers begin harvesting from about November.


Western Australia

Total grain output in Western Australia, the nation's biggest wheat producer, may be 9 million to 10 million tons in 2012-2013, Max Johnson, grain operations manager at CBH Group, the state's biggest handler, said Sept. 5. That compares with a July forecast of 9 million to 11 million tons and a record 15 million ton harvest a year earlier.

Western Australia's southwest had the driest July on record and the state's mean minimum temperature was the coldest since at least 1950, when comparable records began, according to the Bureau of Meteorology. The state's main grain-producing region is set for wetter-than-normal conditions in September to November, the bureau said Aug. 22.

“We really lost 30 days of growth in July,” Johnson said by phone from Newdegate, about 400 kilometers (249 miles) southeast of capital Perth. “Crops are normally ripening in late August-September, we want those crops to now ripen in late September-October. If we get another three to four weeks of cool, damp weather it offsets that miserable July we had.”

Fill shortfall

Global wheat stockpiles will drop 10 per cent before next year's harvest to 177.2 million tons, the lowest since 2009, the USDA said Aug. 10. Wheat for December delivery advanced 1.3 per cent to $US8.79 a bushel on the Chicago Board of Trade at 8:56 p.m. in Melbourne yesterday.

“Australian grain production this season will go a long way to fill the shortfall left by North American crop production failure as well as parts of the Black Sea region,” Rabobank's Chong said in a phone interview yesterday.

Russia's wheat crop may be 40 million tons, Deputy Agriculture Minister Ilya Shestakov said yesterday. In 2010, when the country's worst drought in 50 years spurred a 10-month ban on grain shipments, Russia produced 41.5 million tons.

In the U.S., soybean production may drop 12 per cent to 2.692 billion bushels while corn output may slide 13 per cent to 10.779 billion bushels, according to the USDA. The U.S. is the world's biggest wheat exporter followed by Australia, USDA data show.