Market News & Headlines >> Australia’s Wheat Crop Seen Down

Drought conditions across Australia's east coast is expected to reduce production of wheat, the country’s main export commodity next season, the government's chief commodities forecaster said on Tuesday.

The Australian Bureau of Agricultural, Resource Economics and Sciences (ABARES) forecast Australian wheat production will fall 8.2% to 24.80 million metric tons in 2014/15 from 27.013 million tons in 2013/14 despite a 1% increase in planted acreage. Wheat yields are seen returning to near average levels due to dry conditions.

Australia, the world's No. 3 wheat exporter, could produce a bumper crop due to the increased plantings if late season rains materialize, ABARES said. However, dry conditions across eastern Australia and forecasts for the return of the El Nino weather phenomena later this year cloud the prospects for agricultural production. 

"The crop will go in the ground, but we will be relying on rains across the country," Luke Mathews, commodities strategist at Commonwealth Bank of Australia told Reuters News Service.

Although production is expected to be down, ABARES expects Australia to maintain an active wheat export campaign, forecasting 2014/15 exports at roughly 19.1 million metric tons, up slightly from about 18.5 million in 2013/14.

Potential supply disruptions in the Black Sea region will have the wheat market watching production in Australia and other major exporting nations more closely.