Sept. 25 (Bloomberg) -- Wheat output in Australia, Asia's biggest exporter, may miss government forecasts after hot, dry weather damaged New South Wales' crops in the past week, adding to concerns that sent world prices up 75 percent this year.

There's been ``massive'' deterioration in the state's crops in the past week, and the wheat harvest from October may be as little as 2.26 million tons, said Frank McRae, technical specialist, grains, with the state Department of Primary Industries. That's 44 percent less than the federal government's commodity forecaster estimated a week ago, and compares with an earlier estimate from McRae's department of 4 to 5 million tons.

Wheat rose to a record this month as drought cut crop expectations in Australia, adding pressure to global inventories heading for a 26-year low. An estimated wheat crop of 15.5 million tons by the chief forecaster may be too high, said Justin Smirk senior economist at Westpac Banking Corp.

``The crops are past the point of no return, even with rain,'' in New South Wales state, said Ron Greentree, usually Australia's largest grain grower. He's expecting to gather as little as one-tenth of his normal crop this year. ``We're talking massive crop failures.''

Wheat futures for December delivery fell 1.25 cents, or 0.1 percent, to $8.765 a bushel on the Chicago Board of Trade in after-hours electronic trading at 5:37 p.m. Singapore time.

Prices rose to a record $9.1125 a bushel this month and have more than doubled in the past year as adverse weather cut output from the U.S, Canada, Australia and Europe.

`Serious Problem'

``Some of the estimates I've seen suggest if it doesn't rain by harvest time the crop could be as low as 12 million tons,'' Westpac's Smirk said today from Sydney. ``We have got a serious problem unfolding in the wheat regions in New South Wales.''

``We're probably in major trouble,'' said the primary industries department's McRae in a phone interview today from Orange, New South Wales. ``I'd suspect a lot of the crop on the central and southern slopes that could still respond to rain, they probably only have another two weeks at most.''

Farmers are cutting crops for hay already in most districts, McRae said.

``It's desperate,'' said Greentree from his farm near Moree, 650 kilometers (404 miles) north-west of Sydney. Greentree, who harvests about 100,000 tons of all grains in a normal year, is expecting production of 10,000 tons to 15,000 tons this year. The nation's wheat production could be below 12 million tons, he said.

Australia's commodity forecaster cut its wheat estimate by 31 percent to 15.5 million tons on Sept. 18 because of dry weather, down from its June forecast of 22.5 million tons. The country's wheat crop plunged to 9.8 million tons last harvest because of drought.

The nation's wheat crop is ``getting smaller by the day,'' Steve Dalton, from grain traders Ecom Commodities said. ``I don't think 12 million to 13 million tons is out of the question at the moment,'' he said.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net

Last Updated: September 25, 2007 05:39 EDT