Sept. 15 (Bloomberg) -- Australia, the world’s fourth- largest wheat exporter, may produce 3.2 percent more of the grain than previously forecast on expectation of bigger crops in the nation’s western and southern states.

Output may be 22.7 million metric tons in 2009-2010, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today. That compares with its June prediction of about 22 million and last year’s crop of 21.4 million tons. Exports are forecast at a four-year high of 15.5 million tons.

Australian farmers planted a record area to wheat after prices rallied to an all-time high last year and will begin the harvest from about November. Wheat prices fell to the lowest in more than two-years today on expectations the world’s farmers will produce the second-biggest crop on record.

“Market sentiment remains bearish, with abundant global supplies and lack of export demand,” GrainCorp Ltd., eastern Australia’s biggest grain handler said today in an e-mail.

Wheat for December delivery fell 0.4 percent to $4.52 a bushel on the Chicago Board of Trade in after-hours electronic trading at 11:24 a.m. in Sydney. The contract dropped to $4.50 earlier, the lowest since April 2007. Wheat reached a record $13.495 on Feb. 27, 2008.

Total winter grains output is forecast at about 36 million tons, the bureau said. Barley production may be 7.9 million tons and canola output may be 1.7 million tons.

“In Western Australia, South Australia and Victoria the majority of crops are well placed leading into the spring months,” the bureau said in a statement. “Rainfall in the spring months is crucial for crops in all regions to reach current potential.”

Australia may plant 19 percent more cotton in 2009-2010, the bureau said. Output may be 375,000 tons, it said.

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

Last Updated: September 14, 2009 22:22 EDT