Dec. 4 (Bloomberg) -- Australia’s most populous state declared a natural disaster and flood warnings were issued for two other regions as rains swept the nation’s east coast, damaging crops and driving up global wheat prices.
New South Wales Emergency Services Minister Steve Whan said A$500 million ($497 million) was wiped off the state’s forecast A$3.2 billion winter harvest, according to a statement released today. Flood warnings were issued for rivers in the northern state of Queensland and the southern state of Victoria.
Flooding “has caused significant damage,” Whan said. “With continuing rainfall predicted in coming days and weeks, we are monitoring the situation across the state and will extend this declaration, if needed.”
Australia’s east coast is being affected by a La Nina event that’s cooling the Pacific Ocean and increasing rainfall, producing the wettest August-to-October period on record, the Bureau of Meteorology says. Crop damage may prompt a revision to third-quarter economic growth, the Australian newspaper reported, and helped push wheat to the highest price in almost four months.
Rains are likely to affect grain quality for all crops including wheat, barley, canola, chickpeas and lupins, the NSW state government said today.
“This is simply devastating to farmers who after 10 years of drought will now see one-sixth of their crop lost to rain,” Whan said. “The winter crop harvest has been brought to a halt across the state, with 60 per cent of the crop still in the paddock.”
The damage from the floods may be compounded by a 25-kilometer (16-mile) swarm of locusts heading through southern NSW toward northern Victoria. The Victorian Department of Primary Industry said while the rainstorms in the region may have forced the swarm to ground, the pests remain a threat.
“Swarming locusts can damage a range of crops, including horticultural and immature cereal crops, as well as pastures,” said Russell McMurray, state controller for locusts.
Australia’s economy last quarter expanded 0.2 percent from three months earlier, the worst performance since a contraction at the end of 2008, the Bureau of Statistics said this week. Agriculture expanded 18.5 percent in the period, driven by “strong crop forecasts.”
The Australian newspaper today cited Mick Keogh, executive director of the Australian Farm Institute, as saying that if the data “for agriculture were corrected for the loss of value in the crop sector due to the rain, it is highly likely Australia would have experienced negative change in GDP for the quarter.”
Wheat futures for March delivery jumped 30.5 cents, or 4.1 percent, to settle at $7.79 a bushel at 1:15 p.m. on the Chicago Board of Trade yesterday, after touching $7.82, the highest for a most-active contract since Aug. 6. Prices were up 13 percent for the week, the most since early August.
Futures have surged 62 percent since the end of June, as drought in Russia and floods in Canada cut output, while dry weather in the U.S. Great Plains threatened winter crops.
“It’s the La Nina weather pattern, which is sending heavy moisture over northern and southeastern Australia,” said Michael Efron, forecaster at the Bureau of Meteorology in Victoria, calling it the largest La Nina since at least the 1970s. “Towards the middle or end of next week we’ll see drier air over much of eastern Australia. Victoria will get relief first.”
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