Australia, the fourth-largest wheat exporter, raised its production forecast to a record because of favorable growing conditions earlier this year, amid concerns that recent heavy rain will reduce crop quality.
Output may be 26.8 million metric tons in the 2010 to 2011 season, compared with a September prediction of 25.1 million tons, the Australian Bureau of Agricultural & Resource Economics & Sciences forecast today in a report. Exports may be 16 million tons, compared with the previous estimate of 18.4 million tons.
Wheat futures in Chicago rose to the highest price in four months this week on concern that heavy rainfall is delaying the Australian harvest and damaging crops. The country had its wettest September-to-November spring on record, according to the Bureau of Meteorology and further heavy falls are forecast in grain producing areas this week.
“The numbers for production look extraordinarily high,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia said by phone from Sydney. “If Abares’ numbers are correct, the supply of feedgrain is going to be significantly higher than the market had presumed.”
Wheat for March delivery on the Chicago Board of Trade rose 1.2 percent to $8.0275 a bushel today, taking this year’s advance to 48 percent.
The cut in the shipments forecast reflected reduced production in export-focused Western Australia because of dry weather, Bruce Bowen, general manager of agriculture and food at the Canberra-based forecasting bureau, said by phone. The state’s output may drop to 3.6 million tons this year, compared with a September forecast of 6.1 million tons and production last season of 8.1 million tons.
Harvesting problems and grain-quality downgrades may also curb shipments from the east, he said. The production forecast assumed the weather would allow crops to be harvested, he said.
“Up until recently, many cropping regions in eastern Australia have had near-ideal growing conditions and this has boosted crop yields to record levels,” Paul Morris, acting executive director of the bureau, said in a statement.
Australia’s total winter crop output may reach a record 43.2 million tons, up from the September forecast of 40.7 million tons and 22 percent higher than last season boosted by the eastern states, according to the report.
The full impact of recent heavy rainfall, which has delayed harvesting and reduced the quality of wheat and barley crops, won’t be known until more of the harvest was completed in southern regions, the report said.
As much as 35 percent, or 5 million tons, of the east-coast wheat crop could be downgraded to feed quality, Mathews wrote in a report on Dec. 5. The bank, which estimates the national crop at 22.3 million tons, cut its export forecast to 14 million tons from 16 million tons.
Growers delivering feed grain into AWB’s eastern Australian marketing pool may receive A$271 a ton this season, up A$2 from a week earlier, the company said in a statement today. The price forecast for the Australian Premium White marketing pool rose A$48 to A$362 a ton.
Still, there was significant interest in feed wheat from customers in Asia and the Pacific who would normally source from countries such as Canada and Ukraine, said AWB General Manager Commodities Mitch Morison in a statement.
The U.S. is forecast to be the largest wheat exporter in 2010-2011 followed by the European Union, Canada and Australia, according to the U.S. Department of Agriculture.