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Wheat Forecast Reduced in Australia’s New South Wales

Dec. 22 (Bloomberg) -- New South Wales, Australia’s largest grain-producing state this season, has cut its wheat output forecast by 5 percent because of flooding and heavy rain.

Output may be 8.75 million metric tons compared with an October outlook for 9.21 million tons, Industry & Investment NSW said in a report on its website today. Harvesting of the state’s winter crops was about 60 percent completed, it said.

Wheat futures in Chicago have gained 41 percent this year on drought in Russia and concern that high-quality grain will be in short supply. About half Australia’s 24 million ton wheat crop will be feed or downgraded quality this season, National Australia Bank Ltd. estimated in a report yesterday.

“Weather damage to grain has been significant across the state,” Industry & Investment NSW said. The remaining wheat crop to be harvested was expected to be feed or lower-quality grades, according to the report.

Wheat for March delivery on the Chicago Board of Trade dropped 0.3 percent to $7.63 a bushel at 12:32 p.m. in Melbourne.

New South Wales winter crop production this season, including crops such as wheat, barley, oats and canola, may be 13.47 million tons, the report forecast, down from 14.32 million tons in an October outlook. Some crops would be abandoned because of weather-damaged grain or because paddocks were too wet for machinery, it said.

Cotton planting in New South Wales is estimated at 346,250 hectares (855,600 acres), up 14 percent from the October estimate, while excluding the effect of flooding in the Macquarie valley, Orange-based Industry & Investment NSW said.

GrainCorp Ltd., eastern Australia’s largest grain handling company, said Dec. 20 its receivals had reached 6.95 million tons after improved harvesting weather last week. Quality was better-than-expected in northern New South Wales given pre-harvest conditions and continuing damp weather, it said.

The harvest was 50 percent completed in the Mallee region of Victoria state and 20 percent completed in the Wimmera region, Sydney-based GrainCorp estimated.

To contact the reporter on this story: Wendy Pugh in Melbourne wpugh@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at Rdobson4@bloomberg.net

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