Australia, the world’s second-biggest wheat exporter, lowered its output forecast as dry weather delayed plantings, deepening global supply cuts caused by droughts from Russia to the U.S.
Production may reach 24.1 million metric tons in 2012-2013, 6.2 percent below the 25.7 million tons estimated in March and the lowest level since 2009-2010, the Australian Bureau of Agricultural and Resource Economics and Sciences said today. The country harvested a record 29.5 million tons in 2011-2012. Exports may drop to 20.5 million tons in the year starting Oct. 1 from last year’s 22.3 million tons.
Wheat has tumbled 20 percent in the past year as global harvests recovered from a three-year low in 2010-2011. Prices yesterday dropped to the lowest level in almost a week after the U.S. Department of Agriculture said world stockpiles in the 12 months ending May 31 will be larger than analysts expected. A smaller Australian crop would cut global stockpiles next year.
“The Abares number reflects the dryness that we’ve had recently,” Michael Creed, an agribusiness economist at National Australia Bank Ltd., said by phone from Melbourne. “We’ve seen a downgrade in global wheat stocks and there might, in turn, be a rising premium on milling-quality wheat,” he said referring to a 1.3 percent cut in the USDA’s May forecast for inventories. “It certainly does provide a bullish outlook for prices.”
The state of Western Australia, the country’s largest grower, had below-average rainfall in April and May, according to the Bureau of Meteorology, boosting concerns that dry conditions may curb planting.
Wheat for July delivery gained as much as 1.1 percent to $6.225 a bushel on the Chicago Board of Trade and was at $6.21 at 4:54 p.m. in Singapore. Futures dropped yesterday as much as 2.7 percent to $6.1325, the lowest price since June 6.
World stockpiles will total 185.76 million tons at the end of the season, down from 188.13 million tons predicted in May, the USDA said yesterday. Analysts surveyed by Bloomberg before the report expected 185.06 million tons as hot, dry weather threatened crops in the U.S., Russia and Ukraine. Output will reach 672.06 million tons, compared with 677.56 million tons estimated last month, it said.
Growers in the U.S., the biggest exporter, will produce 2.234 billion bushels (60.8 million tons) in the year that began June 1, the USDA said. That’s down from 2.245 billion bushels forecast in May. Production in Russia, projected to be the fourth-largest shipper in 2012-2013, will total 53 million tons, compared with 56 million estimated in May, it said. Australia will produce 26 million tons and export 20.5 million tons in the year ending September 2013, it said.
The area planted to wheat in Australia may total 13.4 million hectares (33 million acres), from 13.7 million hectares estimated in March, Abares said. Total winter-crop output, including wheat, barley and canola, may total 38.5 million tons in 2012-2013, compared with 45.5 million tons a year earlier, the bureau said.
“Winter-crop production will be reliant on timely rainfall over winter and spring, particularly in Western Australia and some eastern cropping areas where sandy soils have lower water-holding capacity,” the bureau’s acting Executive Director Kim Ritman said in a separate statement.
Wheat output in Western Australia may be 8.7 million tons, down from 11.7 million tons last year, said Abares. Production in New South Wales, the second-biggest grower, may decline 13 percent to 6.9 million tons, it said. The country produced 21.8 million tons in 2009-2010, according to Abares data.
Cotton production in Australia, set to be the second-biggest exporter, may reach 1.05 million tons compared with 1.075 million tons forecast in March, the bureau said. The harvest was a record 1.08 million tons last year.
Prices of cotton have slumped 24 percent this year on concerns that Europe’s debt woes and a faltering world economy will erode demand, and on signs supply will be ample. Global stockpiles on July 31, 2013, may total 74.51 million bales of 480 pounds each, up from 73.75 million bales projected in May, the USDA said.
The country’s canola production is forecast at 2.94 million tons, up from 2.93 million tons forecast in March, Abares said. Output may total 2.97 million tons in 2012-2013, the Australian Oilseeds Federation said May 16.
The bureau cut its forecast for barley production to 7.3 million tons from 9 million tons estimated in March.