• Dry, hot conditions linked to El Nino reduce harvest outlook
  • Declining crop quality may reduce export outlook further

Australia cut its wheat export estimate 3.3 percent after dry and hot weather curbed output, with grain quality concerns threatening to further reduce shipments, the country’s agricultural commodity forecaster said.

Exports may total 16.95 million metric tons in the year started July 1, the Australian Bureau of Agricultural & Resource Economics & Sciences said in a report on Tuesday. That compares with 17.5 million tons forecast in September and 16.6 million tons a year earlier, according to the Canberra-based bureau. Australia is the world’s fifth-biggest wheat exporter.

Australia last week lowered its wheat harvest estimate 5.1 percent to 24 million tons, citing hot and dry weather through October. El Nino, which brings drier spring weather to eastern Australia and parches Asia, will probably rank among the three strongest since 1950, according to the World Meteorological Organization. Wheat futures in Chicago dropped 18 percent this year amid expectations global production and inventories will climb to records.

“Since the beginning of September 2015, hot and dry conditions in many of Australia’s cropping regions have adversely affected winter crops at a critical stage of growth and development,” Abares wrote in the report. “If overall crop quality is worse than expected, export volumes and values are likely to be lower than currently forecast.”

World Output

Wheat for March delivery added 0.2 percent to $4.835 a bushel on the Chicago Board of Trade by 9:57 a.m. in Singapore. Futures are heading for a third straight annual decline, the longest slump since 1999.

World wheat output will total 727 million tons in 2015-16, up from 723 million tons a year earlier, according to Abares. Stockpiles at the end of the season will increase 4 percent to 210 million tons, the agency said. That compares with global production of 732.98 million tons and reserves of 227.3 million tons forecast by the U.S. Department of Agriculture. The USDA is set to update its estimates Wednesday.

Australia raised its cotton production estimate to 560,000 tons from 470,000 tons forecast in September and 505,000 tons a year earlier. The area planted to the fiber is set to surge 52 percent in 2015-16 to about 300,000 hectares, Abares said. Above-average rainfall in November supported an estimated 100,000 hectares of dryland cotton plantings in southern Queensland and northern New South Wales, it said.

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