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Australia's wheat crop is forecast to shrink to 15 million tonnes or less because of renewed drought, the head of the nation's top grower body, Grains Council of Australia, said yesterday.
As world wheat prices hit record highs, driven mainly by a deteriorating Australian crop, there was little prospect in the near future of rain rescuing crops, council president Murray Jones said.
Australia's 2007/08 wheat crop was forecast at over 26 million tonnes early this year, when it seemed that the country's worst drought in 100 years had broken.
"The Australia crop is at a critical position. Desperately looking for rain," Jones said. .
"I'd be on 15 (million tonnes). I think that the chances at the moment of getting good rains are not good and we only need a hot week and it'll sort things out," he said.
The leader of Australia's 35,000 wheat growers said he did not think the crop would fall to as low as the 9.8 million tonnes of 2006/07, but the shrinking size would cramp exports. Australia, usually the world's second-biggest exporter after the United States, was forced to ration exports from its 2006/07 crop, limiting sales to core customers.
Jones sees further rises in Australian and international wheat prices after Australian wheat futures hit a record A$427 ($512.30) a tonne on the Australian Stock Exchange on Monday and Chicago wheat futures hit contract highs.
The Australian crop has become the main factor in the Chicago market after crops in Europe and the United States were hit by poor weather. A couple of millimetres of rain fell across southern parts of Victoria and South Australia on Monday night, but this was nowhere near enough to rescue crops, Jones and other crop analysts said.
No rain is on the horizon for other parched parts of Australia's wheatbelt, which extends around the middle to southern part of the country like a giant horseshoe.
The Grains Council's estimate of an Australian crop of 15 million tonnes or less is among the more pessimistic.
Private forecaster Australian Wheat Forecasters said the wheat crop had lost size again in the last week and weather forecasts for later this week were less optimistic than before.
AWF said its latest forecast was in the range of 15 million tonnes to 18 million tonnes, down from its forecast last week of between 15 and 20 million tonnes.
"It can go lower if we just continue to get this dry spring weather," AWF's Ron Storey said, adding that he was keeping 15 million as the floor tonnage.
Storey sees a short-term upside for prices. "Australia, or the Southern Hemisphere, is just the focus at the moment because the world needs our exports this year to fill the gap, and people are concerned about that," he said.
- Reuters
