Heavy rains expected to curb Australia wheat output

[SYDNEY] Australian wheat output will likely fall short of official estimates of near record volumes as heavy rains exacerbate recent damage to crops in the east of the world's fourth largest exporter, farmers and analysts said on Tuesday.

The country's east coast is expected to receive as much as 100 millimetres of rain later this week and to see wetter-than-average conditions until November, according to forecasts from the Bureau of Meteorology.

That would add to crop losses after near record rains earlier in September, farmers said, with damage across New South Wales, but most notably in the central west region of the state.

"We are starting to see some crop losses after it has been too wet for too long," said Dan Cooper, a farmer in Caragabal, 460 kilometres west of Sydney. "We have been pretty lucky, but we have probably lost 5 per cent of our wheat crops." Australia's east coast produces the country's high protein wheat, meaning output losses would limit the country's exportable supplies of the more desirable grain.

Lower wheat production from Australia could support global benchmark prices, which earlier this month hit a 10-year low due to ample global supply.

Australia's chief commodity forecast earlier this month raised its 2016 forecast for wheat output by more than 14 per cent to 28.1 million tonnes, which would be the second highest level on record.

"There is a risk to production estimates," said Phin Ziebell, agricultural economist at National Australia Bank. "The headline number may be affected but perhaps the bigger issue is quality downgrades to feed wheat. Australia is already a bit priced out of international trade and if we see quality downgrades, it is going to be very tough to find a market for those supplies."

REUTERS