CANBERRA - Australia slashed its wheat crop forecast by 22 per cent yesterday, the second downgrade in just six weeks, as drought and searing temperatures have led to total crop failure in some regions.
This year's harvest is expected to yield only 12.1 million tonnes of wheat, down from a September forecast of 15.5 million tonnes, according to the Government's Australian Bureau of Agricultural and Resource Economics.
World wheat prices soared to record highs in September on the poor grain forecast from Australia and other major producers such as Canada, but analysts said this downgrade will probably be the final one.
"It would be unlikely that we would see material change again in those forecasts, at this late stage in the crop programme," said Wayne Carlson, general manager for agribusiness at the National Australia Bank.
ABN AMRO Morgans analyst Belinda Moore said the new forecast was in line with expectations, with little room for further downgrades.
"I don't think there's room for too much more downside at these levels. I think we're getting close to the bottom here," Ms Moore said.
The forecast has almost halved the crop expectation from an earlier June estimate but is still above last year's output of 9.8 million tonnes, when the crop was also ravaged by drought.
Australia, normally the second-largest wheat exporter in the world, usually produces about 25 million tonnes of wheat a year.
Wheat prices for December delivery jumped 3 per cent on Monday to close at A$8.27 ($9.8) a bushel on talk Pakistan and India will be scouring the world for hard-to-find wheat supplies.
The benchmark wheat price hit a record of A$9.61 a bushel in September, up more than 90 per cent on the year. The bureau also cut its barley forecast by 15 per cent to 5 million tonnes, and the nation's canola crop forecast by 19 per cent to 909,000 tonnes.
"Lack of rainfall, combined with hotter than average daytime temperatures and strong winds has led to the rapid deterioration of crop yield potential and in many areas has resulted in total crop failure," the bureau's executive director Phillip Glyde said.
The biggest fall was for New South Wales state, where the bureau forecast a wheat crop of 1.7 million tonnes, down from 4 million tonnes forecast in September and the 8 million tonnes it forecast in June.