Sept. 24 (Bloomberg) -- Commonwealth Bank of Australia increased its wheat output forecast for the country by 4 percent as a record harvest in eastern areas may make up for crop losses in the west because of dry weather.
Production may gain to 23.1 million metric tons from 21.4 million tons last year and up from a July estimate of 22.2 million tons, the bank said in an e-mailed report. Exports in 2010-2011 may rise to 17 million tons from at least 15 million tons this season, it estimated.
La Nina weather conditions have brought increased rain to Australia’s eastern states, raising crop production forecasts and driving cattle prices to the highest level in four years. The wheat crop may be the third-largest on record, according to the federal government’s commodities forecaster.
“Our improved production numbers reflect record-breaking yield prospects across most regions in eastern Australia,” Luke Mathews, commodities strategist at Commonwealth Bank, wrote in the report. Key risks to the eastern harvest included locusts, crop-disease damage, frosts or a heat wave, he said.
December-delivery wheat advanced 1.3 percent to $7.0525 a bushel on the Chicago Board of Trade at 6:47 p.m. Melbourne time, taking the weekly loss to 4.7 percent, the most for the most- active contract since the week ended June 4.
Australian wheat production may increase to 25.1 million tons this harvest and exports may rise to 18.4 million tons, the Australian Bureau of Agricultural & Resource Economics-Bureau of Rural Sciences forecast Sept. 14.
Export Outlook
Exports could be curbed if there were any significant logistics problems in the east or if the Western Australia crop continued to deteriorate, potentially challenging the state’s record low of 4 million tons, the bank said.
Damage from past locust plagues was generally less than 1 percent of the total output and the worst damage was in 1934-35 when losses were forecast at 2 percent to percent, the bank said.
“This would hardly put a dent in our record crop forecast, and technology to control locusts in the 1930s is hardly comparable to what is available today,” Mathews said.
“Although we do expect reports of damage due to locusts over the next month, which may include the complete wipe-out of some individual paddocks, we don’t expect an Armageddon-like impact on the entire east coast crop.”
Wet weather in Australia’s east this year reflects warm conditions in the Indian Ocean and cool temperatures in the equatorial Pacific Ocean, both associated with a La Nina event, the Bureau of Meteorology said yesterday.
--Editors: Ravil Shirodkar, Matthew Oakley
To contact the reporter on this story: Wendy Pugh in Melbourne at wpugh@bloomberg.net
To contact the editor responsible for this story: Wendy Pugh at wpugh@bloomberg.net
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