Prices of wheat in the global market could further escalate in the coming months as Australia, the world's No. 2 wheat exporter, had announced cuts in its wheat production forecast for the 2012/13 crop marketing year.
Wheat quality may be low because of the prolonged wet season. However, prices have remained appealingly high.
The Australian Bureau of Agricultural and Resource Economics and Science (ABARES), in its latest crop report released on Tuesday, slashed its projections by 7 per cent from its previous forecast of 24.1 million tonnes in June to 22.5 million tonnes this month.
Forecast yield of barley and canola were likewise reduced, from the 7.3 million tonne estimate in June to 6.96 million tonnes this month for barley, and from 2.93 million tonnes to 2.76 million tonnes for canola.
The reduced target revisions were largely due to the prevailing dry conditions in Western Australia.
"In Western Australia, conditions for crop planting and establishment were generally poor and winter rainfall was below average, which hindered crop development and reduced prospective yields to below average,'' ABARES said in its report.
Although ABARES is expecting better harvests in NSW and Queensland, the prevailing weather conditions in WA, as well as in Victoria and South Australia affected the latest estimates.
In WA one, winter crop production fell to 10.9 million tonnes in the latest estimate from the 13.2 million tonnes forecast in June.
"Sufficient and timely rainfall will be required over the spring to achieve currently forecast yields," ABARES said.
Victorian winter crop production was estimated to hit 5.37 million tonnes, lower than the 5.73 million tonnes forecast in June.
SA's winter crop was projected to hit 6.77 million tonnes, 108,000 tonnes less than ABARES' June forecast.
NSW's winter crop, on the other hand, was projected to jump by 250,000 tonnes to 10.83 million tonnes.
Australia's overall national winter crop production is forecast to hit 2.2 million tonnes, lower at 36.2 million tonnes.
Australia had a record 29.5 million tonne wheat harvest in 2011.
Global prices of wheat have surged almost 40 percent since early June.
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