El Nino fear weighs on wheat forecast


The U.S. is the world's largest wheat exporter, followed by Australia

SYDNEY, Australia (CNN) -- A continuing drought in parts of Australia has prompted the world's No. 2 wheat exporter to cut its crop forecast for 2002-03 by more than 14 percent.

ABARE, the Australian government's agriculture forecaster, said Tuesday that wheat production would likely fall by 3.5 million tonnes in 2002-03 to 20.5 million tonnes.

It repeated last month's weather warning by the Australian Bureau of Meteorology that there was a high chance of an El Nino pattern emerging this year that would worsen the drought.

Releasing the Australian Crop Report for June, ABARE executive director Dr Brian Fisher said farmers in many regions were still waiting for "decent sowing rains" so they could plant their southern winter crops.

"Total area planted to winter crops this year is forecast at 19.3 million hectares, down 0.7 million hectares from last year," Fisher said.

Areas of concern

The areas of most concern are in the two large eastern States of Queensland and New South Wales.

Winter crops in Australia are sown between April and July, for harvest from October to late January.

"In most areas, the time to sow crops such as canola and lupins is largely past, but there is still time to sow wheat and barley without significant yield penalties," Fisher said.

The Bureau of Meteorology said at the end of last month that there was now a 70 to 90 percent chance of a drought-forming El Nino weather pattern occurring during 2002.

But it said it was not sure how severe such an event would be.

"With the likely onset of an El Nino, the timing of rain throughout the growing season becomes more critical for those crops that are able to be sown," Fisher said Tuesday.

U.S. biggest exporter

Assuming there is enough rain over the next month, ABARE is forecasting winter crop production in 2002-03 of 32 million tonnes. That is down 5.2 million tonnes from last season's near record crop.

Australian wheat exports are worth about $2 billion a year, the biggest item in total grain exports of about $3 billion. In its latest monthly report, the U.S. Department of Agriculture says it expects Australia to export about 18 million tonnes of wheat in 2002-03.

According to the department, the United States is the world's biggest wheat exporter, with exports in 2002-03 likely to be about 24 million tonnes.

Australian prime hard wheat for June delivery is quoted at $181.90 a tonne, increasing to $189.40 for November delivery.