ABARES lowers forecast: Australian wheat crop at 10-year low

Australia has lowered its wheat harvest forecast by 11% today. It would be the smallest harvest in more than a decade. A crippling drought on the east coast of Australia is likely to make the world's fourth largest exporter of grain less efficient.
Wheat production in 2018/19 is expected to reach 16.95 million tonnes, according to the national statistics bureau ABARES. This is even less than the previous estimate from September, which was still 19.1 million tons. That would be the smallest harvest since 2008 when only 13.6 million tons of wheat were harvested.
Lower wheat production in Australia is reducing the continent's export potential and is expected to have a positive effect on the evolution of wheat prices on the CBoT. The price has already risen to its highest level in two months.
Australia usually exports two-thirds of its wheat, but the needs of local millers are hitting the demand of large buyers like Indonesia. Meanwhile, Australia's largest grain trader GrainCorp has fallen into financial distress and received a takeover bid from a previously unknown asset manager over the weekend.
It is unlikely that crop estimates will need to be further reduced. However, the state weather service expects dry weather in the coming days until the first weeks of 2019.

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