With much of southeastern Australia returning to drought conditions, the U.S. Department of Agriculture's (USDA) Foreign Agricultural Service (FAS) recently lowered the country's total wheat production forecast for 2008-09 to 20.15 million tonnes, down from the previously forecast 21.6 million tonnes. The FAS also lowered the total barley production forecast for 2008-09 to 7.013 million tonnes, down from the previous forecast of 7.875 million tonnes. The FAS said there remains significant scope for further reductions in forecast production for both wheat and barley.
Despite very low or no rainfall for the month of August in southeastern Australia, many winter cereal producers in these regions had hoped for at least average or above average rainfall during the crucial period of late September and early October, the FAS said. This did not occur however, and the winter cereal producing regions in Western Victoria, Australia and Southern New South Wales, Australia are expecting a very poor harvest with many crops cut for hay or abandoned altogether. The FAS believes the conditions faced in these areas are so severe that they will significantly constrain Australia's overall production of wheat and barley and thus have provided the basis for the downward revision in both area and yield. In revising production downwards, the FAS has cut area by 500,000 hectares and has also trimmed yield.
Recent FAS investigations have revealed the local production credit conditions for Australian growers (in the context of ongoing drought) remain of greatest importance, at least for the foreseeable future. Many growers believe that without widespread rainfall prior to planting next year's (2009-10) crop, credit required to "dry sow" crops may be constrained. On the positive side, growers believe that falling oil, fertilizer and the weaker Australian currency will likely provide some economic relief going forward.
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