Bureau trims forecast for wheat output

Australia has reduced its forecast for wheat output after dry weather in the biggest producing states harmed crops, curbing supplies available for export from the world's third-biggest shipper.

Farmers are expected to harvest 24.5 million tonnes in 2013-14, down slightly from 25.4 million tonnes estimated in June. Even so, this would be up from 22.1 million tonnes a year earlier, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said.

Exports may reach 19.5 million tonnes in 2013-14 from a previous forecast of 19.6 million tonnes.

Wheat prices have fallen 17 per cent this year on expectations that increased production in Canada and Russia will result in a record global output.

World food prices fell for the fourth month last month to their lowest level in more than a year, on lower grain prices. Corn has slumped 34 per cent this year and soybeans 4.4 per cent, the United Nations says. A smaller-than-expected Australian crop is "a major risk for the world" and could help push prices higher, brokerage Macquarie Group said.

"Below-average rainfall since mid-winter in parts of NSW, Queensland and the northern growing areas of Western Australia has adversely affected crop development," ABARES executive director Paul Morris said. "Temperatures and rainfall have generally been favourable in South Australia, Victoria and the southern parts of Western Australia."

West Australian growers will collect 7.3 million tonnes in 2013-14, compared with 8.8 million tonnes forecast in June, the bureau said. That will still put the state ahead of NSW, last year's top producer, which will harvest 7.2 million tonnes.

CBH Group, Western Australia's biggest grain handler, said last week that it expected to receive about 6.5 million tonnes of wheat. The company collects and exports about 95 per cent of the state's grain harvest.

"Below-average rainfall was received in the northern regions of the Western Australian grains belt, while rainfall was average to very much above average for much of the southern region," ABARES said.