Official forecasts of Australia's wheat and canola crops are expected to be trimmed next week after one of the driest winters on record.
But the cuts would not be as large as expected because good rain over the past week produced enough of a boost to hold losses to a minimum, industry sources said.
"(Forecast numbers) are easing a bit but probably not as much as before (the rains)," an industry source told Reuters.
The government unit, the Australian Bureau of Agricultural and Resource Economics (ABARE) will release new forecasts for Australian crops on Tuesday, with the key wheat forecast expected to be trimmed from the June prediction of 23.246 million tonnes.
The canola crop outlook is also expected to be downgraded slightly from the last forecast of 1.498 million tonnes. Of the three major winter crops of wheat, barley and canola, the oilseed is most vulnerable to dry weather in the growing season.
Despite the dry weather and ABARE's expected forecast cuts, private group Australian Wheat Forecasters is bravely hanging on to its forecast of a record wheat crop of 26 million tonnes.
Managing Director Brian Bailey told Reuters on Friday that two days ago AWF had produced a new forecast of 26.02 million tonnes of wheat, ahead of the record 24.72 million tonnes produced in 2003/04, on AWF's figures.
A spokesman for monopoly wheat exporter AWB Ltd, Peter McBride, said on Friday that it was not reviewing its forecast of the wheat crop of 21 to 24 million tonnes. This compares with record production of 25.2 million tonnes last year, on AWB's figures.
Industry officials said that the ABARE forecasts would be based on rains in eastern Australia toward the end of August helping stop a slide in the winter crops. Crops were slipping before then but the rains helped in South Australia, Victoria and most of New South Wales states.
Rains came just in time to save the canola crop, they said. Dry weather meant that this season's canola yields would not be changed greatly from last season's relatively poor performance, which produced a crop of 1.622 million tonnes.
"But (all crops) will get by if they get good showers of rain at the right time," one analyst said. "It's a just-in-time crop, like just-in-time production in the manufacturing sector."
ABARE and all forecasters were very conscious of warnings by the Australian Bureau of Meteorology that an El Nino weather event, which typically causes drought in Australia, could be brewing in the Pacific, analysts said.
An El Nino is blamed for triggering Australia's worst drought in a century in 2002.
This decimated crops, cut national economic growth and disrupted exports.
Australia is the world's second-largest wheat and canola exporter, after the United States and Canada, and is the largest barley exporter, excluding the 25-member European Union.
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