SYDNEY: Australia is expecting its third-biggest wheat crop on record after the government forecaster raised its estimate for the 2013/14 crop by 7 percent, in a surprise move that could put pressure on global wheat prices.
The Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) forecast wheat output of 26.213 million tonnes, up from its September estimate of 24.467 million tonnes, citing favourable weather across the west coast.
The increase could pressure Chicago Board of Trade wheat futures, which hit a near one-month high on Monday on expectations for increased demand for U.S. supplies amid production concerns in Australia and Argentina.
"It is a large crop given the season we have had, it is a strong result," said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.
"We would expect some modest downward pressure on CBoT as a result of this, especially as the large crop is being seen in the key exporting regions of South Australia and Western Australia."
The market had been bracing for a downgrade to the previous forecast due to frost across Australia's eastern growing states.
However, ABARES increased its forecast for wheat production in Western Australia by more than 31 percent to 9.605 million tonnes, pointing to favourable weather in the country's largest grain producing state.
The bumper Western Australia crop offset production cuts across the east coast. Production in New South Wales and Queensland was expected to fall nearly 12 percent to 7.85 million tonnes from the previous estimate of 8.913 million tonnes.
Australian grain handler GrainCorp flagged potential production shortfalls across the east coast in November.
The bureau said Australian canola production in 2013/14 would total 3.41 million tonnes, having previously forecast output at 3.31 million tonnes.
Australian cotton production was seen down at 975,000 tonnes, having previous pegged production at 990,000 tonnes.
Chicago Board of Trade March wheat last traded at $661-3/4 a bushel.
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