Australian wheat crop shrinks

Further downgrades to Australia's wheat crop are looming as drought deepens across the continent, with national wheat exporter AWB Ltd considering whether to cut its forecast.
AWB's forecast of 23-25 million tonnes is looking optimistic after other groups slashed their forecasts. Australian Crop Forecasters now expects around 18 million tonnes and rural services group Farmarco is expecting 18-20 million tonnes.
Forecasts by the Australian Bureau of Agricultural and Resource Economics for 22.8 million tonnes and by the United States Department of Agriculture of 21.5 million tonnnes also appear ambitious.
"We're currently looking at that," AWB spokesman Peter McBride said of the group's market-sensitive crop forecast. Despite good rains last weekend which gave eastern crops a temporary reprieve, the New South Wales government this week said 94 percent of the state was in drought, up from 89 percent a month ago.
Rains in mid-June had allowed nearly all of the state's anticipated 4.6 million hectares of winter crops to be planted, but much more showers were needed, state Primary Industries Minister Ian Macdonald said.
Drought was also a big theme at this week's annual conference of Australia's biggest farmers group, the New South Wales Farmers Association. Some parts of the state were in their fifth straight drought year, creating uncertainty for crops and having an impact on rural communities, the association's president Jock Laurie said.
"At no other time since European settlement could farmers have withstood the climatic and complicating commodity price variables that you have over the last 10 years," federal Agriculture Minister Peter McGauran told the conference.
"Even the best of farmers are in dire straits," he said. There was some good news for wheat monopoly AWB this week, in its ongoing battle to defend itself against allegations it paid $222 million in kickbacks to the Iraqi regime of Saddam Hussein.
AWB won a major victory in the Federal Court, which ruled that the government-appointed inquiry, being conducted by Commissioner Terence Cole, did not have the power to compel AWB to produce some 1,300 documents covering legal advice by AWB's lawyers.
Cole is now prevented from seeing them until the matter is heard fully in court, strengthening AWB's hand to keep them under wraps permanently. This could further delay the already twice-extended September 29 deadline for Cole to rule on whether AWB broke Australian laws in providing the alleged kickbacks.
The New South Wales Farmers Association also voted strongly to support Australia's wheat export monopoly and its operation by AWB (International), a subsidiary of AWB. Meanwhile, AWB(I) said it was weighing its options on how Australian wheat might bid in the next Iraqi wheat tender.