Australian farmers will reduce wheat plantings in 2012/13 in response to lower global prices and shift to more lucrative canola and livestock production, a senior farm ministry official said on Tuesday.
Planting conditions in Australia, typically the world's third largest sugar exporter and No 4 wheat and cotton supplier, are favourable ahead of sowing, thanks to widespread late summer rains, Paul Morris, executive director of Australian Bureau of Agricultural and Resource Economics said in an interview.
"We are seeing areas likely to come down simply for the relative returns for canola and barley compared to wheat," he said. "We are also seeing some movement back into sheep as well." "World prices are pretty high at the moment and so are meat prices, so that is a bit of incentive to move back into livestock as well."
The benchmark US wheat futures has gained about 0.8 percent so far in March, rebounding slightly after finishing lower last month due to plentiful supplies. Last year prices fell 21.7 percent. US live cattle futures kicked off the month by posting an all-time high last week on fund buying that was prompted in part by hopes for stronger cash cattle prices due to drought-reduced supplies.
The lead April Chicago Mercantile Exchange live cattle contract posted a record of 131.200 cents per lb, topping the previous high of 129.775 cents set on February 22. Australia's wheat output is likely to slide more than 15 percent in 2012/13 from a bumper crop this year as lower global prices may prompt farmers to shift to other crops such a s canola and barley, according to a Reuters survey of 10 analysts.
Wheat output is expected to fall to 25 million tonnes in the year to June 2013, down from an all-time high of 29.5 million tonnes, which is estimated to have been produced this year. Morris said the planted area for wheat in 2012/14 is likely to fall to 13.7 million hectares compared with 14 million last year.
World wheat stocks at the end of the 2011/12 season look set to eclipse the previous record set more than a decade ago, according to the International Grains Council (IGC), raising its forecast for production to an all-time high. The IGC, in a monthly update, increased its forecast for world wheat production by five million tonnes to a record 695 million tonnes, partly reflecting higher estimates for Kazakhstan, India and Australia. Global crop prices will retreat sharply this year as farmers around the world expand production to bring stability back to commodity markets and ease fears of food inflation, the US government has forecast.
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