Australia’s wheat crop is now forecast to produce 12.1m tonnes, down from 15.5m tonnes expected last month and nearly half the 22.5m tonnes that was projected in June.

The price of wheat hit a record of $9.6175 a bushel in late September as bad weather damaged crops in Europe, Canada and Australia. Wheat stocks are already near their lowest since 1979, according to the International Grain Council, an intergovernmental body.

Tobin Gorey, commodities strategist at the Commonwealth Bank in Melbourne, said the revised figures for Australian wheat had not come as a surprise given the weather conditions. He said some investors may have factored in an even larger fall.

The wheat price on Tuesday retreated 18 cents to $8.10 a bushel.

Amelia Brown, a commodities analyst at the Australian Bureau of Agricultural and Resource Economics (Abare), noted that since September there had been little “worthwhile rain” in major wheat growing areas of New South Wales, Victoria and South Australia.

“That period is critical to [crop] yields and combined with above average temperatures that has placed a lot of pressure on crops,” she said.

The cut in the overall forecast masks regional variations across Australia. There was a small increase in forecast wheat output for Queensland, while New South Wales’ production has been more than halved compared to last month with many crops failing or cut for livestock feed.

Source: FT.com

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