why the 5% drop today?, page-3

Australia cuts 2017/18 wheat forecast to 8 – year low


12 September 2017 00:01

• Dry weather and frost crimps production
• Lower output a headwind to Australian economy
• Australia's largest listed bulk grain handler to be hit

By Colin Packham
SYDNEY, Sept 12 (Reuters) – Australia on Tuesday cut its forecast for 2017/18 wheat production by nearly 10 percent to an eight-year low, as dry weather cuts yields across the country's largest producing regions.
With harvesting set to begin in coming months, wheat production is expected at 21.64 million tonnes, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said, down from a March forecast of 23.98 million tonnes.
This would represent a one-third decline from 2016/17, when production of Australia's largest rural export hit a record 32.64 million tonnes.
The revised forecast by the world's fourth-largest exporter may ignite fresh concerns about global supplies of high quality wheat, with benchmark prices hitting a two-year high in July despite abundant stocks of lower quality grain.
Lower output will also affect Australia's broader economy. Fuelled in large part by wheat, the country's agricultural sector grew 23 percent last year, contributing nearly a third of GDP growth during the 2016/17 financial year.