11/06/08 Australian government lowers wheat crop estimate

Farm and Ranch November 6, 2008 The Australian government has issued a new forecast for its wheat crop, reducing the estimate to just under 20 million metric tons. Norton: " It is a fairly significant cut but it is still up 50% year-to-year." And better than the last two years according to USDA grains analyst Jerry Norton. Back in 2005 Australia produced a 25-million ton wheat crop but then drought hit cutting the 06 crop to just 10.8 million tons and the 07 crop to just over 13 million. Norton says it was thought this year would be a big year because of increased plantings. Norton: "Because of the those drought years in 2006 and 2007 they liquidated a lot of sheep herds so they had a lot of grazing land they put into wheat this last year. So we had a very optimistic view of their crop going back up to the those kind of 25 million ton levels early on, but the dryness in southern Australia has really affected them." But with a better crop than the last two years, Australia will be competing again against Pacific Northwest and other U.S. wheat growers. Norton: "We compete with the Australians into the Japanese market, which is a high quality wheat market. So in year's when there are crop failures or crop problems like they have had the last two years in the southern hemisphere there is a lot stronger demand out of Japan for U.S. and Canadian hard red spring wheats and even white wheats. Now what we are going to see with the rebound even with this reduced crop potential, we are going to see some increased competition in those markets, particularly Japan and southeast Asia where they buy high quality wheats." I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.