Australia Wheat Prospects Improve on July Rainfall

By Madelene Pearson

July 29 (Bloomberg) -- Australia, forecast to be the world's third-largest wheat exporter, is more likely to meet a government production forecast after rainfall this month improved crop prospects, ProFarmer Australia said.

``The July rains have been really excellent because they have been widespread and because they have been significant,'' Richard Koch, managing director of the Perth-based forecaster said today in an interview in Melbourne. He's predicting a wheat crop of 23.2 million metric tons.

Wheat production in Australia may climb to 23.7 million tons this harvest, up from last year's drought reduced 13 million tons, the government's commodity forecaster said last month. The driest May on record and lack of rain in June prompted the U.S. Foreign Agricultural Service to cut its Australian crop estimate just two weeks ago.

``With good July rain the number of problem areas are shrinking,'' Koch said. ``If the season continues to co-operate and we get a reasonable spring, there's every chance we could meet that crop forecast.''

Wheat futures for September delivery fell 6 cents, or 0.8 percent, to $7.93 a bushel on the Chicago Board of Trade in after-hours electronic trading at 5:13 p.m. in Sydney. Prices reached a record $13.495 a bushel on Feb. 27.

Australian Exports

Australia begins harvesting the current wheat crop from about November. Australian wheat is expected in the global market this year after two years of drought, helping to ease prices, said Malayan Flour Mills Bhd., Malaysia's second-biggest miller.

``Australian wheat is important to us,'' Teh Wee Chye, managing director of Malayan Flour Mills said at a conference in Melbourne today. ``The current prospect of a huge crop in the northern hemisphere, as well as improved weather conditions in Australia, will lead to an overall improvement in the global wheat supply and result in lower and affordable wheat prices for both producers and consumers.''

AWB Ltd., Australia's biggest wheat exporter, rose 13 cents, or 4.9 percent, to A$2.81 on the Australian stock exchange at the 4:10 p.m. close of trade in Sydney.

The U.S. is forecast to be the world's largest wheat exporter in the year that began June 1, followed by Canada and Australia, according to the U.S. Department of Agriculture. The U.S. Foreign Agricultural Service is expecting an Australian crop of 22.4 million tons.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net