West Australia Ag Minister Sees Wheat Crop Yields Below Average

By Madelene Pearson

July 4 (Bloomberg) -- Western Australia, the nation's biggest grower of wheat, may see two thirds of its crop producing below-average long-term yields because of dry weather, the state's agriculture minister said.

The state may produce 6 million metric tons to 8 million tons of wheat this harvest, Kim Chance, 61, said today during an interview in his Perth office. The state's production of all grains may total 10 million tons, he said.

Australia, which is forecast to become the world's third- largest wheat exporter, relies on the state for about 40 percent of its total grain output. The chance of below-average rainfall is as much as 75 percent in parts of Western Australia between July and September, the country's weather forecaster has said.

``All of these predictions assume average rain between now and the end of September, so not a great outlook at all,'' Chance said. ``It could come in below that because those predictions are based on average rain.''

Global wheat prices rose to a record $13.495 a bushel on Feb. 27. Australia's worst drought on record has cut the nation's output for the past two harvests, dropping the country to number six among wheat exporting nations.

``This will be our third or fourth year in a row that we haven't been able to satisfy our core clients,'' Chance said. Prices ``are going to stay strong for a long time,'' as rising incomes in China and India drive demand, he said.

Western Australia may produce 8 million tons to 12 million tons of all grains, CBH Group, the state's biggest grain handler and marketer, said yesterday, restating an earlier forecast. Output of all grains may be between 10 million tons and 12 million tons, with the wheat crop forecast at 6.7 million tons, the West Australian Department of Agriculture said on June 6.

The U.S. is forecast as 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's latest estimate.

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