(Updates prices in fifth paragraph.)
Dec. 3 (Bloomberg) -- Australia increased its wheat crop estimate to the third-biggest on record as the harvest in the west of the country offsets frost damage in the east, adding to global production that’s already at an all-time high.
Farmers may reap 26.2 million metric tons from 24.5 million tons estimated in September and 22.5 million tons a year earlier, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report today. Growers in Western Australia, the largest producing state, will gather 9.6 million tons from 7.3 million tons seen in September, it said. The country is the world’s third-largest shipper.
Wheat tumbled 15 percent this year as corn slumped 39 percent and soybeans lost 6 percent on expectations global output of the crops will reach records. Increasing global supplies will pressure crop prices through year-end, according to HSBC Holdings Plc. Lower prices may cut the world’s food- import bill by 3.2 percent to $1.15 trillion this year, according to the United Nations’ Food & Agriculture Organization.
“The South Australian and Western Australian crops are beautiful,” said Michael Pitts, a commodity sales director at National Australia Bank Ltd. in Sydney. Production of lower protein, softer varieties of wheat will increase and “Australia will be selling that pretty aggressively to Asia and the Middle East,” he said by phone today.
Wheat for March delivery added 0.2 percent to $6.63 a bushel on the Chicago Board of Trade at 5:32 p.m. in Singapore today. New South Wales milling wheat futures for January delivery gained as much as 1 percent to A$298 ($270) a ton as Abares reduced its production estimate for the state.
Global wheat production will increase 7.8 percent to 706.4 million tons as output in Canada climbs 22 percent and Russia’s harvest surges 37 percent, the U.S. Department of Agriculture estimates. The Abares estimate compares with 25.5 million tons forecast by the USDA last month.
“Generally favorable conditions and timely rainfall during spring increased prospective yields, particularly in southern and central Western Australia,” said Canberra-based Abares. Crops in southern Queensland and northern New South Wales were hurt by frost in August, while some in New South Wales suffered “significant” frost damage in October, it said.
New South Wales, set to be the second-biggest producer, will harvest 6.7 million tons from 7.2 million tons estimated in September. Abares lowered its estimate for area planted to wheat in Australia to 13.5 million hectares (33.4 million acres) from 13.7 million hectares seen in September.
Canola production may reach 3.4 million tons from 3.3 million tons predicted in September, it said. Barley output may total 8.6 million tons from an estimate of 7.7 million tons, while cotton production may be 975,000 tons from 990,000 tons seen in September.
--With assistance from Ben Sharples in Melbourne. Editors: Sungwoo Park, Jarrett Banks