Drought further cuts Australia crop f'csts - ABARE
Date: 30-Oct-02
Country: AUSTRALIA
Author: Michael Byrnes
The Australian Bureau of Agricultural and Resource Economics (ABARE) further downgraded all of Australia's crop forecasts after more than six months of severe drought.
Drought would slash Australia's wheat crop, a major source of supply for Asian and Middle Eastern tables, to a bare 10.13 million tonnes and would cut an estimated 0.7 percentage points from Australia's economic growth in 2002/03, ABARE said.
It also further cut forecasts of Australian barley, used in beermaking in China and Japan and for animal feed in the Middle East, and of canola, a major source of cooking oil in Asia.
"The drought is now estimated to reduce the rate of economic growth in Australia in 2002/03 by around 0.7 percentage points, or around A$5.4 billion ($3.0 billion) from what would otherwise have been achieved," ABARE executive director Brian Fisher said.
ABARE said in September the drought would cut growth by A$3.8 billion or 0.5 percent to about 3.3 percent in 2002/03.
Treasury in May forecast GDP growth of 3.75 percent in 2002/03 but is expected to cut its projection in a mid-year economic review due in November.
NEAR RECORD TURNS TO DUST
Australia's eastern grains belt is in the grip of an El Nino weather condition, caused by abnormally warm sea temperatures in the east Pacific. Further crop cuts were possible, traders said.
"After a near record winter cropping season in 2001/02, rainfall has been well below average over nearly all of the grain belt during the 2002 winter grain growing season," ABARE said in a special drought report released yesterday.
Production of the four winter crops of wheat, barley, canola and lupins in 2002/03 was forecast to decline to 14.8 million tonnes, down 57 percent from last season's 34.1 million tonnes.
This would be the smallest harvest for these crops since the 1994/95 drought year, which produced 13.2 million tonnes.
ABARE's previous forecast for Australia's premier winter crop, wheat, was 13.45 million tonnes against 23.96 million tonnes of actual production last year.
Australia's wheat exporter, AWB Ltd , has said it would be forced to ration sales to supply premium markets.
ABARE also forecast the drought would cut Australia's barley crop to 3.36 million tonnes, down from the last forecast of 4.581 million tonnes and from 7.459 million tonnes in 2001/02.
Barley exporters have also said they will ration exports.
The government unit cut its forecast of Australia's canola crop to 720,000 tonnes, down from its last forecast of 990,000 tonnes and from 1.605 million tonnes production in 2001/02.
Exporters have said that Australian canola exports from the current crop would be confined largely to the best market, Japan.
ABARE cut its forecast of lupins production, which are largely exported to India, to 560,000 tonnes. Its last forecast was 710,000 tonnes, against 1.1 million tonnes in 2001/02.
ABARE added that the rainfall outlook for summer crops, mainly cotton, rice and animal feed sorghum, was not promising.
An AWB spokesman said no decision had been taken on any review of its current wheat forecast of 11-13 million tonnes.
But traders saw further downside for already decimated crops.
"It's not going to get any bigger. If anything she'll slide," one said, pointing to an expected canola crop of 700,000 tonnes.
Another said the domestic trade had factored in a 10 million tonne wheat crop before last week's damaging dust storms.
"But we may see some rally in Chicago and it will put pressure on the Aussie market," he said of the ABARE forecast.
