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Australia on Tuesday cut its estimate for this year’s wheat crop by 8.8 per cent to 23.7m tonnes after the driest May on record, reviving memories of last year when drought reduced the harvest to just 13m tonnes.The Australian Bureau of Agricultural and Resource Economics said crops sown in northern Western Australia, the largest wheat-growing state, were beginning to show signs of stress because of the dry weather. Below-average rainfall is forecast to continue in parts of the region.“It’s a very delicately poised number this year,” said Simon Roberts, head of agricultural commodities at Australia and New Zealand banking group: “A lot will be determined by weather.”In Chicago, wheat has rallied more than 14 per cent this month – to $8.94 a bushel on Tuesday – prompting analysts to question if the market had reached a turning point.Wheat prices sank more than 40 per cent between late February and the end of May in anticipation of a strong rebound in global production to a record 656m tonnes this year.More production disappointments could force another reassessment of the outlook. Demand for wheat as animal feed is also expected to rise as corn and soyabeans prices have hit record levels amid concerns about the impact of wet weather and flooding on US production this year.CBOT wheat futures for delivery in December 2009 traded up to $9.80 a bushel on Tuesday, suggesting the market anticipates further price strength.By Chris Flood
As in the days of Noah...
