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Rain Damage to Aussie Wheat Not as Bad as Expected

23 December 2010

AUSTRALIA - The rains which are still dogging harvest progress in parts of eastern Australia have not caused as much damage to wheat as initially feared - even though the cost in crop downgrades is "approaching" $1 billion, according to

Australia & New Zealand Bank said that about 10.5m tonnes of milling wheat in New South Wales, South Australia and Victoria, half the crop in these states, would escape being cut to feed quality.

The figure was higher than the total of 8.0m tonnes at best the bank estimated two weeks ago, when the region suffered particularly heavy rain, dumping more than three inches in one day on some farms.

"Post the major rainfall even a fortnight ago, the severity of quality downgrades hasn't been as based as first feared," ANZ (Australia and New Zealand Banking Group Limited) said.

While most areas had received further rains in the past week, "in general this is not expected to have led to a further deterioration in wheat quality".

And although most growers were up to a month delayed on harvesting, with 60 per cent of the crop yet to be reaped in South Australia and parts of Victoria, the short term weather outlook was "fine" for areas furthest behind.

Financial Impact

Nonetheless, the level of damage "could wipe up to Aus $1 billion from the value of the national wheat crop", National Australia Bank analyst Michael Creed said.

"Much of Australia's east coast in November recorded more than double the November average [rainfall]," he said, estimating that about half of Australia's total wheat crop of 24m tonnes would be of "feed or downgraded quality".

However, taking into account higher prices of farm commodities, and the advantage to livestock farmers of watered pasture and an abundance of feed wheat, the net loss to Australian agriculture over the last month from the downpours was more modest.

Creed cut by Aus$300 million to Aus$46.7 billion his estimate for the value of Australia's farm production in 2010-11, and his forecast for farm incomes by Aus$200 million to Aus$10 billion.

TheCropSite News Desk

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