Australian wheat forecasts at risk of downgrade

Estimates of Australia's 2010/11 wheat crop face the danger of being downgraded as farmers hold back from planting, wary of poor prices, rising input costs and a potential locust plague. Australia, the fourth-largest wheat exporter, accounts for 12 per cent of world shipments, so any cuts to forecasts could help lift global prices, especially if farmers elsewhere also hold back in response to prices languishing near five-year lows. Forecasters say their early estimates of 22 million to 22.5 million tonnes for the next season, up from 21.7 million, are conservative, but some admit the current outlook is still vulnerable to downgrade. Paradoxically, recent rains have set up the best pre-planting conditions for years, but poor prices and rising fuel and fertiliser costs mean that wheat looks like a loss-making crop to many farmers now deciding their planting intentions. "Farmers have very tight budgets this year because of low grain prices and inputs are starting to go up again so I think that's going to reduce the area planted to wheat," Mike Norton, head of the Western Australian Farmers Federation, told Reuters. Last season, Australia harvested 1.9 million tonnes of the oilseed.