Australia says its wheat output will be shrunk by Iran war costs, dry weather

CANBERRA, June 2 (Reuters) – Australia’s upcoming wheat harvest will be the smallest in three years, as high fertiliser costs and dry conditions in some areas reduce planting and yields, the ​government said on Tuesday.

Australia is a major exporter of ‌wheat and other crops. Lower output would reduce global supply, putting upward pressure on prices that reached two-year highs last month due to crop losses in the United States. [GRA/]

Australia should reap 26.7 million metric tons of wheat later this year, ‌the ​Australian Bureau of Agricultural and Resource Economics ⁠and Sciences (ABARES) said in a ⁠quarterly crop report.

That would be around 9 million tons less than last season and roughly 8 million less than the average over the last five seasons, according to its data.

Fertiliser costs have ​rocketed since the war in Iran choked off deliveries from Gulf nations. High prices will likely cause farmers to fertilise less, reducing ⁠yield potential, said ABARES, a part of ⁠the agriculture ministry.

Meanwhile, large parts of Australia’s east have ​had months of low rainfall. Widespread rain during May improved crop conditions, ​but the country’s weather bureau still predicts an El ‌Nino and below-median rainfall in the coming months.

“It will be crucial that adequate and timely supply of fertiliser is available and adequate rainfall is received to meet current yield projections,” ABARES said.

ABARES estimated that the ⁠amount of land planted with wheat would fall 12% from last season to 10.9 million hectares, the least since the 2019/20 season.

Planting of barley – ⁠which requires less fertiliser ‌than wheat – is set to increase 4% from ⁠last season to 5 million hectares, but production ​will ‌still fall 15% to 14.1 million tons, ABARES said.

The ​area planted ⁠with canola – which needs plenty of fertiliser but is more valuable than wheat – should fall 6% to 3.5 million hectares, but the harvest will be 20% smaller at 6.2 million tons.

Australia’s sowing period is just wrapping up and harvest is due towards year-end.

(Reporting by Peter Hobson; Editing ​by Sonali Paul)