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Drought Slashes Australia Wheat Crop

Sharp decline in wheat and barley production could limit exports and drive up global prices.

Australian wheat production may fall two-thirds from last year's crop, from 25 million metric tons to 10 million tons, due to a bad drought. Barley production could drop even more steeply, about three quarters from 10 million to 2.5 million tons, says Grains Council of Australia.

The tumble in production looks to cut export availability from about 20 million tons from the previous crop to less than 5 million from this one. Such a loss in available exports would support already high global prices for the grains.

Facing a crop that Grains Council chief operating officer David Ginns thinks "may well be financially the worst for a generation," Australians are already looking offshore to solve potential domestic feed grain shortages. The Australian Quarantine and Inspection Service has already received a number of applications asking to import grain from a number of countries, says a spokeswoman. AQIS has not issued any import permits so far.

The canola crop appears to have taken a hit as well, down to 561,000 tons and about two-fifths of last year's crop, by the Australian Oilseeds Federation's estimation.

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