March 6, 2017 / 1:03 PM / 5 months ago

Australia sees 2017/18 wheat output falling 32 pct from record crop

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SYDNEY, March 7 (Reuters) - Australia's 2017/18 wheat crop is expected to fall 32 percent from the previous season, the country's chief commodity forecaster said on Tuesday, as seasonal conditions turn drier, pushing yields to average levels.

Farmers in the world's No. 4 exporter will harvest 23.98 million tonnes of wheat next season, the Australian Bureau of Agriculture, Resource Economics and Rural Sciences (ABARES) forecast, down from a record 35.13 million tonnes in 2016/17.

Smaller production from Australia will relieve some pressure on benchmark global prices, which hit a 10-year low in August 2016 amid bumper global stocks.

The production fall comes despite only a forecast 1 percent fall in planting, which will begin in late April, as yields fall to average levels amid what is shaping up as a drier year.

Australian wheat production during 2015/16 was buoyed by near record wet weather across the country's east coast. But with forecasts for a return of an El Nino weather event within the first six months of 2017, which would bring drier conditions, ABARES said yields will fall to a three-year low.

Australia's Bureau of Meteorology last week pegged the chance of an El Nino this year at 50 percent.

The drier conditions across Australia will also reduce production of canola, the government forecaster said, despite farmers sowing a three-year high amount of the oilseed.

Australian canola production will total 3.69 million tonnes during 2017/18, ABARES said, down 10.9 percent from the 4.14 million tonnes produced last season.

Drier weather will also be a blow for Australian cattle farmers attempting to rebuild their herds after the worst El Nino in nearly in 20 years which ended early last year.

Dry weather forced graziers to cull cattle in record numbers as dams ran dry and feed stocks wilted, taking the size of Australia's cattle herd to at least a two-decade low last year.

Last year's wet weather allowed farmers to start rebuilding, but a return to drier weather is expected to again push up cull rates, taking them to a three-year high, ABARES said.

Australian beef production is expected to total 2.09 million tonnes, up from 2.03 million tonnes one year earlier.

Higher slaughtering will aid Australia's abattoir operators, which were forced to idle processing plants as supplies dwindled over the past 12 months.

Reporting by Colin Packham; Editing by Richard Pullin

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