Sydney: Torrential rains whipping across eastern Australia have devastated wheat crops and flooded coal mines, while oil and gas producers and iron ore miners in the west face a high risk of being battered by cyclones over the next two weeks.
Up to 60 per cent of Australia's forecast 26.8 million-tonne wheat crop could be reduced to feed quality, cutting farm incomes and tightening global supplies of premium wheat used for bread and noodles. In a normal year, only between 5 per cent and 10 per cent of Australian wheat is sold as feedstock.
La Nina conditions continue to dominate across the tropical Pacific, which is contributing to eastern Australia's wettest spring on record, according to the Australian Bureau of Meteorology.
Fears persist
Severe weather conditions pushed US wheat futures to a four-month top last Tuesday, before falling slightly on Wednesday as the US dollar rose and investors took profit.
"Whilst those crop production fears have not dissipated, the market was due for a correction," said Luke Mathews, an agricultural commodities strategist at Commonwealth Bank of Australia. "I'm looking at this as being a further consolidation and slight correction to the gains that we've had in the past two to three weeks," he added. More rain is forecast for eastern Australia's grain-growing regions over the remainder of the week.
The Australian Bureau of Agricultural and Resource Economics and Sciences cut its forecast of Australia's wheat exports to 16 million tonnes from a September estimate of 18.4 million tonnes for the 2010-11 harvest. But most analysts peg exports at between 14 million tonnes and 14.5 million tonnes.
Mines
Five coal mines in Queensland state have closed due to flooding and bad weather, according to Gladstone Ports Corp.
The mines include Rolleston, Minerva, Blackwater, Jellinbah, and Ensham.
