Australia cuts farm commodity forecasts

Australia on Tuesday slashed forecast production levels for wheat, cotton and other agricultural commodities in fiscal 2015/16 as an El Nino weather phenomenon grips the country and dries out farmland. Meteorologists warn the current El Nino, the second in five years in Australia, will persist until the end of the year.
"We should see a peak to this El Nino by December, January at the latest," Andrew Watkins, manager of climate prediction services for the Australian Bureau of Meteorology. In the year ending July 1, 2016, cotton production in Australia is forecast to reach only 520,000 tonnes down from a March forecast of 559,500 tonnes, according to the latest quarterly update from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
Wheat production should top out at 23.6 million tonnes in the 2015/16 season starting July 1, ABARES forecast, well below its previous forecast of 24.4 million. Australia's cattle industry has also been hit hard. Unable to find enough food or water for their cattle as the El Nino turns major grazing regions into parched wasteland and beef growers have been slaughtering cattle and sheep at record levels, reducing the size of the Australian herd to its lowest in almost 20 years.
This has driven beef and veal shipments from the world's third-biggest exporter to a record 1.3 million tonnes in 12-month period ending on June 30, according to ABARES figures released on Tuesday. Australian beef growers are hoping a forecast end to the El Nino by year end will enable them to replenish the national herd in early 2016, reducing exports in the process. "If normal seasonal conditions return in the first half of 2016, we expect strong herd rebuilding because of the high slaughter rates that have run down the numbers," said Jammie Penm, ABARES chief commodity analyst.
ABARES forecasts Australian beef and veal exports will tumble 10 percent year-on-year, owing to lower supply in the first half of 2016, mirroring a similar decline in the national cattle slaughter. Exports to the United State alone, Australia's biggest market, are forecast to recoil by 13 percent over the next financial year to around 410,000 tonnes from a bumper 470,000 tonnes this year, ABARES forecasts.