Rain hits Australia's wheat harvest causing quality downgrades
Heavy rainfall affects Australia's wheat quality
2.5 mln to 5 mln tons downgraded to feed wheat, analysts say
Australia is harvesting above-average wheat crop
By Peter Hobson
CANBERRA, Dec 4 (Reuters) -Heavy rainfall has hit Australia's bumper wheat harvest causing widespread quality downgrades, traders and analysts said, increasing the prospect of tightening global supply.
Farmers in Australia, the world's fourth-biggest wheat exporter, are wrapping up an above-average harvest and providing much-needed supplies to the world market but rain over the last two weeks has doused crops and more wet weather is forecast.
Global wheat inventories are projected by the U.S. Department of Agriculture to hit their lowest in nine years by the middle of 2025.
Between 2.5 million and 5 million metric tons of wheat across Australia's southeastern growing regions have been downgraded to animal feed from milling quality, four agricultural analysts said. This represents 8% to 16% of the total crop.
"We're already hearing that a lot of things have sprouted," said an analyst at a major grain trader in Australia, referring to grains and seeds soaked by rain. Other crops such as canola and lentils have also been impacted, he said, asking not to be identified because he was not authorised to speak with the media.
The analyst said 3 million tons in New South Wales and 2 million tons in Victoria will now be turned to feed wheat, estimating that total lost value across crops could reach A$250 million ($162 million).
Greater damage to the crop has been averted by an early start to the harvest this year, analysts said.
The country is set to harvest 31.9 million tons of wheat in the current season, well above the 10-year average of 26.6 million tons, the government said on Tuesday.
High-yielding crops in northern New South Wales and Queensland were safely brought in before rain deluged southeastern growing regions, analysts said.
"(About) 2.5 million metric tons of wheat is expected to be downgraded, mostly due to rain-triggered germination," said Stefan Meyer, who heads a grains trading team at brokers StoneX in Sydney.
The proportion of the overall crop - around 11% - that is feed wheat will likely be similar to the average of the last 10 years, brokers IKON Commodities said.
However, rain bodes well for next year's harvest, said Rod Baker at Australian Crop Forecasters.
"If there is a bit of a silver lining, it's that those soil moisture profiles will be filled up and we'll be in for an at least average crop next year," he said.
Australia's Bureau of Meteorology forecasts above-median rainfall for most cropping regions from December to February.
($1 = 1.5444 Australian dollars)
Rainfall in Australia https://tmsnrt.rs/4eWC8qv
Australian long-term rain forecast https://tmsnrt.rs/49hyO8a
Reporting by Peter Hobson; Editing by Naveen Thukral and Saad Sayeed
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