* Australia trims wheat forecast on dry weather
* Warns rains needed to prevent further downgrades
* Increases canola estimate on increased plantings
By Colin Packham
SYDNEY, June 11 Australia lowered its forecast
for 2014/15 wheat production by nearly 1 percent on Wednesday as
dry weather curbs yields, and warned output could fall further
if an El Nino weather pattern forms.
The world's third-largest wheat exporter is expected to
produce 24.59 million tonnes in the current season, down from a
March estimate of 24.80 million tonnes, the country's official
agricultural forecaster said.
The crop would still be the seventh-largest on record
following last year's bumper 27.01 million tonnes, but the
Australian Bureau of Agriculture and Resource Economics and
Sciences (ABARES) cautioned that dry weather could cut yields.
"Sufficient and timely rainfall over winter will be critical
to the development of winter crops, particularly in those areas
where soil moisture levels are presently low," the bureau said.
"Yields are likely to be lower than currently assumed if
sufficient and timely rainfall is not received."
The forecast decline in the wheat crop comes even as the
acreage devoted to the grain is expected to rise to a three-year
high of 13.84 million hectares.
Strong Australian production will add to pressure on
benchmark wheat prices, which have tumbled nearly 15
percent over the past five weeks as fears over global production
have eased with favourable weather in the United States and an
easing of tensions in Ukraine.
ABARES cautioned that the impact of an El Nino, seen by most
global forecasters as increasingly likely to arrive over the
next few months, would be difficult to predict.
The El Nino - a warming of sea-surface temperatures in the
Pacific - can trigger drought in Southeast Asia and Australia,
as well as floods in South America, hitting production of key
commodities such as rice, wheat and sugar.
The U.S. Climate Prediction Center this month gave its
strongest forecast yet that El Nino will strike during the
Northern Hemisphere summer, pegging the likelihood at 70 percent
in its monthly outlook on June 6.
The worst El Nino on record in 1997-98 was blamed for
massive flooding along China's Yangtze river that killed more
than 1,500 people.
ABARES forecast Australian canola production during the
2014/15 season at 3.471 million tonnes, up from its previous
estimate of 2.948 million tonnes.
The rise comes as farmers have increased acreage devoted to
the oilseed at the expense of other winter crops.
The bureau also revised down its estimate of 2013/14 cotton
production to 910,000 tonnes, having previously pegged output at
(Reporting by Colin Packham; Editing by Richard Pullin)