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Australian wheat harvest seen exceeding forecast on rains

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MELBOURNE, Australia — The wheat harvest in Australia, the fourth-largest shipper, will be bigger than predicted by the government after rains in eastern growing areas boosted yields.

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Production may total 24.9 million metric tons in 2014-2015, according to the median of seven analyst and trader estimates compiled by Bloomberg. That compares with a government forecast of 24.6 million tons and 27 million tons a year earlier. Farmers begin harvesting in about October.

Wheat futures in Chicago tumbled 15 percent in the past year on expectations that farmers worldwide will reap record crops. Increased supplies of grains are helping to pressure global food prices, with a United Nations' index slumping to a six-month low in July. Growing conditions in Australia's west and south are favorable, Rabobank International said this week.

"From central Queensland down received one to two inches of rain, which was very beneficial," said Tom Howard, group general manager of origination and communications at Emerald Grain Pty, a Melbourne-based trader and grain handler. "Another inch or two would go a long way to seeing the crop home and reaching its full potential."

The outlook for an El Nino had boosted production concerns earlier this year as the weather pattern that typically brings drier conditions to Australia's south and eastern inland areas risked worsening drought. The chances of an event this year are at least 50 percent, the Bureau of Meteorology said Aug. 12. That's down from at least 70 percent odds in May.

New South Wales, the second-largest wheat producer, had its driest July since 2002, according to the Melbourne-based bureau. Drought covers 75.5 percent of Queensland, according to the state's government.

There remains a more than 60 percent chance of below-median rain between August and October in southern New South Wales, most of Victoria and South Australia's far southeast, the bureau said July 24. The prospect of an El Nino is the biggest concern for wheat, according to National Australia Bank.

Northern parts of New South Wales received as much as 50 millimeters (2 inches) of rain in the week ended Aug. 19, according to bureau data. Southern areas in Queensland and parts of southwest Western Australia also received rain.

"There's been some good rainfall in some spots which have been dry," said Wayne Gordon, an analyst at UBS AG in Singapore. Global wheat production may climb to a record 716.09 million metric tons in 2014-2015, the U.S. Department of Agriculture said Aug. 12, forecasting Australia's harvest at 26 million tons.

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