Australian canola harvest is estimated at 1.05 million metric tonnes of canola, down from 1.23 million tonnes estimated last month, the Australian Oilseeds Federation in Sydney said. Output last year was 512,000 tonnes.

Harvest expectations in Australia are being scaled back as the nation's worst drought on record cuts yields of all grains including wheat and barley.

Forecast canola output has been cut the past two months, limiting growers' ability to benefit from canola's 36% price gain in the past year.

No rainfall since August
"There has been little good news in New South Wales, with the last reasonable rainfall occurring in the third week of August and then only in the north east,'' the federation said.

New South Wales may produce 40,000 tonnes of canola, 75% less than forecast last month. That estimate may be further cut, the federation said.

Other states also affected
Victoria State may harvest 348,000 tonnes of the oilseed, down from the 430,000 t estimated last month.

The federation cut its forecast for South Australia by 5% to 190,000 tonnes and left its estimate for Western Australia unchanged at 475,000 tonnes.

The federation's forecast compares with the 1.1 million tonnes production estimate made by the government's commodity forecaster, which also said the nation may export 672,000 tonnes of the oilseed according to its latest quarterly commodity report on Sept. 24.

Australia is the world's third-largest canola exporter. Canada is the world's largest canola exporter, followed by Ukraine.