Tobin Gorey, commodity analyst at Commonwealth Bank of Australia, said:
“The longer this dry weather goes on, the less chance prices have of recovery.
There are not a lot of crops around from this year’s winter crop so it’s
expensive anyway and the pasture growth isn’t going to be there if it’s dry.”
Gorey adds that ranchers aren’t confident that they can feed their
The latest report from the Australian Bureau of Agricultural and
Resource Economics paints a dire picture for the country’s agricultural sector.
More than half of Australia’s farmland is now officially classified as
drought-stricken. The bureau also says that production of the three main
resource crops – wheat, barley and canola – will be cut by more than 60% in
2006/07. The national commodity forecaster said wheat output may fall to a
12-year low of 9.7 million tonnes.
The indirect effects of the Australian drought are being felt
worldwide: Global wheat prices recently hit a 10-year high, fueled by supply
worries sparked by the country’s dismal crop forecasts.