CANBERRA, AUSTRALIA — Dry conditions continue to plague Australia’s wheat crop as the Foreign Agricultural Service (FAS) of the US Department of Agriculture reduced its production forecast by 3.5 million tonnes, to 28.5 million, in its latest estimate.

The FAS said the decline from its previous forecast for the 2024-25 crop was due to “depleted soil moisture, insufficient rainfall, and frost damage in September, which significantly reduced crop yield potential.”

Despite the challenging conditions, the FAS’ latest projection is 7% above the previous 10-year average of 26.6 million tonnes and 10% higher than last year’s output of 25.9 million tonnes.

The above-average production estimate for 2024-25 is driven by higher-than-average planted area, forecast at 13 million hectares.

“This is among the highest in the last decade,” the FAS said. “The expansion is not due to favorable planting conditions, but poor conditions that discouraged canola planting. In some cases, failed canola crops were replanted with wheat, contributing to the larger wheat area.”

As a result of the downward revision for production, a slight reduction in wheat exports is also forecast by the FAS, dropping by 1.2 million tonnes from its projection in July to 20 million tonnes. That total, if realized, would still be slightly above the 10-year average of 19.2 million tonnes.

On the demand side, the FAS sees domestic wheat consumption rising slightly to 8 million tonnes, with the increase primarily attributed to modest growth in feed grain demand, driven by increasing poultry production and a rise in cattle numbers and beef feedlots.

Domestic wheat consumption for flour milling is expected to remain steady at 3.5 million tonnes in 2024-25, the FAS noted. However, it added that “Australia’s population growth has recently outpaced the norm, which could spur increased production capacity and wheat demand for milling in the future.”