UPDATE 1-Australia cuts wheat output forecast on worries over drought

Mon Dec 1, 2014 6:17pm EST
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By Colin Packham

SYDNEY Dec 2 (Reuters) - Australia cut its 2014/15 wheat production forecast by 4 percent on Tuesday as drought in key growing regions curbed output from the world's fourth largest exporter of the grain.

Reduced Australian wheat output could further bolster global prices that have firmed in recent days on concerns over international supply.

Production shortfalls will also limit the revenues bulk grain handlers, such as GrainCorp, Viterra and CBH Group, which get income from storage fees and trading.

Winter crop production has suffered from hot, dry conditions across the east and south coast, Australia's official commodity forecaster said.

Wheat production in the current season was seen at 23.22 million tonnes, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said, down from the 24.23 million tonnes estimated in September.

"From July on, large areas of the country did not get much rain," said Phin Ziebell, agribusiness economist, National Australia Bank.

Chicago Board of Trade wheat futures hit a near six-month high on Monday on suggestions Russia may curb exports and concerns over U.S. production.   Continued...