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Australia cuts wheat production forecast by nearly 10%

By Colin Packham

SYDNEY, Sept 10 (Reuters) - Australia on Tuesday trimmed its wheat production forecast during the 2019/20 season by nearly 10% as prolonged dry weather across the country's east coast wilts production.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) pegged production of the country's largest rural export at 19.2 million tonnes, down from its previous estimate in June of 21.9 million tonnes.

Should the forecast materialise, it would be more than 22% below the 10-year average of 24.7 tonnes, and mean a third straight year of lower-than-average production - crippling growers and exporting companies, and providing a hurdle to an economy that is already threatening to stall.

ABARES said while the overall output has been saved by production from the country's largest growing region, Western Australia, the national crop will be well down on average.

"Prospects for Australian winter crop production in 2019–20 deteriorated over winter because of unfavourable growing conditions in some regions, particularly in New South Wales and Queensland," ABARES said in its quarterly report.

Australian farmers plant wheat in April-May and the crop is harvested in December. The southern hemisphere spring, which starts in September, is the most crucial grain-making phase for the wheat plants.

With lower production, Australia - typically one of the world's largest exporters - is also likely to lose greater market share into lucrative markets such Indonesia and Korea at a time of falling prices.

Dwindling Australian production is one of the few areas of support for benchmark prices, which are down 8% this year amid abundant global supplies,

Lower wheat exports will also damage Australia's stuttering economy.

Wheat is the country's most lucrative rural export from an agricultural sector worth about A$50 billion.

In the year to June 2019, Australia's ranking among the top suppliers of wheat dropped to No. 7 - down from being the third-largest exporter in 2016/17, when production hit a record of 35.1 million tonnes.

Lower production may force some millers into rare imports.

Australia in May approved the first import shipment of wheat into the country in more than decade.

(Reporting by Colin Packham, editing by Ed Osmond)

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