Australia says its wheat output will be shrunk by Iran war costs, dry weather

CANBERRA, June 2 (Reuters) - Australia's upcoming ‌wheat harvest ​will be ​the smallest in three years, as high fertiliser costs and dry conditions in some areas reduce planting and yields, the government said ‌on Tuesday.

Australia is a major exporter of wheat and other crops. ⁠Lower output would reduce global supply, putting upward pressure on prices that reached two-year highs last ‌month due to crop losses ‌in the United States. [GRA/]

Australia should reap 26.7 million metric tons of wheat later this year, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) ​said in a quarterly crop report.

That would be around 9 million tons less than last season and roughly 8 million less than the average over ⁠the last five seasons, according to its data.

Fertiliser costs have rocketed since the war in Iran choked ​off deliveries from Gulf nations. High prices will likely cause farmers to fertilise less, reducing yield potential, said ABARES, a part of ​the agriculture ministry.

Meanwhile, large parts of Australia's east ‌have had months of low rainfall. Widespread rain during May improved crop conditions, but the country's weather bureau still predicts ⁠an El Nino and below-median rainfall in the coming months.

"It will be crucial that adequate and timely supply of fertiliser is available and adequate rainfall is received to meet current ⁠yield projections," ABARES said.

ABARES estimated that the amount of land planted with wheat would fall ​12% from last season to 10.9 million hectares, the least since the 2019/20 season.

Planting of barley - which requires less fertiliser than wheat - is set to increase 4% from last season ‌to 5 million hectares, but production will still fall 15% to 14.1 million tons, ABARES said.

The area planted with canola - ‌which needs plenty of fertiliser but is more valuable than wheat - should fall 6% to ⁠3.5 million hectares, but the ‌harvest will be 20% smaller ​at 6.2 million tons.

Australia's sowing period is just wrapping up and harvest is due towards year-end.

(Reporting by Peter Hobson; Editing by ‌Sonali Paul)

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