SYDNEY, AUSTRALIA — Australia’s chief commodity forecaster on Feb. 18 pegged wheat production during the 2019-20 season at 15.17 million tonnes, the lowest output in 12 years.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) had predicted production at 15.85 in December, but ongoing drought pushed the forecast lower.

If realized, the forecast will be 2.3 million tonnes lower than the previous year and the lowest since 2007-08.

According to a recent U.S. Department of Agriculture report, 2019-20 is expected to be the third straight year of falling wheat exports, 8 million tonnes, down 1 million tonnes compared to the year before.

Australia perennially ranks among the world’s top 10 wheat exporters but has seen production decline sharply from historic highs during three straight drought years.

The situation has deteriorated to the point that GrainCorp, the country’s largest grain handler, in June 2019 signed a 10-year deal with insurance broker Aon in which it will receive payment of $15 per tonne when grain production from Australia’s east coast winter crop falls below 15.3 million tonnes. Payments will be capped at $A80 million.