The forecast is significantly below the 35-million-tonne record harvest in 2016-17 and 6.4% below the revised official forecast of 23.5 million tonnes. It is also below the long-term average Australian season for wheat production of 24 million tonnes.

“Since the planting from April 2017, wheat crops in Western Australia and other states have been significantly affected by poor seasonal conditions and low rainfall,” the report said. “In some regions, around 10% of the wheat crop appears unlikely to be harvested as less than 20% of normal rainfall occurred by July 2017.”

Overall, the nation’s winter crop production is expected to decline significantly in 2017-18 compared to the previous year because of the less favorable seasonal conditions.

Record rainfall in June hurt crop development and the outlook for rainfall through September is drier than average. Crop abandonment could increase if there isn’t more rain, the report said.

In addition to lower wheat production, the FAS said barley production is now forecast at 7.5 million tonnes, 500,000 tonnes below the official estimate due to dry and hot conditions. Sorghum production, however, is expected to rebound to 1.9 million tonnes due to an expanded harvest area and rising prices.

The harvested area for wheat has been lowered to 12.2 million hectares, 3% below the official estimate, due to slow crop development in some regions, the report said. In addition, low world wheat prices have encouraged a shift in some areas from wheat to higher value crops like chickpeas, canola and lentils.

Average wheat yields for 2017-18 are estimated to decrease to 1.8 tonnes per hectare because of the weather conditions. This is below the average yield of 2.7 tonnes per hectare in 2016-17.

Part of the wheat crop was sown dry in regions with poor upper layer soil moisture and significant rainfall is especially important over the next few weeks in areas of northwestern New South Wales, the Eyre and Yorke peninsulas in South Australia, and the northern and central regions of Western Australia, the report said.

“Rainfall is urgently needed in these regions for crops to establish,” the report said. “Post further notes that some estimates of Australian wheat production in 2017-18 were made on the assumption that June would provide needed rainfall, but instead the month was the second driest ever recorded. This outlook contributed to a one third increase in the price of wheat over the three months to July 2017.”

Wheat export volumes for 2017-18 are estimated at 21 million tonnes. The volume of wheat available for export was revised downwards due to the expected fall in production.